13/02/2012 - OECD Secretary-General Angel Gurría said Spain’s comprehensive reform programme is a major step forward in strengthening the country’s banking system and its public finances, as well as creating a more dynamic labour market.
“Government action has shown that reinforcing confidence in the banking sector, boosting budgetary discipline and creating a better-performing labour market are firmly in its sights,” said Mr Gurría. “The labour market reforms are particularly relevant in view of Spain’s very high unemployment rate, especially among the young. Measures to introduce greater flexibility in permanent contracts will reduce labour-market dualism, and promote employment by encouraging firms to hire more people on permanent contracts. It is also worth underlining that the new reforms streamline the judicial process for adjusting the labour force,” he added.
The government has also launched important measures to ensure that collective agreements can respond better to changing economic circumstances. In this regard, the OECD welcomes moves to favour firm-level collective agreements over sector-wide agreements, and to limit the extension of expired agreements. These policies will raise employment and permit the Spanish economy to take advantage of new opportunities and global markets.
“The level of youth unemployment in Spain is a tragedy that cannot be allowed to continue,” Mr. Gurría also said. “The plan to make continuous training more attractive is an important step forward, as is the expansion of subsidies for hiring the young and long-term unemployed on permanent contracts, especially by small and medium sized firms”.
OECD work has shown that such temporary subsidies are effective during recessions. In the longer term, however, such subsidies should be targeted on the most disadvantaged youth. Further efforts will be required to strengthen incentives for the unemployed to actively seek work and to help them do so. Government proposals to improve training will be critical to upgrading the employment prospects of many young people.
Spain is taking decisive action to address the current challenges, restore confidence and put the economy back on a strong growth path. The OECD welcomes these measures, whose impact goes beyond Spain and benefits Europe at large. It also reiterates its willingness to work with the Spanish authorities in addressing these complex challenges.