Speech by President of the Government at inauguration of forum entitled "La Razón del Empleo" [The reason for employment]

Madrid

Mr Speaker of the Lower House of Parliament, Mr Speaker of the Upper House of Parliament, Mr Chairman of Atresmedia, senior management of Atresmedia, Mr Chairman and Editor of the daily newspaper "La Razón", public officials, dear friends,

Activating public debate is one of the best ways to strengthen civil society and, for that reason, I wish to start my speech by thanking those in charge of "La Razón" for the great work their daily paper has been performing in this regard for many years now.

The very diverse forums that this paper organises, from tourism to entrepreneurship, including meetings with leading figures from our public life, are a splendid platform for dialogue in order to further examine, as Ortega would say, the current affairs of our time.

As an example of what I am saying, these workshops given over to employment could not be more relevant. No-one is blind to the fact that, from among those issues that most concern the people of Spain, employment is deservedly at the top of the list. Indeed, employment has been the key issue of this term of office, which nears its end; it will be the main priority for the next term of office and probably for several more to come.

As you are aware, employment does not only help those in work to move forward with their life project but employment is also decisive, through National Insurance contributions, for maintaining and improving our public pension system. Employment is also very important, and greatly so for those in work, for maintaining and improving the major fundamental public services, such as healthcare, education, social services, etc.

That is why, I repeat, creating jobs is the main goal of the next term of office, it has also been so in this term of office and it will continue to be so in the time remaining until the end of this term. That is why it is good and necessary to talk about employment, about how to create jobs and better quality jobs. And it is also good, in any walk of life, but above all when talking about employment, to listen to those people who are in the know, to those experts on the labour market, because only through a good diagnosis can you implement the right policies and to make this diagnosis you need to listen to the best people who are precisely those called to this forum.

I also wish to convey to you my special thanks because through your composed analysis, through your evaluation of public policies, and also through your suggestions on how to improve things, you have contributed to achieving this great national project of job creation. You contribute to making this road map possible that we have set: for Spain to return to having 20 million people in work as there were before the crisis started.

Dear friends,

It was a day like today a year ago when I had the pleasure of sharing with those attending a forum similar to this one the data from the Labour Force Survey for the second half of 2014. I remember this very well because we had been waiting for a long time, specifically since my arrival at Moncloa Palace, to hear news like that. That survey clearly showed us that the labour market had done a 180-degree about-turn. Of course, we were and indeed we are very aware of the long road ahead of us, but we are also aware of how extraordinarily difficult it had been to change the direction we were heading in.

Together we had to overcome two major crises; firstly, a financial crisis, and then, a debt crisis. We had to avoid a bailout; which many saw as the only option. We had to make a major effort at fiscal consolidation and approve structural reforms. And we had to do all of that to correct economic imbalances, to improve competitiveness and to grow. It was also very important to maintain, as a conscientious duty, the pillars of our Welfare State at a time in which families most needed help.

So, a year has passed since then, a very tough stage is being left behind and today we have seen the figures from the latest Labour Force Survey which show that this about-turn was not merely circumstantial. It shows us that the improved labour market is structural.

Last year, we recorded a historic figure and one year later and this has been improved upon. To put it another way, if in 2014 we confirmed that we were on the right path, in 2015 we have seen that we are travelling along it with gathering momentum.

The figures we have seen this morning, as the editor of the daily paper 'La Razón' mentioned, are the best employment data ever seen. Never in the history of the Spanish economy, never before have so many jobs been created in a single quarter.

The Labour Force Survey for the second quarter of this year has shown excellent results, with strong job creation and lower unemployment. As regards people in work, the following trends can be highlighted: increased total number of people in work by 411,800, compared with the first quarter of this year, of 2015. Practically all the jobs correspond to the private sector, since the number of people in work in the public sector has remained constant. Aside from this, the creation of jobs is generalised in all sectors, with particularly strong growth in services, industry, agriculture and construction. In annual terms, employment has risen by 513,000 and full-time employment has increased by 430,000, while part-time employment has fallen by 18,000.

There is also another very relevant fact, which is that job creation is exercising an effect on the active population. This quarter, the active population has increased by more than 116,000 people. This shows that job creation is leading to the reincorporation of workers who had become discouraged.

Another important fact is that the number of households in which all its members are in work has risen by 386,000; in other words, there are nearly 400,000 homes more where everyone is in work than in the previous quarter.

The unemployment figures are also positive; the number of unemployed has fallen in the quarter by 295,600 people and, in year-on-year terms, the fall in unemployment is 473,900. This is a very sharp reduction, which is now in its seventh straight quarter and I would like to point something else out: the number of unemployed is now more than half a million people lower than following the first Labour Force Survey (LFS) of this term of office, in the first quarter of 2012.

We had always set our goal as being able to say to the people of Spain that at the end of this term of office Spain would have, after having had to take many tough decisions and overcome many hurdles, as you are aware… We wanted to say to the people of Spain at the end of this term of office that there are now more people contributing to the social security system than at the start; that there are more people in work than at the start and that there are fewer people unemployed than at the start of this term of office. Well, we do not need to wait until the end of this term of office, because we can already say that there are more people contributing to the social security system than in December 2011, there are fewer people unemployed and there are more people in work after today's announcement of the LFS figures.

Having said all this, we should make one thing very clear, because what is important here, as in any other walk of life, is the future. Being on the right path does not mean that we can allow ourselves to drop our guard. There are still many Spaniards and many families having a hard time and in a difficult situation, and the government is not oblivious to that or sitting on its haunches. That is why we know that we must continue working and undertaking reforms right until the last hurdle because reforms make possible that which was quite simply unthinkable before.

At present, there is no lack of people saying that reaching 20 million in work is impossible. We will see. To all those people I want to say that four years ago there were also many people saying that it was impossible to stop jobs being shed in the middle of a recession, but between us all we managed to achieve that. Agreements in companies allowed a very serious economic situation not to translate into a greater number of jobs being shed; quite the opposite, 300,000 jobs were saved that way.

Four years ago, some people were also saying that in order to create jobs Spain needed to grow at a rate of 2.5%. We also showed that this was not the case, because with the reforms undertaken jobs started to be created, for the first time in our history, with levels of growth of 1%.

A few years ago, some people were also saying that you could only grow during a crisis with temporary jobs, and that it was impossible to see an increase in permanent employment. Well, fortunately that has not been the case either. We have managed to ensure that Spain has come out of an economic crisis with increases in permanent employment.

And the most important and positive thing is that our labour market is contributing to a cross-cutting change; a change for the better that affects all our economic sectors, across all the provinces in Spain, all groups of people and all age groups.

At other times of recovery, for example, job creation was tied in to one or several specific sectors. Now, however, jobs are being created in the service sector, in construction, in agriculture and in industry, in such an important sector as R&D, jobs are being created at a rate of 5%, almost 1.5% above the average. And jobs are also being created right across all age groups.

There is still a lot, a great deal, to do, I repeat, but this recovery is also reaching the youngest people and that is something that has not occurred in any other recovery. When we came out of the crisis in 1993, we had to wait two years to see youth employment; however, employment among those under the age of 25 is growing at a rate of 7%, almost double the national average.

And we can also see today something we had never seen before, and that is that we are creating jobs in all the autonomous regions and in all the provinces. And something else important; we are also creating jobs among all groups, both men and women, the self-employed, salaried workers and persons with disabilities. And here there is a specific figure that I believe we should must us all be proud of as a society: in 2014, 200,000 contracts were signed with persons with disabilities, more than ever before.

In short, today we can say something that was unthinkable just a few years ago: we have gone from contributing half the additional unemployed in Europe to creating half the additional jobs. This change is important and it is a change with a social face and with specific named individuals. We have done this while remaining realistic and, if you will allow me, through humility, because it is not the government that creates jobs. We do not have machines that create jobs, or magic wands to make them appear out of thin air; what the government has done is foster and incentivise their creation by being heavily involved in supporting those who create them: companies, entrepreneurs, independent contractors, SMEs and all those people that are trained to give value and sense to their lives and to our lives in society.

To all of them, and also to the Spanish people as a whole, the reforms that this government is pushing through are directed, and there have been many of them, as you are aware, and major reforms, because these have been important, far-reaching reforms, and we hope that they will last for a long time, the labour reform, the energy reform, the reform of the Budgetary Stability Act, the re-structuring of our financial sector which was so difficult, so complex and so far-reaching, the reform of the public administration, the Market Unity Act, etc.

I am not going to go into details, you are well aware of them, and it is not appropriate on a day like today, but I would like to refer to two issues which, in my opinion, are important: first, taxation, to the recently-approved tax reform, and second, to the issue of training, a key issue for the future of the people of Spain and for our country.

Today Spain can lower its taxes because its economy allows it to do so, because, furthermore, the people of Spain want this and because lowering taxes also helps to create jobs. The financial stranglehold, because that is what it was, that had its grip when we came to power, made it impossible back then, and after only 10 days in power as the President of the Government, I was forced to raise Personal Income Tax. If I had not done this, I would probably have been criticised less back then, but I am unaware of what the effects would have been for the Spanish economy as a whole. My feeling is that nothing good.

But what is true is that, as and when that has been possible, we have lowered taxes and we have now taken a decision, just a short time ago, to bring forward the second part of the reform of Personal Income Tax, which was going to come into effect in 2016, to 1 July 2015. Hence, as happened in the first half of the year, withholdings will once again drop as a way to bring forward the tax break that came into force, I repeat, in July. This will allow taxpayers to have more money in their pockets and in their current accounts, and they will have more money available to spend how they see fit during the rest of the year.

This reduction means an injection into the real economy, into the economy of people; 1.5 billion additional euros in 2015 and, through that, we will benefit both individual taxpayers in their payslips, and the country as a whole, because that money will help people to continue saving and to continue spending.

To the extent that tax revenues permit, and to the extent that we continue containing the public deficit, which is a goal that we cannot renounce in any way, since it has been key in Spain's economic recovery; to the extent that these two requirements are met - increased tax revenues and controlled public spending - we will lower taxes yet again.

We have already done so with Personal Income Tax and the vast majority of taxpayers will pay less at the end of 2015 than in 2011; we have done this with Corporate Income Tax - this started in the year 2015 and will continue in 2016 - and we have also taken certain important decisions that affect entrepreneurs, such as the flat-rate of 50 euros for National Insurance contributions, and not long ago we declared the first 500 euros of salary to be exempt for those people who hire workers on permanent employment contracts.

I repeat, to the extent that tax revenues and the controlled public deficit so allow, we will once again lower taxes in our country.

Second important comment - I wanted to talk about taxes and I also wanted to talk about training - to help further drive job creation, and, in order for us to enjoy quality jobs, above all, training is essential. Not long ago, I read - I cannot remember exactly where, but I read this - that in Europe it has not been possible to cover hundreds of thousands of jobs in the digital world due to a lack of worker qualifications. That is a truly devastating figure.

Hence, the conclusion is that we must continue working to make training, and looking after talent, the centre of our policies. Spain is staking its future on training. This is what allows employment expectations and everyone's salaries to improve; this is key to improving the competitiveness of our companies and socially it is the best policy for equal opportunities.

I sincerely believe that we can all truly feel proud, not just the government, of all the reforms carried out in terms of training. We have implemented a far-reaching reform of the Vocational Employment Training System, which was a major gambit for us as a society. In this area, we have successfully introduced the Dual Vocational Training model which allows people to work and train at the same time, and which has led to such good results in other countries. I have personally had the opportunity to see that in operation. We are no exception. Since the labour reform in 2012 and until May 2015, 386,936 young people have started dual training through training and apprenticeship contracts. In addition to this the National Professional Certificate List has been completed, which has also demonstrated its efficiency, as 64% of those unemployed that have signed up to this specified training have since found work.

Moreover, it is good to remember that training now forms part of the individual rights of workers. That was established by the labour reform, because training is also part of the policy of not leaving anyone behind that is characterising the Spanish recovery.

Hence, here we also have one of the major goals for the future of our country.

I will now draw my speech to a close. I said at the beginning that one year ago today Spain registered an about-turn of 180 degrees in the labour market. We were the European leaders in shedding jobs, whereas now we are the European leaders in the creation of jobs.

That is why, one year on, we can assert that this change in direction does not respond to circumstances nor it is situational, but rather it is the very structure that has changed and that is why what this change shows us is that some policies are not the same as others. This shows us that ideas have consequences and that this remains a time for seriousness and for reforms, and not for counter-reforms or trips down memory lane, because I would simply refer to the facts: certain events and a reformist paralysis led us to a sad record of job losses; reforms and seriousness is leading us to break records in terms of job creation.

Hence, this is not the time to return to the past, but rather to confirm our place in the future that waits for us and work together towards the future of Spain. The government will continue working on this future. We believe that there is no time to lose. Our aim is to hit the figure of 20 million people in work that will certify the definitive end of the crisis which is increasingly close and we know that, by avoiding distractions, through reforms, by counting on everyone, by lowering taxes and committing to training, this goal is within our grasp. And we will do this. We will reach 20 million people in work. I am counting on all of you and you can count on us, because quality jobs, as I said to you at the start, have been, are and will remain the priority of my government.

Thank you very much.