Turbulent and misunderstood relationship between economic growth and employment in Spain
Juan Francisco Jimeno, Emilio Ontiveros Baeza, Guillermo de la Dehesa Romero and Miguel Jiménez Cabezas
On 28 February 2017, the Foundation organised the dialogue "Turbulent and misunderstood relationship between economic growth and employment in Spain" on the occasion of the presentation of the book "Growth and Employment" by Juan Francisco Jimeno, published by RBA. In addition to the author, Emilio Ontiveros Baeza, Guillermo de la Dehesa Romero and Miguel Jiménez Cabezas (moderator) participated in the dialogue.
From the political and media spheres it is customary to establish a simple and direct link between economic growth and job creation. However, this relationship is far from being as clear-cut as it is made out to be. Expanding job opportunities and increasing GDP depend jointly on a host of factors that are interrelated in a complex way. "Growth and Employment" reveals the macroeconomic keys that condition the labour market, denounces some common fallacies and illustrates its arguments by applying them to today's Spain. And not only does it analyse the present, but also dares to give clues as to how demographic, technological and environmental developments will determine the future of employment in the coming decades.
Juan Francisco Jimeno holds a PhD in Economics from MIT, has been a professor at the London School of Economics and the University of Alcalá de Henares and a researcher at Fedea, and is currently President of the Spanish Economic Association. In his long career he has made a decisive contribution to our understanding of the functioning of the Spanish labour market in areas as varied as collective bargaining, employment protection and temporary contracts, labour reforms, unemployment, immigration, education performance and pensions.
Emilio Ontiveros Baeza holds a degree and PhD in Economics and Business Administration. He worked for more than seven years in national industrial companies before beginning his career as a university professor. Professor of Business Economics (Universidad Autónoma de Madrid), where he was Vice-Chancellor for four years. Founder, in 1987, and Chairman of Afi (Analistas Financieros Internacionales). Author of several books and numerous articles and contributions to specialist journals. He is a regular contributor to various media. He has received several awards for his research and dissemination of economics. He has been a Fellow of the Real Colegio Complutense, at Harvard University, and a visiting scholar at the Wharton School - University of Pennsylvania. He is a member of the Editorial Boards of several scientific and professional publications and of the Boards of Directors of several companies. He has been Director of the Revista Economistas since its foundation until December 2011. He is Chairman of the Social Council of the University of Castilla la Mancha, and a member of the Boards of Directors or Advisory Boards of several companies and institutions.
Guillermo de la Dehesa Romero is a Commercial Technician and State Economist and Head of Office at the Bank of Spain (on leave of absence). He was Secretary of State for Economy, Secretary General for Trade, CEO of Banco Pastor, S.A. and international advisor to Goldman Sachs International. He is currently non-executive vice-chairman of Amadeus IT Holding, S.A., honorary chairman of the Centre for Economic Policy Research (CEPR) in London, member of the Group of Thirty in Washington, chairman of the board of trustees of IE Business School, non-executive chairman of Aviva Vida y Pensiones, S.A. de Seguros y Reaseguros and chairman of Aviva Grupo Corporativo, S.L.
Miguel Jiménez Cabezas holds a degree in Law and Economics and Business Studies from the Universidad Pontificia de Comillas (ICADE E-3) and in Political Science from the UNED. He studied a Master's Degree in Journalism at the EL PAÍS / UAM School and an Executive Development Programme at the IESE Business School. He took his first steps as a journalist in the International section of EL PAÍS, the official journal of the IMF and World Bank Assembly in Madrid and Dinero magazine. In 1996 he joined Cinco Días, where he was head of the Markets section, editor-in-chief of the Weekend edition and the Business section and deputy editor, a position he held until joining EL PAÍS in 2006 as editor-in-chief of the Economy section and the Business supplement. In 2015 he was appointed deputy editor of Information.
On 28 February 2017, the Rafael del Pino Foundation organised the dialogue on the relationship between economic growth and employment in Spain, on the occasion of the presentation of the book "Growth and Employment" by Juan Francisco Jimeno. In addition to Jimeno, President of the Spanish Economic Association, the event was also attended by Emilio Ontiveros, Professor of Business Economics at the Autonomous University of Madrid, and Guillermo de la Dehesa, Honorary President of the Centre for Economic Policy Research (CEPR) in London. Juan Francisco Jimeno began by recalling that one of the most common questions asked by economists is how much an economy has to grow in order to create employment. Jimeno considers this to be an unhelpful question because the general answer would be "it depends", since economic growth and employment growth are determined jointly. What the person asking this question is thinking of is something like how much economic policy would be needed to create jobs. The problem is that it is not guaranteed that more public spending means more economic growth and more employment. For Emilio Ontiveros, the key to increasing employment and improving its quality lies in increasing the total productivity of the factors of production. To this end, institutional, regulatory, organisational and business quality aspects must be taken into account, including the size of companies, because these elements also have an influence. For his part, Guillermo de la Dehesa warned of the challenges posed by the evolution of the Spanish population, climate change and technological development. In relation to the reform of the labour market, Jimeno stated that the Spanish economy has a very peculiar characteristic: it is very volatile. When it grows, it grows a lot; when it falls, it destroys a lot of jobs. In this sense, labour reforms have had more of an impact on this relationship than on transferring all economic growth to employment, because no labour reform in itself manages to increase productivity. Ontiveros, for his part, stressed that the regulation of the labour market leaves much to be desired and generates defence mechanisms in companies, such as the excessive use of temporary contracts, especially by micro-companies. In turn, De la Dehesa pointed out that unemployment has not evolved with economic growth due to the number of reforms that have been made to the labour market, which, in general, have worsened it. The 2012 reform, however, was a little better than the previous ones. The problem is that the reforms do not have an impact on other problems affecting employment, such as the low educational level of certain sections of the population, the lack of professional qualifications of others or the disconnection between the education system and the needs of companies. Another of the issues discussed was the duality of the labour market. In this respect, Jimeno recalled that this is a problem that Spain has had for a long time, since 1984, as a result of the temporary nature of employment, which is the main reason for the volatility of the Spanish economy, low productivity and the duality of the labour market, which extends to all age groups and is socially unfair. The model of temporary contracts was initiated out of desperation, in the face of the refusal to reform the Workers' Statute, but what was thought to be a temporary measure has become permanent because companies use it to avoid the high costs of dismissal or other rigidities in labour regulation. De la Dehesa pointed out that another part of the problem is the malfunctioning of the State Employment Service, which is not able to place the unemployed. And Ontiveros added that a simplification of the number of contracts is necessary, in order to reduce the privileges of permanent employees and the manifest lack of protection for temporary employees. He also highlighted the role of collective bargaining in the duality of the labour market. Jimeno also pointed out that duality has to do with the regulation of objective dismissals, which has yet to be resolved. This is what explains why temporary employment is so high. For this reason, it is necessary to design adjustment mechanisms that allow companies to react in a different way. Another part of the problem, according to Jimeno, is collective bargaining agreements, which have the force of law but those who sign them are not very representative of both companies and workers. The agreements also affect business quality because they affect the size of the company, said Ontiveros, who also referred to the quality of the functioning of the financial system and institutions.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.