When will end the Fall in the Spanish Labour Market?

When come to an end the fall in the Spanish labor market? Buenos Aires, Argentina March 4, 2009 This time of global economic crisis are also times of reunion for many Argentines How is this? Is that the crisis in Argentina in 2002 caused many Argentine citizens emigrated to other countries in search of economic well-being. And Spain was one of the favorite destinations for Argentines. But the crisis is hitting so hard on the Spanish economy that many of those Argentines who had seen a better future in the country of the old continent, are returning to their land. The labor market Spanish suffered as few actual international financial crisis. In the month of February, the number of unemployed increased by 154,058 workers. The overall number of unemployed and slash the 3.5 million unemployed. The desperation of the Spanish to the fragile employment situation has benefited the gambling business. Predictor set a revenue record in 2008 to total revenues of EUR 557 million. The desperation of the Spanish people to the deteriorating labor market makes them resort to any kind of salvation. But although the labor market remains in continued deterioration and the prospects for it are not the best in the coming months, from the government of Rodriguez Zapatero is confident that it can reverse the trend throughout this year.

Under Secretary General for Employment, Maravillas Rojo, the Spanish government "actively working with the triple objective of going slowing job losses, ensuring coverage to people who lose their jobs, and facilitate the relocation of the unemployed." To Spanish government officials, have to wait until May to see results on the labor market in the economic stimulus plan launched by the Zapatero government, which considers an investment of 11,000 million euros for municipalities made 31,000 public works and generates around 400,000 jobs.

Nevertheless, given the urgency that produces the current situation, the Spanish government on Friday will consider a package of 1,500 million euros to promote the creation of jobs and improve the collection of subsidies. The BBVA (IBEX: BBVA) has an economic proposal for the government of Rodriguez Zapatero. The entity proposes to cut by 3.5 percentage points Value Added Tax (VAT) which would help create 280,000 jobs and have a neutral fiscal impact since it is offset by higher revenues from a higher level of activity. Perhaps this proposal should be considered by the Spanish government. Returning to the question we asked at the beginning of the article: Is the job market recover soon in Spain? All indicate that no. Stimulus plans appear to be insufficient given the context so negative, and the government has no resources to significantly increase the size of the package. Thus Spain's economic prospects are not encouraging. According to projections made by BBVA, the Spanish economy would shrink 2.8% this year and 0.3% in 2010. Both the external and internal negative appear to think about an early recovery of economy Spain.

External demand is very weak and can not count on it to boost the recovery of the activity. It also shows weak domestic demand. The companies limit their investment plans and families increase their savings to the possibility of falling into unemployment. To make matters worse, the banking system does not help the domestic demand. In January, new loans to companies registered a decline of 7.4%, while loans to households fell by 38% (housing credit fell by 49%). The outlook for this year is to continue the contraction in bank lending, so that further hinder the recovery of domestic demand. Thus for the Spanish labor market, the picture observed by the BBVA is more than disturbing. End of 2009 the Spanish economy could have 4.1 million unemployed, while the figure would rise to 4.5 million in 2010. If fiscal policy (which is limited by the large deficit of Spanish public accounts) do not can do much to reverse the contraction of the Spanish labor market, can help the monetary policy of the European Central Bank? from the European Central Bank there is no great belief in continuing the cycle of rate cuts to ease the region's economic recovery .

For this to happen, the scene of the euro shall be clearly identified with an economy in deep contraction and without inflationary pressures. However, the weakness observed in the transmission channels of monetary policy generates few positive expectations about the effectiveness of it to prop up economic recovery and reverse it in the labor market situation in Spain. The Spanish labor market situation has led to calls for reform to it. Among the proposals, the BBVA suggests that the reform includes the creation of a "single permanent contract" for new jobs, whose firing costs do increase as the age of the workers as well as a "sure fire ' as currently exists in Austria, which is accumulated during their working life and reverse the worker when you start to draw your pension. The Organization for Economic Cooperation and Development (OECD), meanwhile, recommends Spain market flexibility cheaper labor and dismissal. For the OECD to improve the situation of the Spanish labor market is necessary for the government allow companies to more easily repeal the application of wage agreements and encourage the removal of clauses to index for inflation.

The suggestions of the Spanish labor market flexibility are shown as a compromised solution to the situation of Spanish workers, but this is not the only problem with the economy of Spain, so that at most alleviate the deteriorating labor market. In 2009 will undoubtedly be a difficult year for Spanish workers. Zapatero's government must make every effort to limit the effect of the crisis on workers. ¿Will call for a reform in the labor market for it?