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Spain: signs for the future

The Socialist government wants to modernize the economy, but its plan lacks specific details

Spanish Prime Minister Pedro Sánchez.
Spanish Prime Minister Pedro Sánchez.

Never before had a government relied on such precarious parliamentary support to turn its proposals into reality. This government’s main project, the 2019 budget blueprint, will be pushed through, in the best of cases, with the same weak and heterogeneous support that made Pedro Sánchez the prime minister on the back of a no-confidence vote in late May. To this complicated goal of seeing the political term through to the end, the executive is now adding a set of measures, many of them economic in nature, grouped under the ambitious title of Agenda For Change.

For now at least, it is a statement of purpose

Available information allows us to deduct that we are talking about dozens of measures, some of them far-reaching in scope and applicable over the course of several years, that are part of a larger modernization drive. It is a strategic plan of sorts, backed by a diagnosis of the strengths and weaknesses of the Spanish economy, and including decisions considered necessary to make progress on the generic goal of eliminating the sources of inequality in this country: the inequality between rural and urban Spain, between men and women, and between different generations of Spaniards. The reduction of macroeconomic imbalances and the increase in the economy’s potential for growth are also part of the agenda.

For now at least, it is a statement of purpose, without sufficient details about specific decisions, that aims to underscore and accentuate the electoral messages of the Socialist Party (PSOE). It adds to the conventional rhetoric about the need for macroeconomic stability, environmental policies and social cohesion. But the document also suggests policies that would go beyond the complete repeal of the labor reform undertaken by the previous administration.

The Spanish economy needs to grow in a better way

Besides its social policy ambitions, the agenda pays particular attention to the economy’s potential for growth. This is a necessary condition to guarantee greater social welfare and to reduce macroeconomic imbalances such as excessive public debt levels and the unemployment rate. But in order for the Spanish economy to grow more in the long term and in a sustained way, it needs to grow in a better way. Its businesses need to provide more added value, and this entails improving the economy’s productivity, rather than basing it on low wages and lack of protection measures for workers. Rather, it requires bigger injections of technological and human capital; reinforcing worker skills, improving the quality of the institutions and improving corporate governance. The economy needs to make steps towards a complete assimilation of digital technologies

The government’s Agenda For Change is a respectable project, even if its statements are guided by the upcoming elections. The modernizing ambition encapsulated in its contents is also reflected in decisions about raising the minimum wage, government workers’ salaries and pensions, in order to send a message of optimism to potential voters and carve out a space in the political center-left while the right-wing parties attempt to craft alliances of their own.

Even if some of the Agenda’s proposals finally become a reality, which is yet to happen, it would not stop the Spanish economy from deviating from the slowdown that the global economy is experiencing, particularly in the euro zone. In any case, some of those measures will have to be adopted by whoever is in government, if they want to reduce the Spanish economy’s vulnerability and defend job creation in a more competitive context.

Deep down, the current government is aware of its scant parliamentary clout and ultimately it is doing nothing more than pointing at goals. Yet even if it only served to encourage a debate about the country’s economic overhaul, it would already serve a positive purpose. Certainly, it would be more positive than focusing on other issues that do nothing to help guarantee the welfare of the majority.

English version by Susana Urra.

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