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José Ramón Pin Arboledas, Professor at IESE Business School, University of Navarra

On the path to growth?

Fri, 25 Jul 2014 10:16:00 +0000 Published in La Vanguardia

The Bank of Spain's forecast of second quarter growth of 0.5% of GDP (gross domestic product) heralded a good EPA (survey of active population) in the second quarter of 2014. Unemployment fell by 310,000 people and 402,000 jobs were created. The unemployment rate leave to 24.4%. With tourism, third quarter GDP growth will be of the same tenor or more. So it is not difficult to guess that, although the fourth quarter is usually the least active, 2014 will yield a GDP increase of more than 1.7%. In the past, Spain needed more than 2% to create employment; now it does not. Lower figures increase work. This is a structural change.

The civil service examination accuses that these are low-wage and temporary jobs or part-time. It is true, but it is also true that this subject of jobs allows Germany to keep unemployment fees low and to grow. According to the coalition that governs there, it is better for a young person to have that subject of employment than unemployment; it is the way to enter another subject of jobs.

It is safe to predict that unemployment will be close to 22% of the labor force by the end of the year.
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To compete internationally Europe needs to be flexible with a market of work with contracts part-time (we are approaching the European average ), continue with a percentage of temporary (which are going down) and adjust wages. This change is not only an effect of the labor reform, it is the adaptation of Spain to the new world Economics . The prospects for tourism are spectacular. 63 million foreign visitors are expected. It is a consequence of the leave inflation and the containment of salaries, which allow competitive prices, together with the social instability of our competitors.

Therefore, if this EPA is encouraging, next quarter's will be the same or better. It is not risky to predict that at the end of the year unemployment will be close to 22% of the active population. Lower than at the beginning of the legislature.