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Isabel Rodríguez Tejedo, School of Economics, University of Navarra, Spain

Slow and insufficient

Sat, 25 Jun 2011 14:18:39 +0000 Published in La Razón (Madrid)

Everything comes. In March it seemed that the June summit to compare notes on the Euro Plus Pact (that pact with the name of a washing machine that has given so much to talk about and demonstrate recently) would never come. And here we are. As anyone would expect from a student that knows it has not done its homework properly, there is a lot of nerves and some last minute effort to review the most important... just in case it comes out.

In this case, among the most important are the issues of public finances and, especially, competitiveness. Let's remember that the original name of the pact was going that way, until it was changed because many people thought that so much competitiveness sounded too German. To these two priority objectives, the promotion of employment and financial stability are also prominently added.

If it all sounds familiar, it is because these four topics have been the core topic of discussion of most of our recent economic policy (or lack of policy). Let's focus on the two most talked about in our country: competitiveness and employment. As usual, reforms are slow and insufficient. We do them late, in fits and starts, and we tend to leave the most important ones behind. The thought that these difficulties would have been largely avoided if things had been done differently six or seven years ago is neither consoling nor a consolation. We are here, now, and we are still doing nothing.

The competitiveness that is supposed to be the panacea does not necessarily imply lower wages. But, let's not kid ourselves, it is the most likely scenario. If it is not done directly, then it is likely that inflation will be responsible for lowering real wages. There could be complementary measures, aimed at improving other aspects of business flexibility, but that front seems to be (at least for the moment) blocked.

No one will be surprised to hear that at employment we fail, and by a long shot. Examining the fees youth and long-term unemployment deadline of our Economics will bring out our embarrassments, and the labor reform continues the tone of non-reform that, like Don Quixote, seems like a national ensign. If Spain, as a country, had a "facebook", I would say that we should join a group of which I have been told recently: "I also said I am on my way and I had not even left". I do not know what its "grace" will be, but the degree scroll is nailed to us.