I cannot stress enough the importance of having a future generation of workforce that is capable and flexible enough to accommodate changes in production technology. In addition, fostering close collaboration with the private sector could also be an essential part of the solution, and it is very encouraging to see more involvement from large Thai corporates in the process of recruitment and training as of late. (2)  Engineering a “transformative” upgrading of the supply side  In addition to relieving constraints in the labor market, the second reform focus I would like to discuss is the urgent need for a “transformative” upgrading of the supply side. Pursuing growth from labor-intensive activities is no longer a viable option, due to the fact that Thailand would not be able to compete with lower-wage competitors, and also the fact that such strategy is simply unsustainable from a long-term perspective. More importantly, failing to upgrade now will cost us an inestimable amount in the form of missed opportunities. Indeed, it was precisely the inability to engineer a large-scale upgrading, when the time was ripe, that separated our path from peer countries like Taiwan and Korea that started out at a relatively similar income position several decades ago. By using the word “transformative”, I mean that the upgrading process needs to go beyond mere efficient use of workers and capitals. It has to support firms to move up the value chain to higher value-added activities.
Consumption needs to be less dependent on perceived wealth gains, and investment to be more diversified, well beyond the construction sector. This will make participation rates more sustained. For what concerns the Spanish financial sector, it has long been a source of strength and national pride for this country. In many respects, Spain can be a leading example for global financial reform. I will say more on this later in my talk. Spain’s financial system has proved resilient to the shock in the early stage of the crisis. Supported by prudent regulation and supervision, the banking system in this country has built dynamic provisioning cushions during good times. And the traditional role of banking, founded on long-term relationships with customers, has largely been preserved. Looking forward, this is an important asset. But a solid future calls for some areas of adjustment in the way the financial industry behaves. The exceptional support of public policies will, at some point, have to be withdrawn. Private sector confidence in the future will need to replace policy intervention as the main spur of growth. The Asociación de Mercados Financieros and its members are an important link in the chain through which confidence will build and transmit to your customers. The obvious prescription for a sustainable return to stability is for many of you to simply look back at your past of prudent and sound management.