Labor reform, the key to recovery for the EU, Berlin and the IMF

The intention of the Coalition Government to end the changes introduced by past labor reforms do not sound good outside of Spain. The modifications introduced by the PP Government, especially the twist of 2012 in the worst moment of the crisis, have been constantly praised in Brussels, Berlin and Washington, among other capitals. Moreover, the renewal effort to reduce high unemployment was encouraged.

The positive comments from the European Commission have been constant over the past years. In the latest report on our country, the Commission assessed that “economic expansion has been accompanied by robust job creation, backed by the impact of labor market reforms and wage moderation.” The former Employment Commissioner, Marianne Thy-ssen, invited Spain to move forward with the reforms.

A similar message arrived from the IMF. The Fund, based in Washington, valued structural reforms, including labor, as part of the efforts that contributed to reducing imbalances in the fourth euro economy. The institution encouraged Spain two years ago to “move forward with new structural reforms of the labor market.”

From the German Government, its former Minister of Finance, the influential hawk Wolfgang Schäuble also praised our country on several occasions for reforms in this field. “Spain has done a very good job in the last two years,” he said in 2014.

From the outside, the creation of more than two and a half million jobs during the recovery are sufficient proof that the reforms have worked. However, the Commission is also concerned about the segmentation between fixed and temporary contracts, in addition to labor precariousness, which has been partially aggravated by some of the changes introduced.

The Community Executive has also given several opinions on the increase in the interprofessional minimum wage. In the latest report on our country, he pointed out that the increase to 900 euros “exceeded the expected moderate acceleration of prices and labor productivity for 2019” and brought the ratio of Spanish average and median with this salary closer to European ratios, from one of the lowest.

Of course, the Commission document echoed the report of the Bank of Spain, which forecast a negative impact of 0.8% on total employment.

The rise in the minimum wage was better received in other organizations such as the OECD. Its secretary general, Ángel Gurría, said that the increase approached our country to the average of the countries of the organization in terms of the percentage that represents the minimum with respect to average wages, since it was in the lower ranks.

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