The EU countries are subject to the Brussels evaluation of the required policies and reforms on Wednesday. And, as I had already suggested, the European Commission has suspended Spain in the sustainability of its medium and long-term pension system, which in its opinion "worsens intergenerational equality". The Community Executive has also decided to keep Spain under surveillance for its macroeconomic imbalances: for its high public and private debts, along with 11 other countries. Among them are also Germany or the Netherlands, which continue to register high fiscal surpluses.
The European Commission publishes on Wednesday the country reports describing its fiscal, social, labor and competitiveness situation. This is a kind of test whose effectiveness the EU countries call into question (Germany and the Netherlands still have high fiscal cushions), but at least it serves to get the colors out of them. Spain has experienced strong growth between 2013 and 2019, with an expansion of its Gross Domestic Product (GDP) of 16.5%. Even so, Brussels warns that it drags "structural weaknesses" and a legacy of the crisis from which Spain fails to completely escape.
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- Brussels gives Spain a touch of attention due to debt, unemployment and productivity stagnation
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Spain continues to suffer, according to Brussels, a high private debt, 132% of GDP, and public, in addition to a deficit that resists to drop at a stretch and that the government manages to reduce "above all" by economic growth. The Commission considers that medium and long-term fiscal sustainability risks exist. And it names it: the pension system. Specifically, it warns of "the government's plans to permanently reinstate pensions to the CPI" and disconnect them from the population's life expectancy. Without "compensatory measures," the report adds, spending will continue to rampage and equality between generations will worsen, just at a time when "poverty mostly affects younger groups, including children."
"Generalized" use of temporary hiring
The European Commission, however, places a lot of emphasis on the labor market, which is one of Spain's main weaknesses. Brussels recalls that unemployment has been falling, but that it is still "very high", especially among young people and unskilled workers. "The widespread use of temporary contracts weighs on productivity growth and feeds inequality and poverty at work," says the document, which recalls that Spain is the EU country with the highest rate of temporary employment.
Brussels notes that the 22.3% increase in the interprofessional minimum wage has increased labor costs, especially in some sectors or regions, but does not yet quantify its impact on employment and labor poverty.
The report also refers to the possibility of a labor counter-reform. "The new government has also announced its intention to review aspects of the 2012 labor reform," the document said. Brussels points out that this action of the PP government is "recognized" for having "underpinned the strong creation of employment during the recovery." Community sources recommended to the government that, before making changes to that law, preserve the capacity to create jobs that Rajoy reform has.
Finally, the Commission sets out several fronts that Spain still has pending. One of them is the early school drop-out that laminates equal opportunities and contributes to the high percentage of low-skilled workers. In the social sphere, Brussels warns that, despite continuing to decline, the volume of population at risk of poverty and social exclusion remains high, especially among children.
Touch to Germany and the Netherlands
Reports indicate that the public debt falls from the aggregate point of view of the Twenty-seven, but there are still countries with debts close to or greater than 100% of their Gross Domestic Product (GDP) and, as a whole, the members of the community bloc continue without being able to coordinate your fiscal policy. "The current high levels of public debt are a source of vulnerability in some Member States and a barrier for governments to have macroeconomic stabilization when necessary. In Italy, Belgium, Spain and France debt rates have not decreased, despite the favorable economic and financial conditions of recent years, "notes the communication approved by the Commission.
In an environment of weak growth and with the threat of the coronavirus, Brussels also stops at the investment chapter. Commission reports indicate that member countries are still struggling to recover pre-crisis investment levels, which were above 3% of GDP. In part, this is because states with a more comfortable position such as Germany or the Netherlands continue to accumulate large surpluses at the cost of not investing.
"The reduction in public and private debt levels is progressing at an uneven pace. And although current account deficits have mostly been corrected, large surpluses remain a concern," he said in a statement prior to the conference. Press the Economy Commissioner, Paolo Gentiloni. Labor markets have also improved, although the percentage of active population that suffers risk of social exclusion or poverty rises.
