Spain has turned a corner, says PM Rajoy

The Spanish Prime Minister, Mariano Rajoy, insists that 2014 will be better for the country

Spain’s Prime Minister Mariano Rajoy has given a frank and candid interview with leading British, Spanish, French and German newspapers in which he declares that Spain has turned a corner and he is positive about what 2014 may hold.

Despite a 12 months that may have looked disastrous on paper – youth unemployment sticking stubbornly above 50 per cent, debt levels reaching 100 per cent of GDP, and only slight growth following a two-year recession – Rajoy insists that his austerity efforts were the right thing to do, and that tough labour reforms have helped create a more competitive employment landscape for all concerned…

“Last year, the debate was over when Spain would get a bailout, and this year the debate is over when Spain will recover,” Rajoy said in his interview with the media, going on to point at recent stats that show unemployment fell for the first November in 16 years.

“Since June 2007,” he continued, “the difference in the unemployment numbers for the corresponding month of the year before has been getting worse and worse and worse. There was a moment, in 2009, when comparing January 2009 and January 2008, one million extra people had registered as unemployed. But now, for the first time, in October this year, this trend changed.”

Rajoy’s claims can be backed up by statistics that show there were approximately 2,500 fewer people registered as unemployed in November compared to the preceding month. The Prime Minister, however, is not satisfied with that – even though he was at pains to point out that any sign of recovery, no matter how small, should be treated with cautious optimism.

Spain’s thriving export industry – spearheaded by a powerful car industry that has attracted foreign investors and engineered a return of confidence in construction and property – has helped steer the economy along the right path and away from fears that Spain could become the next Greece.

The country is not out of intensive care just yet, but all the recovery signs are good: foreign investment, falling unemployment, job creation, the end of recession, an account surplus – they all point to an economy that has been through the worst and emerged bruised but bullish on the other side.

Having faced an embezzlement scandal and criticism for his tough austerity measures, Rajoy is no doubt looking forward to the end of 2013, which has been a difficult year despite the modicum of success his government has achieved. The Prime Minister was at pains to point out just how difficult some of the reforms have been.

“It’s evident that today there are far fewer people working than five years ago, that is to say that since 2008 things have not gone well in terms of employment,” Rajoy said. “Logically, these people are experiencing difficult times, but it’s also true that in Spain there is a very important safety net, namely public services, unemployment benefit … which have allowed people to attain a dignified standard of living.”

It is now easier for companies to fire staff: hardly an inspiring soundbite for the masses, but actually something that has almost become music to the ears of many Spanish youngsters. Previously inflexible and expensive labour laws meant it was extremely difficult to get rid of underperforming permanent members of staff, which created a sense of employment ennui, and actually may have helped exacerbate Spain’s economic problems. With no more ‘jobs for life’, the hope is that dynamic employees thrive, and those that rest on their laurels get turfed out. Further changes are also afoot, confirmed Rajoy.

“In difficult times, it is better to go for lower salaries and maintain the highest number of people in work,” said Rajoy in defending the rise of part-time contracts. “I would prefer full-time contracts, of course… but short-term contracts can help people out.”

Rajoy also called for greater EU integration in banking and tax collection, adding that even though the worst appears to be over, closer union in the future will help avert similar crises.