Yesterday the European Commission asked the Spanish government to "explore the extent to which reductions in Social Security contributions will lower the cost of non-salaried workers." And because the measure is destined to help create jobs and be "neutral for the budgets," the committee executive advised compensating for it by "changing the structure and type of value added taxes and energy taxes, for example."
Yesterday the European Commission asked the Spanish government to "explore the extent to which reductions in Social Security contributions will lower the cost of non-salaried workers." And because the measure is destined to help create jobs and be "neutral for the budgets," the committee executive advised compensating for it by "changing the structure and type of value added taxes and energy taxes, for example."
Brussels also asked for collective bargaining reform and guarantees that salary progressions better reflect progressions in performance, as is familiar at companies. This advice makes up the first of six formulas that the committee head gave yesterday, urging Spain to improve its tricky economic situation.
Another recommendation is "to apply the strategy budgeted for in 2011 and 2012, guaranteeing to successfully reduce the deficit in all areas of government, including strict application of existing mechanisms to control debt and the regional government´s deficits; to adopt more measures if the budgets do not pan out as expected; to take advantage of any opportunity, including improved economic conditions that will help reduce the deficit more quickly; to go ahead and set contracts that support objectives planned for 2013 and 2014; and to maintain increases in public spending less than the rate of mid-term increases of GDP, introducing a rule about the spending in all areas of the Administración en la Ley de Estabilidad Presupuestaria.
The third recommendation is to adopt pension reforms that push back retirement. The fourth was to reinforce the restructuring of savings accounts, which is already in progress.
The fifth recommendation is to evaluate the results of a recent labor reform at the end of 2011 and present new budgets to reduce segmentation in the labor market and improve opportunities for young workers if necessary. And to improve measures that address those struggling at school through incentives such as professional development programs.
The sixth and last recommendation is to liberalize professional services and promulgate legislation planned to redesign the legal frameworks and eliminate current restrictions of competition, efficiency and innovation; to apply the law on top of the Sustainable Economy, especially measures to improve the business climate and strengthen competition in the market for goods and services in all areas of the administration; and to improve coordination between regional and central administrations in order to reduce the burden government places on companies.
Edited in English by Brandon Dyches and Jose L. de Haro (for comments contact: joseluisdeharo@eleconomista.es)
