Speech by President of the Government at inauguration of 2nd International Forum on Public Employment Policies

Madrid

Madam Minister for Employment, Mr Secretary General of the International Labour Organization, Mr European Commissioner for Employment, Social Affairs and Inclusion, representatives of the Organisation for Economic Co-operation and Development, public officials, friends,

I would like to start by thanking Minister Báñez and Secretary General Ryder for their support and kind words and for their choice of Madrid to host this forum. Believe me, as a Spaniard, I can but congratulate and thank them for their good taste.

Last year, at the first edition held in Mexico, it was made clear that this International Forum on Employment Policies had managed to place employment at the centre of the political agenda at a global level. This would not have been possible without the ILO's drive and the OECD's support.

At this second edition, we are offered an unbeatable opportunity to make progress in this regard, which is and must be a priority for all, regardless of their country. And hence, thanks to those who have made this new meeting possible, thanks to the ILO, to the OECD, to the senior officials from the nearly 50 countries that are gathered here and to the experts that have come to attend this forum to exchange their knowledge. And, of course, my thanks also go to our hosts here at Casa América.

Ladies and gentlemen,

I am sure that these meetings starting today will serve to strengthen the policies that each one of our countries is fostering with a view to making stable and quality employment an increasingly more global reality.

We are faced with many challenges. The world has recently suffered the worst economic crisis since the 1930s. However, the strength of the recent turbulence should not prevent us from seeing the collective achievements that have taken place in the last few decades; since the 1980s, the world population below the poverty threshold has fallen by half, while life expectancy and per capita income, and hence, well-being and wealth have grown significantly in almost every corner of the globe.

Two major forces underpin this and many other areas of progress: on the one hand, the globalisation of economic relations, with a growing number of nations that are developing at great speed; and, on the other hand, technological development, particularly information and communication technologies. These forces are driving development, but also generating changes that give rise to challenges to adapt our societies, and the recent financial crisis has been, to a great extent, a manifestation of these profound and dramatic changes.

At the present time, when the latest reports show that world economies are slowly coming out of the crisis, we can look back and think about what we have been taught. Now, for example, we know that growth must be more inclusive and more sustainable, that the tool for achieving this is within the grasp of everyone and is called the Process of Structural Reform and that these reforms must be centred on job creation, because employment is the basis for individual and social well-being, and the guarantee of our prosperity, the pillar on which social protection systems are based and, in short, the way of life with which we identify ourselves.

Ladies and gentlemen,

At this forum we will speak about public employment policies, the combination of the most suitable actions for sustained, sustainable and intense growth to create opportunities, of specific measures to activate employment that are key to tackling the drama of unemployment; and of course we will also tackle youth unemployment, the greatest challenge for many of our economies, the need to support entrepreneurs as the drivers of job creation and, of course, how to best protect workers' rights.

As President of the Government of Spain, I want to share with you the Spanish experience in this area which, I can assure you, has been very intense over the last few years.

We can now say that the relationship between economic activity and employment is, at this time, the best in the history of Spain. We have never created net employment with such low levels of economic growth. However, we still suffer from excessively high unemployment.

What have been the reasons for this and the solutions implemented? Spain has suffered from a global economic crisis like few others; three and a half million jobs were shed in the first four years of the recession. The reason for this lies, at least in my opinion, in hiding the serious structural problems during the many boom years and also, of course, in the inadequate labour framework, which was too rigid and only protected part of the workforce. We can talk about a job market in which job flexibility didn't provide for adjustments through prices, or wage contention or reductions in the working day, but was limited to adjustments through dismissals.

As a result of this practice, a dual labour market grew up in Spain. The process of adjustments through dismissals and temporary lay-offs brought with it the creation of two different sets of workers: on the one hand, those with longer seniority in their companies and more beneficial working conditions, and those with less seniority, who are those that suffered these adjustments for the mere fact of being less protected.

These dysfunctions in our labour market were most harshly felt against a backdrop of a contraction in economic activity. Upon arriving in power, with growth in unemployment of 12.5% per year at the start of 2012, the situation of our labour market was critical and the need for a reform was imperative. For this reason, one of the first measures adopted by my government during this legislature was a far-reaching labour reform.

The new legislation sought to implement a balanced but profound review of our framework of labour relations. We had to stop the rot of unemployment and transform economic growth, albeit slight, into job creation. As a result of that, there are now 262,397 fewer registered unemployed than when this government approved the labour reform.

Furthermore, it was necessary to implement a new job culture committed to quality and stability, which also contributed to the necessary structural transformation of our economy. This new culture has already introduced a high degree of flexibility in companies, has modernised collective bargaining and provided new facilities to SMEs and entrepreneurs. It has also created a market with fewer difficulties for generating employment, in which excessive temporality is penalised, where stable hiring is a firm commitment and with dismissals being the last resort.

Other structural measures have followed the labour reform, such as part-time work, measures to drive quality jobs and self-employment, the 100 euros per month flat rate for stable contracts and 50 euros for independent contractors. I would also like to mention the reduction in forms of employment contract from 41 down to 4.

We have laid great emphasis on the fight against youth unemployment which has started to bear fruit. Thanks to the Entrepreneurship and Youth Employment Strategy set up in February 2013, 400 young people per day have found a job since then. And, as a result of the recently implemented Youth Guarantee, opportunities for the under-25s will increase. In fact, there are currently 100,000 less young unemployed than a year ago and half the people in this group in the Eurozone who have found a job in this last year were in fact Spanish.

Ladies and gentlemen,

All of the above allows me to assert that this economic policy strategy on employment, in addition to the enormous effort - because it has been huge - made by the whole of Spanish society, is starting to bear fruit. The job market has taken a 180-degree turn. As was published recently in a Bank of Spain report, we can now claim that the Spanish job market has changed cycle. I merely have to quote the figures: we have just become aware of the Active Population Survey figures for the second quarter of 2014, just two and a quarter hours ago, which, as you are aware, are the figures standardised with the rest of the Member States of the European Union. Well, the Spanish economy has created 402,400 net jobs in the last three months. This is the highest level of growth in employment in our country in a single quarter since 2005. You can be totally and utterly sure that I have waited for a very long time, precisely since the day I became President of the Government, to be able to announce news like I have here today.

But, having seen these historic figures, the data from the Active Population Survey ratify that the improvement in the Spanish job market is not circumstantial but structural and that the efforts by the Spanish people as a whole and the government's reforms are bearing fruit.

Certain aspects of this increase in employment are worthy of mention: on the one hand, the rise in permanent contracts - 180,200 people - which is the largest rise in the second quarter since 2007; moreover, growth in private employment - 393,500 more workers than in the first quarter; and finally, growth in full-time employment of 304,400 people.

In another scheme of things, the Active Population Survey shows us that unemployment has fallen by 310,400 in the last three months, an unprecedented fall in the historic series published by the National Employment Institute. And, compared with the same quarter last year, the number of unemployed has fallen by 424,500 people, representing an annual drop of 7%.

To put it another way, we have managed to stop the rot. Unemployment has turned around from increasing by 12.5% when the labour reform was approved, to falling by 7% in this second quarter of 2014.

Our economy has managed to return to create net employment. Previous figures to those announced today show that we have now enjoyed 10 consecutive months of growth in the number of contributors to the Social Security system, following a period of 68 months of decline. With regard to the challenge of creating quality jobs, permanent employment contracts are increasing at rates in excess of 20%.

But while all these figures are positive, we should not forget that there is still a long way to go. With unemployment figures still in excess of 24% of the active population and above 50% in the case of our young people, there is still a long way to go, and I will obviously not stop trying to continue creating jobs and leave unemployment to pass into a thing of the past, a sad past, in Spain.

This is a job for the government, but also for everyone else; for all public authorities, business owners, workers and also those social stakeholders who, I should say, approved an historic collective bargaining agreement two years ago which has been enormously useful for everything that has taken place since and which I, from this stage, would encourage the trade unions and business associations to renew.

As regards the government, our responsibility lies in continuing to make progress through labour market reforms. We will do so consistently as regards job activation policies. To that end, we are driving through a second generation of reforms aimed at speeding up a return to the job market by the public services; among them, worthy of mention are the Annual Employment Plans and the Spanish Activation Strategy 2014-2016; the Framework Agreement for public-private intermediation to be used by the regional governments with support from the private sector to boost the effectiveness of job placements; the Employment and Self-Employment Portal, which we set in motion some days ago - a single employment portal that contains all offers of public employment and which, thanks to the collaboration of the portals that have signed up, now offers some 85,000 jobs.

And, of course, vocational training must play a key role in our active policies as a tool for improving the employability of workers and the competitiveness of our companies. In this area, we will soon have a new-style regulatory framework that will exceed the present limitations and which is committed to boosting productivity and competitiveness through innovation, excellence and attention to the demands of the market.

Ladies and gentlemen,

One of the best ways to know a society consists of asking oneself what opportunities it offers its citizens, how it treats those people who are suffering the most and how it seeks to include those who are excluded.

The damage caused by the crisis to so many people and to so many families has spurred us on to show our social sensitivity, not with kind words and good intentions, but rather through verifiable actions and concrete reforms. In this regard, offering a job opportunity to those looking for one without success remains and will continue to remain our top priority, because the impact of the crisis on unemployment has served for us to see, clearer than ever, that employment is our foremost social policy, the very backbone of our system of well-being.

As you are well aware, economic growth, employment and well-being are closely related. More growth means more work, which means more income, more consumption, more job demands and more growth. And all of this results, in the end, in better social benefits and in a sustainable and sound Welfare State. We must enter this virtuous circle to once again offer opportunities to those who have been left behind in the crisis, and that is the challenge we are called on to respond to, right here and now.

Ladies and gentlemen,

I don't know anybody that doesn't have the best intentions. We all want to have the best public pension system, the best healthcare system, the best education system and the best system for providing long-term care. Everyone has the best intentions, but without economic growth and without employment, you cannot collect revenue.

The main problem Spain has had in the last few years is that in just two years, 2008 and 2009, we lost 70 billion euros in revenue and mounted up a public deficit in excess of 9%, which meant, as you are aware, that however good one's intentions may be, one cannot live nor can we maintain the Welfare State in this situation.

Fortunately, Spanish society understood this. A great effort has been made and I believe we can now say that we are starting to coming out of this situation, but we must be crystal clear about what happened so that the same doesn't happen again in the future.

One issue to which I give great importance is youth unemployment. We are all aware of the very serious impact in the long term of being unemployed at what should be the start of one's professional career; but by driving youth employment, as we have done, we can support - moreover, as I just mentioned - the sustainability of our system of well-being, which is critical for developed societies that are facing a process of gradual ageing.

There are almost 9 million pensioners in Spain, and a little under 17 million people registered with and contributing to the Social Security system. Our Welfare State and our social policies will be increasingly better to the extent that we are capable of creating economic policies that generate new jobs.

Another important challenge is to support equality in the job market. Here in Spain we have approved the Strategic Plan for Equal Opportunities 2014-2016, designed to foster equality between men and women at work, as well as to fight against wage discrimination and improve reconciliation between home and work life.

In the same area of workers' rights and working conditions, our intention is clear: we want to do away with the said duality in our labour market, because while a dual labour market protects part of the population to some extent, the price we pay is that of leaving another key part of the population unprotected which also has a right to protection.

Similarly, today we have the imperative to offer new incentives to those who are at risk of being marginalised. For example, growing international competition threatens the jobs of many less qualified workers in developed countries and our public authorities must seek to find solutions for them. To that end, my government has not only driven a global education reform that seeks excellence, bust has also committed, as I said earlier, to vocational training geared towards the job market.

Ladies and gentlemen,

These are the challenges now facing us, and behind each one lie many citizens, many people, all with their own individual identities, with each serving to remind us that getting employment policies right is the most direct route to improving the lives of these people. For that reason, I don't want to draw my speech to a close without reflecting on this and by remarking that all the measures I have mentioned, and all the challenges, respond to one conviction: that a country cannot hope to truly prosper without being a fairer society. A society cannot make progress if its citizens don't make progress and this magnificent project of the future, which is Spain, will only prosper if everybody takes part in the project. That means everyone giving of their best, but to do so, they need to have opportunities and we in power, must provide those opportunities.

And, if you will allow me, I wanted to end my speech by telling you something. What is easy, when one governs a country, is not doing anything or only trying to give good news, but that is building up false hope only to find that tomorrow the cupboard is bare. Implementing reforms and taking tough decision in the short term is not pleasant for anyone, everyone criticises them. In the medium term, some might come to appreciate them, and many more may do so in the long term, when a great deal of time has passed in political terms. But that is neither here nor there. Rest assured that the fundamental obligation of a governor is to take decisions that are good for the general interests of their country, although sometimes they may be tough and although sometimes the lack of comprehension is greater, but at least your conscience is at peace and you are aware that you have done what needed to be done.

Moreover, when one does nothing, there are no effects; when you do something, the medium-term effects are many, and that is what counts - the progress the country makes.

Thank you very much for being here.