Unsustainable. Spain entered 2012 with 5.27 million unemployed workers. A gloomy record high figure that has revealed the selfish and ineffectual behavior of previous governments who applied cowardly touchups to our labor market, characteristically influenced by government hiring offices and labor unions who are more interested in making money for themselves than reaching a healthy employment level.
With European debt in full crisis mode and the Spanish economy a main focus, the IMF envisions a contraction of at least 1.7% for 2012 and a credit rating lowered by two rungs followed by a recession that will be intense and difficult to overcome.
Spain cannot support itself any longer without making severe spending and tax adjustments and initiating bold reforms that confront real underlying issues at expense of ephemeral political gains. The current government cannot repeat past errors. It should act now wand with force, although doing so could entail political suicide, because in the end ballot boxes are far wiser than selfishly myopic politicians.
The government should win back Spain's credibility and turn deaf ears to those looking to act selfishly, be they labor unions, regional governments or political parties. There needs to be a complete redefinition of our labor relations system that cleans up the rules, puts an end to "duality," and increases hiring contract flexibility even though these steps will hurt in the short-term. Spain must liberalize, stimulate credit markets and energize the private market. If it cannot do so, then we are facing a decade of decline.
