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Interview: Reducing unemployment, raising wages, challenges of next gov't in Spain

Xinhua, June 25, 2016 Adjust font size:

Reducing the high number of unemployed people and raising wages are the major challenges that Spain's new government will face after the general elections to be held on Sunday.

This is the conclusion of Alfredo Pastor, Emeritus Professor of Economics at IESE Business School in Barcelona and Spain's Secretary of State for Economic Affairs between 1993 and 1995.

"Our problem now is creating a lot of jobs and raise wages, both. Although it is very difficult to do both things at once," Pastor told Xinhua in a recent interview.

"We should plan to create a lot of jobs and have higher wages within 2, 5, 10 or 20 years because this is what other European countries do," Pastor said, noting that "we have to create better jobs that allow having higher wages, and this takes time."

"Deepening within the labor reform, saying that we have to follow a low-wage strategy, it is a mistake," he said.

According to Pastor, the next government should consider two main things, deciding whether to raise or not the minimum wage and reforming the country's employment services especially the training and formation offered.

On the other hand, Pastor said "it should be carefully considered to raise the minimum wage," he said, while explaining that a rise would not produce necessarily unemployment and "for some low-qualified jobs the only solution is to raise the minimum wage, because according to the market they will be low."

Other challenges, such as the reduction of public debt and deficit and, the pension system and economic growth sustainability, among others, "always brings us to the basic problem, we have high unemployment and low wages," he said.

"With low employment and low wages our pension system will not be sustainable," Pastor said.

According to the Inquest into the Active Population (EPA) in the first quarter of the year there were 4.8 million unemployed people in the country, while the minimum wage stands at about 655 euros (about 727 U.S. dollars) per month.

Regarding the deficit, "if there is no growth and productivity, tax revenues do not rise," Pastor said, "and major changes in income are given to lower unemployment and higher wages."

The same applies to economic growth, "the Spanish growth comes from domestic demand, but it can not grow indefinitely if wages do not rise again."

The Bank of Spain recently predicted growth of 2.7 percent for this year, 2.3 percent in 2017 and 2.1 percent in 2018.

"The economic problem we have is that, and it is very difficult, it is not an easy problem," Pastor said. Endit