ECONOMY

Economy minister forecasts “significant” job creation for 2014

De Guindos says government labor reforms will help drive recovery

Following on from Prime Minister Mariano Rajoy’s year-end speech, in which he said 2014 would be the year of economic recovery, Economy Minister Luis de Guindos predicted in an interview broadcast on Wednesday that the creation of jobs this year would be “significant.”

“In 2014, the projections we have at the Economy Ministry point to a net creation of jobs, even above what we forecast when we drew up the state budget,” De Guindos said in an interview recorded a few days previously with radio station Cadena Ser.

Spain emerged from a protracted recession in the third quarter of 2013 when GDP grew 0.1 percent. However, unemployment remains painfully high at 26 percent. De Guindos argued that the labor reform introduced in February 2012 would invigorate the job market. The reforms made it cheaper and easier to sack workers but also provide more incentives for companies to take people on part-time.

The government is predicting GDP growth for this year of 0.7 percent, although some members of the government believe that target is modest and that the pace of growth will gradually pick up as the year progresses.

With regard to the overhaul of the tax system the Rajoy administration is preparing, De Guindos said the changes will help offset the impact of the hike in personal income tax introduced in 2012 to rein in the budget deficit. However, he insisted the government has no plans for major changes to value-added tax, which was also raised to reduce the shortfall in the government’s finances.

The minister added that he did not think that the self-rule drive in Catalonia would derail the recovery.

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