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Quality jobs

The challenge for the new government is not just reducing unemployment, but creating stable positions

Jobless claims fell in May.
Jobless claims fell in May.TXETXU BERRUEZO

Unlike in 2011 and 2012, the Spanish labor market’s main challenge is no longer the need to ensure that unemployment keeps falling. The combined effects of a GDP growth rate in excess of 2.5% and labor reform that has reduced hiring costs ensures that joblessness will continue to shrink in the coming years.

May's labor figures confirm this, showing fewer than four million people out of a job (3,891,403 to be precise) and 1,988,004 more Social Security affiliations —although these numbers still have to be ratified by the quarterly labor survey Encuesta de Población Activa (EPA).

If the caretaker Popular Party government wanted some good news from the job market ahead of the general election on June 26, it has it. But it is obvious that the drop in unemployment, in and of itself, does not necessarily mean improved working conditions.

If the way out of the financial crisis and the subsequent recession is to make precarious hiring a permanent reality, then we can foresee that there will never be a full recovery

Whatever government emerges from the election, it will have to steer the labor market in a new direction. Even if it does not address Spain’s economic growth model — which it should do, to prevent jobs from depending so much on tourism and construction — the new administration will still have to solve the conundrum of extremely high youth unemployment, which is painfully slowing down the rejuvenation and upgrading of Spain’s labor force.

Equally, the government will  need to consider the worryingly high jobless rate among older people. Anyone currently out of a job who is aged 45 or older can be fairly certain they will not find another stable job in the current market conditions.

And that is the real trouble with today’s jobs. The seriousness of the situation demands a labor policy that will go beyond a reform that should have been conceived as a solution aimed at preventing the destruction of businesses, but which should be reinforced with employment policies favoring long-term hiring.

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If the way out of the financial crisis and the subsequent recession is to make short-term recruitment a permanent reality, then we can foresee there will never be a full recovery, that is to say, a growth period in which employers and workers can count on a sustained increase in demand in the mid-term. Whoever blindly defends the theory advanced by the president of the Spanish employers’ confederation, the CEOE, that “fixed jobs are a 19th-century notion,” will have to explain how the new system will sustain purchases of durable goods orders.

For the last four years, the government has disregarded pursuing active employment policies. Its approach has been insufficient and indirect, based primarily on tax benefits and selective reductions on social security contributions, which are not enough to make a real difference to job creation.

The lower unemployment figures should not blind us to the need to apply stimulus policies to the demand side so as to raise expectations of investment, consumption and, as a result, stable employment.

The options are clear: either we entrust job creation to the mechanism of income reduction, or we debate and propose new hiring policies that will reinforce Spain’s medium-term growth expectations.

English version by Susana Urra.

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