Speech by President of the Government at closing event of workshops entitled "Industry in Spain. Reflections", organised by UGT

Burgos

Mr President of the Regional Government of Castile and Leon, Madam Minister for Employment, other public officials, Mr General Secretary of the General Union of Workers [Spanish acronym: UGT), Mr Secretary of FICA, ladies and gentlemen, dear friends,

I want to start my speech by thanking the General Secretary of the UGT and his fellow managerial staff for inviting me to these workshops. I feel truly honoured. That is not flattery; I say it because I feel it, and I share the reflections that we have just heard in the last part of his speech. Thank you very much.

Secondly, I wish to congratulate the General Union of Workers on its initiative. I fully believe that you have got it right. Debating industrial policy means debating, talking, listening to others and proposing decisions that may or may not be taken in the future on an important issue. In the times in which we are living, in which the important issues do not seem to get all the attention of many people, believe me that it is very comforting to be able to attend a meeting of this nature.

So, thank you very much and many congratulations.

I have come here to offer my opinion, which is exactly what I have been asked to do, in the same way as all the others who have taken part in these workshops will have done, I imagine.

I would like to say to you that this is a very broad issue, with many influencing factors. There are clearly many factors that may influence a good or effective industrial policy. I cannot mention all of them in a speech of this nature, and hence, it seemed appropriate to me to choose some issues that I believe may also be important; I repeat, there may be others that I will omit to mention.

You are all very well aware of what was and remains the main goal of the government I have headed up in recent times: the main goal was - as it could only be - to recover economic activity, and consequently, create jobs. That was and is, and will have to continue to be, the priority in our country for a long time to come.

After five years of recession and unprecedented job losses in the economic history of our country, the Spanish economy has enjoyed three years of economic growth and two straight years at a rate that doubles the Eurozone average, and moreover, this has led to the creation of half a million jobs a year since 2014. In my opinion, and I am fully aware that there is still a lot to be done, and hence this is still the main challenge for the future, this is a collective success, because we went through the worst economic crisis that our country has gone through in many years. This is a collective success due to the efforts made by the Spanish people, firstly; to the reforms undertaken by the government and also to the responsibility shown by the social stakeholders.

Even though, as you know, during the course of this long crisis there have been times we have not agreed on everything, I have to state for the record that the social stakeholders, and particularly the General Union of Workers, have undoubtedly contributed to the change of course currently being enjoyed by the Spanish economy, and not only because you have acted responsibly at times of extreme difficulty, but also because you have made concrete and important contributions for our country. Among other things, I could quote your participation in the 2nd Employment and Collective Bargaining Agreement, the PREPARA Plan, the Active Employment Policies Programme, the Entrepreneurship and Youth Employment Strategy and the so-called Youth Guarantee.

Ladies and gentlemen,

2017 has also started strongly. In the first half of this year we will recover the level of GDP we enjoyed before the start of the crisis. This is a truly incredible year, because between 2009 and 2013 we lost 10% of our Gross Domestic Product; well now, finally, we are going to recover it this year. And in terms of employment, the figures for April - I will only mention these - show that we already have more than 18 million people, specifically 18,122,122, paying into the social security system, and hence, we are on the path to recovering the figure of 20 million people in work, which was the highest figure we achieved before the crisis. I believe that, if we maintain our economic policy in this direction, this will happen by the end of 2019.

Moreover, everyone expects the Spanish economy to continue growing and creating jobs in a sustained manner. That is why the international bodies have recently revised upwards their forecasts for the growth of the Spanish economy for the years 2017 and 2018. The government has done the same and we expect our economy to grow by at least 2.7% this year.

Furthermore, for the first time in a long time, economic growth is balanced: we are growing because we produce and because we export, and not because we are getting into debt. This can be seen in the surplus in our current account for the last four years, which will continue, if we do things right, until the year 2020.

In this regard, I want to say to all of you what I think about one event that is very important for me, which happened yesterday and is the approval of the General State Budget. The approval of the Budget is going to help growth, because 500,000 jobs are going to be created in 2017; this will send out a message of confidence in Spain both within our borders and beyond them, and will provide a horizon of stability and future for social and economic stakeholders.

So, ladies and gentlemen,

The industrial sector is closely related to everything I have mentioned in a summarised manner, in our economic recovery and also in job creation. I will give you a few figures: the industrial sector currently represents 16% of the Spanish Gross Domestic Product and almost 14% of all jobs; 33% of the Gross Domestic Product of Burgos, which is the most important province from an industrial perspective in proportion to its share in our country.

The Industrial Production Index, which had fallen continuously during the crisis, has now enjoyed 41 straight months in positive rates and during this period industrial production has grown by 8%.

The industrial sector has also significantly contributed to the balanced growth of the Spanish economy that I referred to earlier. Let me give you a figure: while in 2011 industrial goods passed through customs for a total just under 18 billion euros a month, in 2017 this figure is now in excess of 23 billion euros - the average for the first quarter of 2017 - an increase of almost 28%.

As regards employment, this has also been recovered in the industrial sector since 2014. Hence, according to the Labour Force Survey for the first quarter of this year, job creation is growing by 3.6%, above the average of the economy as a whole, which stands at 2.7%. Furthermore, almost 275,000 jobs have now been recovered of those lost during the crisis in the sector and we have now enjoyed 36 straight months of increases in NI contributors.

The industrial sector, furthermore, as we were reminded this morning, is rich in permanent employment, in productivity and in investment in R&D. Hence, for example, its temporary employment rate is lower than the average and, over the last year, permanent employment has risen by close on 16%, a higher figure than the national average by more than three points. Moreover, since it is a leading sector in productivity, its average remuneration also exceeds other sectors.

Ladies and gentlemen,

Committing to what we must commit to, which is economic growth and job creation in the coming years, requires backing a strong and competitive industrial sector; an industrial sector that must be capable of adapting to a changing and globalised environment, and in particular, to the challenges and opportunities of the digital economy. The goal, shared by Spain and the European Union, as the General Secretary of the UGT mentioned in his earlier speech, of the industrial sector holding a weighting of 20% of GDP by 2020, comes within the framework of this context.

In order to tackle these challenges, it is necessary to carry out, first of all, and for me this is very important, suitable economic policies. Let's not forget this, suitable economic policies are good for the industrial sector and for the rest of the sectors that make up what is the Spanish economy.

From the very outset, we implemented an economic policy that sought to correct, on the one hand, our macro-economic imbalances and, on the other hand, strengthen the competitiveness of the economy, and in particular of our industry, by carrying out the necessary structural reforms. If we receive sufficient support, we will continue doing this over the course of this legislature.

Investment is an essential factor for industry, as will not have escaped the attention of anyone here, and in order to invest you need confidence, stability and low financial costs. That is why I said before that it was important for us to have been able to approve the General State Budget yesterday.

The financial reform, the reduction of the public deficit and the tax reform are elements that directly affect boosting investment, and hence, directly affect industry. Furthermore, a sector as open as industry, which competes, let's not forget, globally and which needs to be constantly adapting, particularly benefits from the flexible and efficient functioning of the economy, and that is what the structural reforms we have implemented seek to do.

On another note, and this is undoubtedly a very important issue and one of the main challenges for the future, industry is a major user of energy. Approximately 70% of all electricity consumption, which is easy to say, corresponds to industry and that is why energy - I agree with what we heard - is a key factor in competitiveness for companies and for industrial jobs. That is why the energy reform we carried out was essential for cutting back, although this is still not enough, the spiralling growth of the prices of this necessary resource.

Having reached this point, what industrial policy should Spain undertake? In my opinion, we must persevere along these lines and build on what we have already done, rather than undo it. And it would be good, as was mentioned here, if all of us involved were to do this by common agreement: the government, social stakeholders and political parties. You speak about a State Pact for Industry. That seems like a good idea to me. We could call this all working together in the same direction to have a strong industrial sector that generates jobs in the globalised economy. Hence, we must work to that end and I can state that the government is prepared to do that.

Ladies and gentlemen,

In addition, as I said earlier, to building on what has already been done and in addition to how important a reasonable economic policy is - I apologise for repeating this - for industrial policy, I would like to refer to three specific areas: the digital challenge, energy and specific sector industrial policies and SMEs.

I will start by mentioning the digital challenge, which is a genuine revolution that our economy in general, and industry in particular, must embrace.

The introduction of digital technologies in all areas of the productive fabric is a critical element in competition today, and our companies, particularly industry, must adapt. From this perspective, we have the Connected Industry Plan 4.0, which firmly supports the necessary digital transformation of our industry by boosting the industrial sectors that will play a leading role in the future.

Furthermore, and to harness the opportunities of the digital sector, we are boosting the rollout of new generation networks so that companies can have physical access to digital infrastructure. Not long ago, the Council of Ministers authorised the calls for proposals for the extension of new generation broadband for a sum of 100 million euros, an increase of 58% - we consider this important - on last year's call for proposals.

The government is also boosting the digitalisation of public services through, for example, digital medical histories, the interoperable health card and work to make progress on the Social Card. I believe that all of this will foster the development of an industrial sector associated with new technologies.

In relation to energy - as I said earlier, a key issue - we must take responsible and balanced decisions, allowing us to meet our environmental targets and the goals for the implementation of new renewable technologies while helping our industry to be more competitive. I am referring to the following: avoiding an energy deficit to be generated again as a result of political decisions. We are committed to not raising the part of the energy bill that depends on the government: regulated costs. This would harm competitiveness, in particular, of our industry and, in fact, since the reform of the electricity sector, which was one of the most difficult things we have had to tackle in recent years, these regulated costs have not risen any year and, in 2016, fell by 2.8%. That is the direction to take.

Second, the decisions on which sources of electricity generation should be produced must also be taken responsibly, as the General Secretary of the UGT said in his speech, to ensure that access to energy is acquired at stable and competitive prices in the market. In this regard, I agree, it is fundamental for us to have all new technologies available. For example, the latest auctions of renewable energies took place at zero cost for the consumer.

Third, we will continue to approve specific programmes to support industrial efficiency. Since, 2014, more than 100 million euros have been allocated to energy efficiency policies in industry, which have mobilised investments of more than 451 million euros, thanks to the National Energy Efficiency Fund. And in the upcoming calls for proposals, it is expected that industry will receive an advance payment of 40% of the subsidies immediately upon committing to this type of project.

Fourth, and this is another key issue, albeit one that is difficult, we must continue to boost interconnections with the European energy market. I repeat, this is a key issue. It is an issue that depends on many factors; we have held some high-level meetings here, just a few days ago I was in Portugal and our idea is for the Governments of France and Portugal and the European Commission to meet again with the Government of Spain to give a further boost to electricity interconnections which, I repeat, are fundamental.

Lastly, I want to say that, for the first time, the General State Budget, approved yesterday, contains important items to help reduce energy costs for electricity-intensive industries.

Ladies and gentlemen,

As regards a specific industrial policy, we are setting up a new integrating strategic framework of all the important elements, such as, by way of example, the digitalisation of our industrial fabric, the employability of workers and innovation, which I am aware is another key issue; but in a Budget such as this, with fewer funds to spend than in 2016 because we still have to continue reducing the public deficit, the item on R&D+i has risen by 4.3%, and this must definitely be raised much more in the future, backed up by the collaboration of the whole of the private sector.

In particular, in order to improve the employability of workers, what we have just heard here a while ago is also very important: dual vocational training. This is easier for large corporations and more difficult for SMEs, but this is a key issue and workers must also adapt to new technologies.

Not long ago, the Heads of State and Government were presented with a report at the European Council that spoke about the hundreds of thousands of jobs, which is easy to say, that have been left vacant in Europe as a whole for over a year because of the lack of qualified individuals on matters related to new technologies.

This is undoubtedly another of the major challenges for the future.

Furthermore, industrial policy, the new strategic framework, must be complemented by sector agendas that establish roadmaps to boost the competitiveness of the main sectors. We have started work in the automotive sector, which is also important, in Castile and Leon, and in other sectors, such as the aeronautics, chemicals, space, capital goods and the agri-food sectors, also very important - this last sector competing with the automotive sector for second place in the ranking of Spanish exports; and you also have the cement, paper, fashion and textile sectors.

Finally, this new industrial framework would be incomplete if it wasn't accompanied by a strategy to boost SMEs, a strategy based on a realistic fact, which we should never forget; in the new economy, SMEs must also play a leading role in industrial production. We are working to eliminate barriers and reduce costs to start-up new businesses, to grow and expand, fostering a regulatory framework that is favourable to entrepreneurship and business growth. We must create facilities to overcome one of the greatest obstacles to our small- and medium-sized enterprises, which is access to financing in order to make industrial investments.

Ladies and gentlemen,

I will draw to a close now. Our economic policy - this is a message that I once again repeat in this speech, because I consider it to be important - is good for growth and job creation, and so that our industry has the elements necessary to adapt and compete in a world that is increasingly complex, more open and ever-changing.

The goal is to have a strong industrial sector that generates jobs, is capable of innovating and of conquering new markets. All of this will bring greater development, more growth, more work, better jobs, higher salaries and greater well-being. And I believe we should all devote ourselves to this in the near future. If we want to talk, to make pacts and reach agreements, it is so that things go better for everyone, for all the Spanish people, which is supposedly what we are all engaged in when undertaking public activities.

We must work together and social dialogue and political agreement are fundamental elements for achieving our goals. Furthermore, we are faced with a scenario that will require new agreements. We all share one goal, which is for Spain and its industrial sector to be able to successfully tackle the challenges of globalisation and the digital transformation. Hence, I would say that it is not only necessary to all work together, I would say that it is almost essential if we don't want ridicule ourselves, if you will forgive the expression.

We have found a way to reach agreements in the past and, if we are broad-minded, responsible and generous, I am absolutely convinced that we will also be able to do this in the future. Prosperity in our work and our social model are contained in this challenge. We sometimes punish ourselves, on occasions even mercilessly, with the bad news that we see in our country, but growth and job creation require companies, investment, a strong industrial sector, but economic growth and employment are the guarantee that one of the major achievements of very few countries in the world - something we should not forget - like the Welfare State, with its pensions, with its public health system and with universal education - can be maintained in the future.

We are now also debating and talking with the trade unions about the issue of pensions. This is no joke. Spending on pensions accounts for 40% of the Budget of the government that I head up at this time; 40%. There are 9.75 million pensioners in Spain. It is very important to do things well to maintain this in the future, in a country, such as ours, which has the second longest life expectancy, behind only Japan.

Well, this issue and maintaining our public health system, which is getting better and better, where demands are increasingly greater, undoubtedly require that we reach an understanding and that we put aside some things that some people erroneously call "politics". Politics means doing things broad-mindedly, looking at what is important, taking decisions that must be taken and not concerning oneself with gossip, which recently is something that we have unfortunately all become too used to.

Thank you very much. I will repeat what I said at the beginning: it has been an honour to come here. This is the first time I have spoken at an event organised by the General Union of Workers after 35 years in politics. I'm glad it has finally happened. Thank you.