This is why it’s crucial to eliminate the obstacles to offering jobs to young and old, to everybody in fact. With the right institutions in place, not only would entrepreneurs be able to offer a higher number of jobs that were profitable for their companies but, more importantly, workers would have the option to decide whether they wanted to accept these jobs or not. Because the problem now is that, with no jobs being offered, they do not even have the possibility of deciding. It is sometimes claimed that, whatever our legal and institutional framework, unemployment can only fall if we manage to substantially raise the GDP growth rate. Admittedly, past experience shows that, on average, the Spanish economy has created jobs when it has been able to grow at over 2%. But these relationships are not unmovable since they are precisely an outcome of the institutional framework in place. If structural changes are made to eliminate the obstacles to offering jobs, lower unemployment rates with lower GDP growth rates may be attained. The reforms aimed at increasing the supply of jobs are, moreover, absolutely unavoidable now we are in the Monetary Union. And this should be stressed because, although I believe there is broad consensus on the need to adjust our economy, there is still not sufficient recognition that this adjustment must be different from those made when we had the possibility of devaluing our currency.
I am convinced that, just as the need for fiscal consolidation or pension reform was ultimately recognised, so too will the unavoidable need to change our legal and institutional framework in such a way as to allow entrepreneurs to increase the supply of jobs and workers to decide whether to take them. In the past 50 years, Spain has made numerous reforms across its economic structure. Tariffs have been lifted and companies privatised, and competition has been fomented in many industries. Yet the institutional framework for employment has remained practically and essentially unchanged since the onset of democracy. Meanwhile, in recent decades, other economies, most notably the Nordic countries, have introduced so-called flexicurity, i.e. they have introduced the flexibility needed to reduce the unemployment rate and to increase wages where productivity is growing most, and they have at the same time maintained and even strengthened the social protection which is a hallmark of our European model of society. Finally, the measures I have mentioned are not the only ones that should be adopted. The reform agenda is an extensive one. For instance, it is essential to reduce administrative burdens, to simplify and coordinate economic regulation, and to alter oligopolistic structures, as was recently recommended by the Competition Board for the case of oil products. We could draw up a very extensive list of measures, but you will understand – and I hope appreciate – that, with limited time at my disposal, I have confined myself to what I consider most important and pressing.