The Survey of the Active Population (known as the "EPA" in Spanish) shows that the combination of economic recovery and labor reforms that Minister Fátima Báñez backed could heal deep wounds that the crisis has created in the Spanish labor market. The traditional summer hiring boom alone does not explain the excellent jobs figures between July and September.
This is the third straight quarter that more than 500,000 people are no longer unemployed. After more than two years of tireless work, it is time to challenge ideas that undermined the reforms since they were merely bills. For example, they did create jobs, and falling unemployment was not just because people left to find work in other countries. Last summer, the 151,000 new jobs signify an employment boost that we have not seen since 2007. And measures like the 100-euro flat social security tax have helped create many more self-employed jobs.
So, we will need to see some economic growth for the labor reforms to get traction. But a feeble euro zone will weigh on the recovery in Spain, the Bank of Spain warns. Protecting job growth, therefore, will require increased vigilance. Lowering social security contributions more than the proposed flat tax will compensate for the Social Security system's deficit by making cutbacks in the public sector and help the government stop relying on tax hikes to make money.
