The Bank of Spain changes its discourse and warns now that unemployment and temporary work have “a very high economic cost”

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Just over three years ago, the Bank of Spain warned at the hands of its former governor, Luis María Linde, that indefinite workers had “excessive protection” and pointed out that they should have fewer rights. But in the midst of the covid-19 crisis, the body’s speech in the 2019 annual report it has presented today claims just the opposite.

The current governor, Pablo Hernández de Cos, has warned that the high unemployment rate and temporary work “have a high economic and social cost that the country cannot afford”. He also warned that more training policies are needed and is committed to “employment measures that ensure permanent jobs”. In fact, since the outbreak of the health crisis, temporary workers have accounted for 77.2% of the total decline in Social Security.

Women and young people, the most affected

The report warns that the fall in employment has had a “higher” impact on the services sector, the hospitality industry in particular, and also on the arts arts sector. It states that they are sectors mostly occupied by women, young people under 35 and low-income workers. All of them, according to the study, will pay in a “higher way” the consequences of confinement. In addition, he also points out that the crisis is having a greater impact on vulnerable groups, which will mean an “increase in inequality”.

Therefore, among the proposals for action and improvement, the Bank of Spain includes the need to increase productivity, improve the functioning of the labor market and ensure the sustainability of public finances. In this last sense warns of the need for an adjustment plan to contract public debt. One of the ways is, according to the Bank of Spain, through tax increases. He argues that in the short term it is necessary to implement measures such as a reduced VAT increase, environmental taxes, or a pension reform.

Linde wants less protection for fixed-term contracts

The report coincides with the publication of GDP during the first quarter in Spain. The fall, as confirmed by the INE, was 5.2%, the “highest in its history.” The “necessary” measures to contain the pandemic had a direct impact on declining private spending, exports and tourism services, warns the Bank of Spain.

The Bank of Spain also postpones austerity until after the crisis



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