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Economic Affairs, Employment and Social Security

Sunday 31 December 2017

Economic Policy

After almost four straight years of growth, the Spanish economy is recovering the confidence of the international markets while acquiring efficiency, flexibility and the ability to compete. Furthermore, Spain is once again growing at rates that place it at the head of the main economies in the Economic and Monetary Union.

However, during its last period of economic growth and in the first few years of the crisis, Spain generated major macro-economic imbalances, such as a high level of private debt fostered by negative real interest rates, mounting external debt, a loss of competitiveness and a high public deficit.

In order to overcome a crisis of the magnitude we had to face, it was necessary to adopt a complete, coherent and ambitious economic policy. Fiscal consolidation is high on the list of priorities of our economic policy, Furthermore, after concluding the process of re-structuring the financial sector, it is essential to guarantee structural reforms in the functioning of the factor, goods and services markets.

In recent years, the government has implemented an ambitious reform programme that has allowed a good part of the competitiveness lost since membership of the Euro to be recovered. However, it is necessary to continue along this reformist line to provide the economy with a more efficient and flexible structure that drives lasting growth and job creation.

Together with the actions carried out in the financial sector, continuity has been given to cross-cutting structural reforms with the aim of improving the business climate and to support SMEs, thus contributing the enhancement of the competitiveness of the Spanish economy.

The Law to Support Entrepreneurs and their Internationalisation facilitates the exercise of the revision and improvement of the business climate that must be carried out annually under the coordination of the Ministry of Economic Affairs and Competitiveness.

Research, Development and Innovation

A broad consensus exists in the importance of science, technology and innovation in economic development. In Spain, scientific and technology policy and innovation have their origin in the Law to Boost Scientific and Technical Research and its General Coordination, which was subsequently repealed. The Spanish System of Science, Technology and Innovation is comprised of a raft of institutions that the Science, Technology and Innovation Act classifies from a functional point of view in three areas: coordination and definition of policies, driving R&D+i, and implementation.

Labour Market in Spain

Since the transition to democracy, the Spanish labour market has been characterised by its high level of structural unemployment that increases in periods of crisis. While in economic boom times the unemployment rate has never fallen below 8%, in periods of economic crisis it has risen as high as 26%.

This high unemployment is compounded by excessive segmentation in the labour market between workers on permanent employment contracts and those on temporary contracts. This duality means that 40-50% of the employee population alternates between periods of unemployment and temporary jobs, above all affecting two segments of the population: young people and less skilled workers.

In recent years, the composition of the labour force has shifted enormously into the services sector. In 1982, agriculture employed 17.8% of the workforce; industry employed 26.92%; construction employed 8.1%; and the services sector employed 47.4%. Today, the services sector accounts for 76.3% of workers; industry accounts for 13.7%; construction for 6%, and agriculture for 4%.

The number of people out of work fell by 340,700 in the second quarter of the year, compared with a fall of 216,700 the previous year. It fell in all sectors, particularly the services sector (144,000 fewer unemployed). The number of long-term unemployed also fell, by 142,900 people who lost their jobs more than a year ago, while it increased by 9,100 for first-time job seekers. Over the last 12 months, unemployment has fallen by 660,400 people (14.4% less compared with 11.2% less in the previous quarter). The number of people who lost their job more than a year ago fell by 426,100 and by 59,000 for first-time job seekers.

These figures are an all-time record since the Labour Force Survey (Spanish acronym: EPA) began to be published. The total number of people out of work stands below the 4 million mark for the first time since the end of 2008. The unemployment rate has fallen to 17.2%, the lowest since the first quarter of 2009 and almost 10 points lower than when at its highest point.

Social Security

Social Security is among the institutions that stand highest in public esteem. The protection it affords, based on a constant search for an efficient and modernised management model, is the outcome of a collective effort first undertaken in 1883.

The figures for August 2017 show that the monthly total paid out by the Social Security system for contributory pensions stood at 8.79 billion euros, a year-on-year rise of 3%.

The average retirement pension stood at 1,065.50 euros, 1.97% higher than for the same period last year. The average pension from the Spanish Social Security system as a whole, which includes all the various types of pension available (retirement, permanent disability, widowhood, orphanhood, and those paid out to relatives), stood at 922.17 euros, representing a year-on-year increase of 1.86%.

The public system comprises 9,532,495 contributory pensions in total, an increase of 1.11% on last year. At 5,838,229, more than half of these are retirement pensions, while 2,361,830 are widowhood pensions, 940,302 are permanent disability pensions, 342,219 are orphanhood pensions and 40,915 are pensions paid out to relatives.