Wednesday, 24 February 2010

These days in Spain

In the past two weeks, the Spanish government has been trying to get support from political parties for a "national Pact". The Pact is sought to solve the current crisis, although it is not clear what would its content be. The largest opposition party does not want to pact anything with the Government since its approval rate and chances of winning an election are now higher than ever in the past 6 years. Pact or no pact, the blame gets diluted, some say the crisis started with the financial crisis in the US, some say that it started with the PSOE, some say that the crisis will end soon, some say that it will get worse.
Before the media got ofuscated with the "Pact," the economic debate was focused on the labor market. The opposition and the Governor of the Bank of Spain (who was politically linked to the ruling party) ask for a more flexible labor market while the Government claims the labor market is flexible enough. As far as I can understand, the Government has basically introduced no important reforms on the labor market except for two proposals in the recent weeks: 1) change the number of years used in the computation of the pensions; 2) increase the pension age to 67. The latter faced fierce opposition from the labor unions who, for the first time, protested in the streets of Madrid, Barcelona and Valencia earlier this week.

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