All Eyes on Government Reforms

Profs. Pastor and Vives examine reforms' pace and impact

26/03/2014 Barcelona

Prof. Xavier Vives

The measures taken to clean up the financial system and pension reform are the most important and positive reforms undertaken in Spain since the start of the crisis. On the downside are the lack of policy to create jobs, non-existent education reform, chaos in energy policy and few advances in the rental market or measures to improve productivity. Nor have we seen any judicial reform or improvement in scientific and technical teaching in universities. This was how professors Xavier Vives and Alfredo Pastor summarized Spain’s structural reforms during a Continuous Education session.

Labor reform: unfinished business

Despite reforms in internal flexibility and collective bargaining, the professors claimed the duality between indefinite and temporary contracts, which they regard as inefficient, has not been addressed. “The lack of job-creation policies, the submerged labor market and temporary contracts are all grounds for saying that the reform of the labor market has been a failure,” said Pastor.

The problem is especially acute among the young. In Spain, 40% of the unemployed are in the 30-44 age group; people with higher education and work experience. At a time of slow growth, their only option is to accept temporary jobs, Pastor said “A change in the productive model won’t come about through temporary contracts. You have to invest in the employee,” he said. This investment involves substituting temporary contracts with part-time ones. In the Netherlands and Germany part-time contracts account for 50% and 35% of jobs respectively, while in Spain it is only 16%.

Pastor concluded with a call to simplify the administrative process of setting up a company and said that the best moment to initiate these reforms was in times of economic bonanza.

SpanishReforms, a measure of change

During the meeting the website SpanishReforms, an initiative of IESE’s Public-Private Sector Research Center, was presented. The idea is to follow the development of the Spanish economy and its reforms. This assessment will come under six headings: growth and competitiveness, competence and regulation, labor market, the financial system, tax policy, public administration and the welfare state. The web will bring together economic reforms and reports from official bodies as well as an assessment by a panel of experts. The next assessment of the reforms, which corresponds with the first quarter of 2014, will be published on May 12.