The ‘British crisis’: When tourism bosses bowed to union demands

It doesn’t automatically follow that, in relative terms, a small business will be any less profitable than a large one. But size does help. It helps a great deal in that general financial wherewithal is that much greater. Cost demands can be accommodated more readily by the large rather than the small.
Size of business, nature of business. Two factors inherent to the three sectors in Mallorca and the Balearics that comprise the overarching hospitality industry. How many other factors are there? Nature of the clientele is one. Location is another. These are all clear ingredients for an industry which is not homogeneous. Yet in one very important way, it is. The dealings with the unions.

The three sectors are different, yet they are combined for the purposes of collective bargaining agreements. The restaurants and the clubs are the junior partners. The hotels are senior, just as - on the union side - there is a senior union. The bargaining table is split evenly. Both employers and unions have fifteen representatives. Of the two unions, the UGT have nine representatives. On the business side, the Mallorca Hoteliers Federation has eight.

In theory, the UGT and the federation could arrive at an agreement between them that is binding on all parties. It has certainly been the case, e.g. 2017, that the federation has made a salary proposal that the unions have been only too willing to accept. There were no negotiations as such for the agreement to take effect in 2018, the federation having slapped 17% over four years on the table from the get-go. It was a done deal, and there was nothing that the small hotels, the restaurants or the clubs could do about it.

As junior partners bound by an industry agreement, there has been talk of the restaurants and clubs seeking their own separate agreement. As things stand, the pay for restaurants and clubs under collective bargaining equates, in general, to the lowest band for the hotels. There are pay scales for different types of job, and with the hotels these are also determined by star rating. The highest pay is therefore at a five-star hotel.

On the face of it, one might feel that the restaurants and clubs have a reasonable argument in wanting their own agreement. But history isn’t on their side. More than eighty years of history have to be taken account of. Workers in Mallorca and the Balearics came under an employment regulation of May 1944 that was for the hospitality industry. This was a regulation that was naturally without any union agitation. Even so, the Franco government did have to keep the workers sweet, just as it also had to do twenty years later but then failed to do in 1974.

In 1964, the modifications were primarily concerned with shifts and the meals provided to workers. Ten years on and a matter of major importance to tourism required a response. The oil crisis led to the 1944 regulation being replaced. One thing that this new regulation permitted was the temporary closure of hotels in the low season. This was in order to save costs. It was in effect never revised, and so when there is all the discussion nowadays about hotels being closed in the winter, here was the origin.

More than this, the 1974 regulation unquestionably led to a worsening of workers’ conditions. There were protests, but as this was 1974 these didn’t get very far. However, once the transition to democracy started following Franco’s death in 1975, the memory of the 1974 regulation was fresh in the mind. And what newly legitimised unions therefore sought was a strong and united response from a single industry. The current-day collective bargaining system, with its roots in the single industry regulation of 1944, was born as a means of righting the wrongs of the regulation that had replaced it. Nightlife, which was inconsequential in 1944, had been grafted onto restaurants, and so the three sectors came to form the basis of negotiations going forward.

A position of perceived strength in the post-Franco era made itself apparent in 1986. In 1985 the local media had been highlighting the ‘British crisis’. Margaret Thatcher’s economic policies were having a serious impact on disposable income, and so British tourism took a dive. Employers reacted by cutting jobs, by not hiring temporary workers and by reducing the periods of employment for those on what were in the mid-80s the still nascent ‘fijo discontinuo’ contracts.

The unions weren’t standing for this. The collective bargaining agreement was up for negotiation. The employers wouldn’t back down. And so in June 1986, workers in the hospitality industry went on strike. Or rather, the threat of strike from June 13 had the desired effect. The unions’ gains were significant. There was to be a mandatory period of employment for ‘fijo discontinuo’ employees; there was a pay increase of close to ten per cent (not all in one year); there were improvements to conditions, e.g. occupational health and early retirement. And there was a reduction in working hours.
The united strength was never greater than in 1986. It is still mightily strong insofar as the industry represents some 180,000 workers. It is the single largest employment sector, but there is a weakness which comes from the inherent differences, which are apparent as the employers and unions head towards negotiations for the latest collective bargaining agreement.

All employers’ associations have said that a UGT pay demand that would see salaries rise by above five per cent in one year (an unprecedented single-year increase) is unacceptable. This is particularly the case for the restaurants and clubs, whose laments regarding a weak 2024 season can arguably be viewed as having been tactically pre-emptive, given that the negotiations were coming up. They can also be seen as perhaps reinforcing the call for an agreement separate to that of the hoteliers.
But while pay may well prove to be a stumbling block, working hours could be an even greater one. The UGT is seeking a 35-hour week, lower than the Spanish Government’s 37.5 and of course lower than the current 40 hours. One argument against has come from the president of the nightlife association, Miguel Pérez-Marsa. He maintains that many employees who work in the tourism industry get more from tips than they do from their monthly salaries. They would therefore rather work more hours, not fewer.

The shortage of qualified workers, which has been another lament, and one of longer duration, is another reason for rejecting the cut to the working week. At present it is hard to perceive any common ground between employers and unions on this. The same goes for the pay. The employers accept that there has to be an increase but not on the scale that the UGT wants.

This new agreement is meant to take effect from the first of April. Formal talks are yet to begin, and they most certainly won’t be like 2017, when the need for talks was eliminated by the hoteliers’ generous opening gambit. But the restaurants and clubs haven’t forgotten that. At the same time there is a series of union demands. Might it just be that 2025 relives events that were brought about by the ‘British crisis’?