Zapatero unveils 10 year reform plan

 

Friday of last week saw Spanish ministers giving the green light to a far reaching 10-year reform plan intended to bring the economy away from its dependence on construction and create broader, more sustainable growth in the country’s fights against recession.

The proposal is now due to go before Parliament, and features all areas of the economy from tighter supervision of the financial sector — such forcing listed companies to tell shareholders how much their executives earn — to measures making it easier for the setting up of small businesses in Spain.

The bill also calls for larger tax breaks for companies that invest in research and development, more help for Spanish exporters and changes that force government agencies and other businesses to pay faster for services or goods bought from private-sector suppliers.

It also boosts vocational training in a country that turns out armies of university graduates who often end up underemployed.

Prime Minister Zapatero called the bill essential to Spain's present and future: "For the present because it must contribute to economic recovery and returning to the path of job creation, and for the future because it is a key piece for a new growth pattern."

Spain, once among Europe's largest creators of jobs and boasting more than a decade of solid GDP growth, is now suffering its worst recession in decades. It has been in recession since the third quarter of 2008 after the collapse of a boom fueled by residential construction. The building sector and related industries had accounted for nearly 20 percent of the country's economic output.

Today the unemployment rate stands at almost 19 percent – the highest in the Eurozone - after roughly doubling in just under two years, and is expected to hit 20 percent or more. While the euro zone as a whole has edged out of recession, Spain is not expected to post year-on-year growth for another 12 months.

The Government first unveiled the reform package late last year, and conservatives have given it a tepid welcome, saying it lacks key ideas like loosening up rigid labor laws blamed for discouraging companies from hiring.