Prime Minister Mariano Rajoy says he knows exactly what Spain needs to improve its reputation with international credit rating agencies as well as to create jobs and stimulate the economy. Speaking a day after Standard & Poor's downgraded Spain's sovereign rating along with that of eight other European nations, Rajoy said Saturday that he plans to go before the European Commission on January 30 "to tell them what I believe needs to be done as a clear response to defend the euro, control deficits and introduce economic reforms."
"We are living in difficult times, but the government I preside knows perfectly well what it needs to do to improve Spain's reputation, stimulate growth and create jobs," Rajoy said, in his first public address since being sworn in as prime minister on December 21. He gave no details of his plan.
Standard & Poor's, which downgraded Spain's rating to A from AA- on Friday, has threatened to downgrade it further if Rajoy doesn't move quickly to implement his labor reform plans.
Last week, leaders of the two largest unions, UGT and CCOO, failed to reach common ground with the CEOE businessmen's confederation for a new labor reform bill. Rajoy has given both sides one more week to draw up a joint plan or his government will introduce a labor reform package on its own terms.
Government sources say that the Popular Party (PP) administration's job package is ready to go. "We need to introduce this labor reform now, not because people are demanding this but because we need to create jobs," the sources said.
Rajoy told his audience in Málaga that there are 5.4 million people out of work in Spain. Among the striking features of Rajoy's proposed plan are changes to the way collective bargaining agreements are negotiated between workers and employers. Sources also say that Rajoy wants to introduce a temporary two-year contract so that companies will be more inclined to hire unemployed workers.
On Saturday, former prime-ministerial candidate Alfredo Pérez Rubalcaba, who is running for the Socialist leadership next month, asked rhetorically: "Since when does Rajoy know what needs to be done for Spain? There is a big difference what he used to say and what is happening now."
The prime minister will meet on Monday with French President Nicolas Sarkozy who will be in Madrid for an official visit. On Wednesday, Rajoy will make his first trip abroad as prime minister when he visits Morocco to meet with King Mohammed VI.
A meeting with German Chancellor Angela Merkel is also scheduled for January 26 three days before the European Union summit in Brussels.