The company managers find that if their connections are good and the action rapid, they can avoid many, many problems. The government supports economic development in the region on two fronts. First, it is flexible in its response to new investors, providing them with tailor-made solutions to their infrastructure needs and with economic and financial support during the initial stages of business launch. Second, the government encourages mergers, buy-outs, capital increases and other forms of cooperation between local companies and overseas investors. The Spanish labor system is notorious for its rigidity.
Recent reforms chip away at the inflexibility, and the system is becoming noticeably relaxed.
Employers associations and unions this year signed a national agreement to liberalize Spain's labor laws. The unions scaled back their demands for severance pay rates. This should help Spanish businesses reduce the costs of layoffs, which have been the highest in Europe and discouraged hiring. There have been many other improvements in recent years. The major trade unions and employers associations in 1994 signed an agreement, under the auspices of the government of Navarre, aimed at increasing productivity, encouraging investment and employment, and promoting employee training.