The CEOE finalized its predictions for 2012 yesterday, which paint a less than promising view of the year to come. It expects the Spanish economy to contract by 1.7% and unemployment in the country to rise by 5.7 million.
Companies are backing labor reforms because they allow more flexibility and competitiveness, but with an inchoate W-shaped crisis visible on the horizon, it will be difficult to create jobs in the near term. The labor reforms are not creating jobs, but a structure that fosters job growth during boom times, combats structural unemployment and slows down the recession.
Countries that are getting through the crisis with lower labor costs modernized their labor markets years ago. Spain is just now starting on that path.
