A New Political Cycle

A former labor lawyer from the northwestern Galicia region, Díaz was appointed to Unidas Podemos’s only major ministerial position when the coalition took office in January 2020. When the pandemic hit two months later, she gained prominence in the cabinet as she negotiated a series of agreements between employers and unions over the social response to COVID-19. The most notable concerned the Spanish state’s massive furlough scheme, at its height guaranteeing the wages of over 3.5 million workers.

“The key to explaining Yolanda is the pandemic; her capacity for management and institutional negotiation has chimed with the need for certainty,” one of her senior advisers told Jacobin:

She comes from what is considered the extreme left but now is seen as understanding the economic reality of the country better than PSOE ministers. But she also convinces more because the pandemic has changed the common sense in this country — with the consensus moving leftward around things like public health, reindustrialization, and worker protections.

Yet even as Díaz began to poll among the most popular ministers, under Iglesias’s leadership Unidas Podemos suffered a series of crushing regional election losses through 2020 and into 2021. Iglesias’s final months in the cabinet were defined by deadlock and rising tensions between the two coalition partners as strategic PSOE-run ministries repeatedly stonewalled Unidas Podemos ministers’ legislative priorities. His attempts to regain traction by renewing his attack on the democratic credentials of the Spanish state and then framing last May’s Madrid regional election as an existential battle between “democracy or fascism” seemed more to help galvanize the far right than his own base.

Beyond the exhaustion of Iglesias’s own appeal as a candidate, the Madrid result also seemed to point toward the final exhaustion of the 15-M/Podemos cycle of mobilization. The major concepts that dominated the Spanish left over the last decade — rupture from the post–Francisco Franco 1978 constitutional regime, democratic revolution, new versus old politics — had already lost much of their mobilizing power prior to COVID-19, but the onset of the pandemic saw a more definitive shift. “Solutions rather than great debates are now being sought [by weary progressive voters],” argued political scientists Mario Ríos and Daniel Vicente Guisado in ctxt in September. Similarly, journalist Daniel Bernabé called for the Left to adopt a “reformist realism . . . reclaiming concrete solutions [to urgent material needs] as a defense against the Right’s culture wars.”

As Díaz made her first interventions as the head of the Spanish left last fall, she emphasized different focuses: left unity through dialogue, a more feminized, less macho politics, moves to counter the far right with concrete social reforms, and a proud identification with labor and trade unionism.

This latter was a particular shift for the Left, after organized labor was largely peripheral to the last decade of mobilizations. But Díaz’s alliance with the country’s major unions — especially the Communist-affiliated Comisiones Obreras (CCOO), Spain’s largest — has been key to her momentum in office. The CCOO leadership has undergone a generational shift since Unai Sordo’s election as general secretary in 2017, accompanied by a tilt to the left. Díaz’s deepening alliance with CCOO — of which her father was a historic leader — now looks likely to be one of the defining axes of her emerging electoral platform, set to replace the Unidas Podemos brand in the coming year.

In this respect, Díaz has not only sought to reposition the parliamentary left as a credible governing force but also to contest PSOE’s self-representation as the party of labor. Flanked by the leaders of the country’s two major unions at the Communist Party’s centenary celebrations in September, she insisted: “I’m here to change things, like in the labor market where young people are excluded. . . . We can have dignified lives, with dignified employment.” In Barcelona in November, she framed the upcoming labor reform as the current government’s defining legislation:

The alternative [to poverty and precariousness] is decent work. We are all workers: My colleagues the lawyers, the public health professionals, cashiers, cleaners, those in the cultural sector. . . . We are all workers. And that is why this is the major reform that we need to undertake in our country. Because the young people earning €400 a month lack all freedom. They have no freedom to negotiate with business owners.

At the CCOO conference, where she received a hero’s welcome, she told delegates, “I was brought up here, in this collective house,” before arguing that trade unionism “is the most effective vaccine against authoritarianism. . . . A strong and organized labor movement that reaches more people and workplaces is a solid guarantee of democracy. You represent the best of this country.”

Negotiating the Labor Reform

Yet having argued for “a new social contract,” Díaz also had to deliver meaningful reform within the constraints of the existing balance of forces in the cabinet. A core commitment in the coalition government’s agreement was the repeal of the Partido Popular’s regressive 2012 labor reform, designed at the height of the European debt crisis to impose a brutal form of internal devaluation by slashing wages. Over the past decade, this legislation has exacerbated the worst aspects of Spain’s neoliberal model of labor relations, leading to increased levels of temporary and precarious work, stagnant wages, and the scaling back of trade union rights.

Yet from the beginning of the coalition, Sánchez was circumspect about what this commitment to repeal the 2012 reform really meant. He was never willing to echo Díaz’s assertion that the government would proceed either with or without an agreement with business leaders; and as premier, his “progressivism” has time and again stopped short of any measures that would impose losses on economic elites or challenge existing power relations.

Then, last October, Sánchez sought to intervene in the social partnership talks by attempting to replace lead negotiator Díaz with PSOE’s right-wing economics chief Nadia Calviño. This came after the corporate sector had become anxious at the scope of the proposed counterreform, with Brussels also applying pressure to leave untouched the greater flexibility the 2012 law had afforded to management over questions like layoffs and outsourcing.

“There is a part of the government that does not want the model of labor relations to change, that wants to maintain the status quo,” Díaz responded. The anger at the attempted U-turn even among the PSOE’s own base, and union talk of industrial action, soon saw Sánchez reaffirm Díaz’s authority — albeit on the basis of her reassurances that a compromise deal between unions and employers was possible.

The final “social partnership” agreement announced on December 23 ultimately fell short of a complete repeal of the 2012 reform, while doing away with many of its most damaging aspects. Evaluations on the Left remain divided. Supporters of the deal emphasize that it represents a break with the decades-long trajectory of downward pressure on labor protections. “For the first time [in 30 years], this is a labor reform that recovers and improves workers’ rights,” insisted CCOO’s Unai Sordo.

In contrast, critics see it as enshrining continuity with key aspects of the existing labor market regime — slamming the “triumphalism” of Díaz’s references to a “historic agreement” and “fundamental paradigm shift.” “We all know the limits [the Left faced], but it becomes more difficult to accept these when, on top of that, we are expected to celebrate as a victory what is only not a major defeat,” wrote prominent journalist Antonio Maestre.

Weighing Up the Reform

The new legislation’s limits are obvious. One of the main gains for the corporate sector in the 2012 reform was the greater freedom it won to impose layoffs. This is left unchanged, both in terms of the reduced compensation owed to redundant workers and companies’ legal right to declare layoffs unilaterally without needing authorities’ or unions’ consent. At the same time, companies also maintain their right to break certain terms of collective agreements when justified by financial, technical, or production issues, while the demand to scale back outsourcing in businesses’ core activities was also dropped.

These are major concessions, relative to the promise to fully repeal the 2012 reform. For sure, institutional reformism as a junior partner in a southern European government was never going to deliver many outright victories, particularly in areas that touch directly on the organization of class relations. And if some of Díaz’s rhetorical praise for the deal has been disproportionate, it is also true that it secured substantive advances for labor when the Left and progressive social forces remain demobilized. Indeed, the deal is at its strongest in its recovery of unions’ collective bargaining rights. As one Díaz adviser wrote, “The most important thing about the labor reform is that joining a union — organizing and fighting for the rights of all of us — means more today than [it did] yesterday.”

First, the deal reestablishes the primacy of sectoral wage agreements over company-level ones — thus ensuring unions’ ability to negotiate a standardized level of pay across a sector, including for those working for subcontractors in a given area. For workers in such subsidiaries, where company-level agreements currently run behind sector-level standards, this should deliver meaningful wage increases — though in some specific cases, such as hotel cleaners, there is a dispute over which exact collective agreement applies.

Meeting another key union demand, the legislation also recovers the principle of “ultra-activity,” meaning that the terms of expired collective agreements will remain in effect indefinitely until a new deal is negotiated, rather than being deemed invalid after one year as at present. The 2012 legislation had given bosses enormous leverage in this respect, enabling them to use the expiration deadline to threaten union reps with an automatic reduction of pay and conditions. Now, existing agreements will serve as a guaranteed basis for negotiations.

Moreover, with Spain currently having the highest level of temporary employment in the European Union (amounting to 26 percent of all labor contracts), the new reform will also restrict fixed-term contracts to a much narrower set of circumstances. In this respect, the new legislation aims to better regulate seasonal work and eliminate the widespread use of consecutive fixed-term contracts for what are in reality permanent jobs — a practice that has left hundreds of thousands of workers with little or no job security. Business representatives split over accepting these measures, which should see an overhaul of employment contracts in the construction sector, as well as firms like Amazon.

Finally, the sanction regime against companies using fraudulent temporary contracts will also be strengthened, with fines now applicable for each worker involved rather than a single company-level penalty. The latter is crucial, for the actual impact of the reform will be measured by the labor ministry’s and unions’ capacity to report infractions and make good the rights proclaimed on paper. Díaz had already instituted a much more aggressive workplace inspection regime, with her ministry converting 267,000 temporary contracts into permanent ones in the first ten months of 2021 (a 58 percent increase on 2020), while unions are promising a more robust strategy of collective negotiation in 2022 as inflation eats into workers’ purchasing power.

Consolidating Her Leadership

While the legislation has been passed in the cabinet, it still requires parliamentary approval. Leftish Catalan and Basque nationalist parties (essential to the government’s majority) are currently demanding further guarantees that regional sectoral agreements will take precedence over national ones if they are to lend their support, and negotiations are ongoing. But for Díaz, it is crucial that the bill passes before the February 8 deadline, as she is now looking to pivot to the wider task of restructuring the Spanish left.

In purely party-political terms, the wager of forcing a coalition with PSOE in 2019 (pursued doggedly by Iglesias) seems to have worked for a Left that had risked outright implosion. Government participation has created the conditions for the successful renewal of the Left’s leadership, and potentially opened up avenues for it to avoid the type of marginalization and fragmentation that other left electoral projects have suffered in the UK, Germany, and France. A year ago, it looked like being tied to PSOE in coalition would leave Unidas Podemos worn out by the time it reached the 2023 elections. But the smooth leadership transition last spring and the promise of a unity candidacy after years of internecine factionalism has given it renewed momentum, just as Sánchez himself looks increasingly exhausted.

Polling on the so-called “Yolanda effect” highlights her presidential appeal — pointing to much wider identification with Díaz as a leader than with the existing left-wing parties. While Unidas Podemos has seen a moderate poll rise under Díaz, bringing it back to the 13-14 percent it scored in 2019, she has the highest approval ratings of any leader nationally, and is second-most preferred as leader of the next government, with 17.1 percent support. She is already ahead of the Partido Popular’s Pablo Casado and has closed the gap with Sánchez (21.9 percent). Moreover, 64 percent of those who voted for Íñigo Errejón’s Podemos breakaway Más País in 2019 now prefer Díaz as Spain’s next prime minister, along with 53 percent of voters for the Basque left-wing party EH Bildu, 28 percent of Catalan Esquerra Republicana voters and, crucially, 18 percent of previous PSOE voters.

Having lost votes to both PSOE and peripheral nationalists between 2016 and 2019, there is now a belief that many of these voters could be won back. With elections scheduled for late 2023, this polling recovery is clearly liable to erosion. But it has generated renewed hope on the Spanish left, particularly as the idea of a new broad-front platform built around Díaz’s leadership has gained traction. Díaz, who was never a member of Podemos and holds no leadership position within the PCE, has distanced herself from existing Unidas Podemos structures in recent months, as she seeks to open channels with Más País and other left-wing forces.

Managing such intra-left tensions will not be easy. But having broken PSOE’s monopoly on office on the progressive side of politics, the wager is that in a second term the Left could secure a more balanced coalition, with greater weight in the cabinet. This, in turn, should enable a more assertive legislative agenda.

Yet a second term is far from certain. Most polls give the right-wing bloc (including the Franco-nostalgist Vox) a slight edge over the current government parties, though neither bloc would likely have an absolute majority. And while Díaz has associated herself with the coalition’s most popular policies, there is growing frustration at the pace and ambition of the governments’ wider reform program. In a major recent survey for El País, 70 percent of the coalition’s own voters said they believed its policies benefit corporations and the rich more than they do the poor — a damning indictment for any left-wing administration.

In various key areas, from housing to tax reform and regulating energy prices, the coalition has yet to deliver the change it promised. Díaz is seeking another increase in the minimum wage, building on an existing 22 percent rise since 2019 by bringing it above €1,000 a month. But ultimately, a hypothetical left surge around her brand of laborism will not count for much if the Right ends up winning a majority on the back of a weakened PSOE. To repel such an authoritarian nationalist alternative, Díaz’s reinvigorated social democracy is urgently required.