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Isabel Rodríguez Tejedo, Professor of Economics and Business Sciences, University of Navarra, Spain School
The reform that is not coming
The International Monetary Fund's forecasts for Spain were made public a few days ago. On the IMF's website, a one minute and forty-five second video summarizes the institution's position on Spain's Economics : the sick man is stable. Some data point towards improvement, but it does not seem possible that we are going to see a return "to the good times of the past" in the near future. If we were talking about medicine, the picture would be clear: it's looking bad. But at Economics it is not so easy to decide: is that good or bad?
On budget policy, the IMF gives us a C (the interpretation is mine), but care is taken to add "if" and "provided that". Clearly, budget cuts and the message of deficit containment are in line with the institution's fiscal principles. sample However, the Fund is cautious about the forecasts (which it describes as optimistic) on which the government's numbers are based. Subtly, it suggests preparing "additional measures", just in case.
If the global Economics weakens again (the predictions on this topic are disparate and very changeable) or the fragile confidence of the system in our possibilities deteriorates, it is within the realm of possibility that we will have to make room for some of these additional measures. Perhaps because we are not losing sleep, we are not considering what subject measures are in the chamber.
And while we worry about the double-dip recession, GDP and confidence, the work market waits. Not surprisingly, more than a third of the time devoted by the Monetary Fund to commenting informatively on predictions for our country is devoted to topic labor. In response to the question of whether the reforms will be successful, the manager of the area dedicated to
Spain praises the direction of the measures, but, again, takes cover in conditionals: the reforms will be successful if they are followed through and opportunities are seized.
The recent approval at congress of the work market reforms has come with amendments to the original proposal . With so much back and forth, we are missing one of the few advantages of bad times: when the going gets tough, medicine is taken with less fuss, no matter how bad it tastes.
The translation of "labor reform" that is most often heard on the street is "making it easier for business to fire me" and, if we are talking about pensions, "on top of that, more years working before I can retire", but it is important to think beyond that. And it is the responsibility of our representatives (at all levels, public and private) to make decisions with a view beyond the immediate future.
The Monetary Fund itself insists on the need for a social consensus to face a problem with enormous social and economic costs. This requires, first of all, that all those involved have the courage to recognize what they already know, but it looks bad when it is said on television.
Although there are positive data , which there are, other numbers reflect data that give food for thought. We continue to have a frightening unemployment rate, the issue of households with all members unemployed is growing, young people are facing a labor market with poor prospects. And meanwhile, the doubt of a possible worsening of economic conditions abroad lengthens the shadows of the global recovery, and casts doubt on our recovery.
The external status is not in our hands and, certainly, the range of possible policies is not unlimited. But "stable" should not be confused with "good," and inaction at this point could cost us dearly.