Spain plans new reforms of the labor market

The finance Spanish Minister, Elena Salgado maintained on Tuesday the forecast of growth of the government in 1,3 % of the GDP(GROSS DOMESTIC PRODUCT) for 2011, and announced new reforms supposed to reassure financial markets on the solidity of the Spanish economy.
The government would reveal during the next months of the reforms to reduce the black market in Spain, to liberalize the opening hours of the businesses and modify the pension plan of the state employees. But it’s quite controversial because the leader of the government José Luis Rodriguez Zapatero assured that Spain did not need new measures of budgetary economy.
While markets are afraid that Spain has to ask in his turn for a grant, Elena Salgado asserted that his country was on the road of the resumption. She said that Spain continue to believe that it shall have a 1,3 % growth in 2011 “. The Spanish central bank count on it, on a growth limited to 0,8 % of the GDP(GROSS DOMESTIC PRODUCT).
Minister of Finance besides considered temporary the sharp increase in the interest rates registered on Monday by the Spanish government during a bond issue. This increase, which translates the fears of markets on the future of Spain, is due to the uncertainties on the Greek debt and the speculations on the attitude of the new Finnish Parliament towards possible new rescue plans.

One thought on “Spain plans new reforms of the labor market

  1. I believe that José Luis Rodriguez Zapatero’s comment is a bit out of place, as, with one of the highest unemployment rates of Europe, Spain is definitely in need of some sort of change regarding to where is puts its budget money.

    Whether the problem is the black market or simply bad spending initiatives by the government, I suppose we will see as these reforms are put into place. As the black market largely does not pay taxes, this will certainly raise revenue for the government; however, if their spending policies are flawed in the first place, then this increase in revenue will have little positive effect on the country as a whole as money will continue to be pumped into funding unnecessary or contradictory initiatives.

    While the black market is certainly part of the problem, to fix a failing system you must look at it as a whole rather than simply focus in on certain parts. This trend is reciprocated around the globe: when politicians rather than economists have control of fiscal budgets, the results are usually not positive.


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