In the domestic arena, the parliamentary fragmentation that has characterised national politics in recent years also generates uncertainty over the course of some of the main economic policies, in relation both to the necessary process of budgetary consolidation and to the likewise much-needed adoption of new structural reforms enabling the economy’s growth potential to be increased. Moreover, a further rise in uncertainty, associated with the political situation in Catalonia, continues to pose an additional risk to economic stability, especially in the Catalonian region. Achievements and limits of the recovery The Spanish economy has completed a growth phase of five years. Specifically, since end2013, GDP has grown by 14% in cumulative terms, having exceeded since mid-2017 its pre-crisis level. Some of the structural reforms launched during the recession will have contributed to this recovery. These include, on the domestic front, the labour market reform, the restructuring and clean-up of credit institutions, pension system reforms and the headway in fiscal consolidation. And at the European level, we may mention the various measures approved in recent years, including most notably the start-up of the Banking Union. Yet a series of more transitory – though persistent – factors has also contributed decisively to the momentum of the recovery. These factors include the role played by the ECB’s monetary policy and the implementation of an expansionary fiscal policy in recent years, combined with the significant reduction in oil prices from mid-2014 to early 2016 and, subsequently, the improvements in external markets.
In this respect, the empirical evidence available on 9/14  the effects of increases in the minimum wage offers a wide variety of results, although in general, it tends to suggest that an increase in the minimum wage has a negative – although limited – effect on aggregate employment in the economy. Nonetheless, according to this same evidence, the impact on the probability of job loss is significant in the case of certain groups, such as lesser-skilled youths and elderly workers, whose unemployment rate is still very high and whose level of productivity is below the average. The level of the national minimum wage and its annual increases should therefore be designed bearing in mind the productivity of the workers affected and their level of employability if it is wished to avoid undesirable effects, in the form of job loss and increased inequality. To address the challenges of our labour market, economic policy should firstly move on evaluating active policies, especially among the lesser-skilled, in order to focus resources on those measures most effective with a view to increasing employability. Secondly, future changes in the labour market should serve to make progress in reducing temporary employment and excessive job turnover, without hindering job creation and, in particular, permanent job hires. Thirdly, mechanisms should be set in place to provide for a greater alignment of each firm’s wage conditions with their level of productivity.