Is it possible to reduce unemployment in Spain to 5%?

Fernando G. Urbaneja | John De Zulueta, President of the Circle of Businessmen, believes that Spanish society should aspire to reduce unemployment to 5%, and argues that this would liberate more than €26 billion for savings and investment, public or private, in short for a greater prosperity.

Zulueta is both Spanish and North American, son of an exile (his grandfather was minister and ambassador in the republic and his mother a well-known hispanista), high-level executive in various international companies and a resident of Madrid since the beginning of the 80s. To achieve this objective Zulueta argues for advances in key reforms (labour, fiscal, pensions …), especially in education reform which is preparing to train young people in the new technical skills which the digital revolution demands. Today there are 138,000 vacant jobs because of the lack of skills. To bring unemployment to 5% (a technical level, almost frictional unemployment) means full employment and requires creating more than 2 million net jobs above current levels.

Is Zulueta’s objective possible or wishful thinking? I have asked various economists with experience and knowledge of Spain’s economy over the last half century. They think that it is not impossible, not utopian, but that it requires political will, commitment, confidence and … decisions. It is not an objective for one legislature, but neither for a generation. It is possible in the medium term, between five and 10 years.

Does this not seem possible after twenty years of Spanish inflation below 2%? The combination of effective monetary policy, integration in Europe and the euro and successive agreements between owners and unions on social peace with wage moderation and stable agreement has meant that inflation is no longer a problem. It is possible to achieve this balance. And it is also possible to correct the major problem of Spanish society: high and chronic unemployment which causes social exclusion and generates pockets of poverty and inequality among the young and old and, in the end, childhood.

Unemployment is the main problem for the majority of Spaniards, including those who enjoy stable employment but who fear that this situation could change for the worse. Undermining expectations and creating space for fear of the future is the best gift to populism and to political discourse of easy (and false) solutions to complex problems.

Creating employments, apart from the fear of losing it, is the major social glue for creating a stable and prosperous society. Zulueta’s proposal makes sense, is possible and viable if a social consensus of confidence and self-esteem can be created to asume the risks of reforms which can overcome the current status quo of resignation and impotence.

 

About the Author

Fernando Gonzalez Urbaneja
Over 30 years working in economic journalism. Fernando was founder and chief-editor at El País, general editor at the business daily Cinco Días, and now teaches at Universidad Carlos III. He's been president of the Madrid Press Association and the Spanish Federation of Press Associations. He's also member of the Spanish press complaints commission.