There is no way the PP can get an economic forecast right

The Popular Party was clear in 2022 about what would happen if the minimum wage was raised. “The Government will only succeed in destroying the productive fabric, slowing down job creation and reducing prosperity,” said the internal argument distributed among its leaders to be used in their public statements. The consequence of the latest increase was clear. Fewer hires, more layoffs: “Many companies will pay fewer workers because they will hire fewer people or even have to lay off others.”

The PP has not been very accurate in its economic forecasts for the last decade, but in terms of employment it can be said that it has been so far from the facts that it seems to be talking about another country.

In January 2024, despite the fact that these predictions had not come true, the PP insisted on the same idea. In light of the new increase in the SMI, it insisted on the disastrous effects it would have on employment. “It responds to media emergencies that will produce destabilization, especially in small businesses,” said Juan Bravo, deputy secretary of the PP for the Economy.

Six months later, the EPA data not only fail to detect this ‘destabilization’, but the opposite. The second quarter of the year offers several undoubtedly positive figures. An active population of 21,684,700 people, 434,000 more than in the first quarter. Unemployment falls to 11.2%, the lowest figure since 2008. Ten communities have a percentage below 10%.

The Minister of Economy recorded a video on Friday to share on social media: “Employment remains the main driver of the Spanish economy. There are more people working than ever before.” Carlos Cuerpo had better have enjoyed it, because he will have few opportunities to comment on the figures in Parliament.

The PP refrains from asking her questions in the control sessions, as it also tries to avoid the issue in this legislature with the vice-president and head of Labour, Yolanda Díaz. Regarding economic policy, the only questions are directed to María Jesús Montero and they usually deal with taxes and regional financing.

Yolanda Díaz boasted on Friday about the effects of the labour reform: “We have reduced the number of temporary contracts by almost three million. What was once a curse, temporary employment in Spain, thanks to the labour reform, now allows us to say that we are European. The rate of temporary employment is 12.9%.” Never before in Spain have there been so many workers with a permanent contract.

To know to what extent this benefits the Government, one indirect fact is enough. On Friday morning, the PP did not make any comments on the EPA on its Twitter account. Juan Bravo dedicated a tweet to insist on the “record temporary contracts”, an issue that his party has almost stopped insisting on. He does not even dare to talk about “fake unemployment figures” anymore, because his regional presidents are jubilantly celebrating those same figures for job creation in their regions which, according to the logic of the PP, should also be faked.

The reality is that the increase in discontinuous fixed-term contracts It does not even come close to explaining the increase of permanent contracts. Nor the creation of jobs is due solely to public employment.

So ignoring the news becomes the default solution on the right, rather than continuing to speculate about the truth that the government is supposedly hiding. And in the media, the solution is similar. In the morning, the news was not very high on the ABC home page, but below the problem caused by “the coypu, the ‘rat-otter’ that threatens Spanish rivers.” By early afternoon, it had already fallen further down to the list of other news on the website.

The PP and the ‘paleoliberal’ economists like to talk about the fact that Spain is living in a “fiscal hell” plagued by constant tax increases. A few months ago, the OECD denied this premise and established that the tax burden on wages, with the addition of personal income tax and social security contributions, was on average 40.2%, well below that of Germany, France or Italy.

All this does not prevent Alberto Núñez Feijóo from living in his bubble. Never has a PP leader spoken so little about the economy as in his case. It is difficult to avoid doing so in election campaigns. The man who in the summer of 2022 announced that we were heading for “a very deep economic crisis” had to reduce his interventions on the subject to a minimum in the general election campaign a year later.

Still, he can’t help but occasionally make announcements whose sources are only in his head. In May, he said in Barcelona that Spain is in “crushing economic mediocrity.” “We are becoming poorer,” he said in a recent interview with a right-wing YouTuber.

Economic reality pushes some to think that the government should make the most of it regardless of what the opposition does. Who says it hasn’t? Another way of looking at it is to think that it is very likely that the left-wing parties would have lost the 2023 elections if it hadn’t been for the improvement in the economy. Moreover, these issues are not the only ones that condition the vote, neither in Spain nor almost anywhere else.

With the macroeconomic data in hand, there is no doubt that the US economy is in better shape now than in 2020 and that its employment data is very good. That did not prevent Americans from having a very negative opinion of Joe Biden’s management.

In both Europe and the US, inflation has served to undermine the credibility of governments, another reality that should not surprise anyone. Citizens always believe that politicians should do something about it, i.e., take measures that work.

Above all, the economy – and not even GDP growth – does not work the same for all citizens. If 65.4% of respondents In July, 22.8% of respondents said their personal economic situation was good or very good, according to the CIS, while another 22.8% said it was bad or very bad. Some people can cope with rising prices by reorganising their spending. Others have had to choose between food or heating.

It’s not just macroeconomics. The IMF reported in June that the rise in the minimum wage has lifted nearly a million workers out of poverty in Spain in recent years. This is a measure that has a real impact on people’s lives.

The Government has other pending issues and some of them could have as much impact on its reputation as the GDP. Four years after its approval, the Minimum Vital Income It only reaches 12% of people half of the most serious cases, households living in extreme poverty, are at risk of poverty. Spain continues to be a country that does not allocate sufficient public resources to fighting poverty – no government has done so – and is unable to ensure that existing aid reaches all those who need it.

How many of these people vote regularly? Unfortunately, not many. Those who do vote are city residents with incomes that would have allowed them to buy or rent a home years ago and who have now been squeezed out of the market. The Housing Minister’s statements do not suggest that the government is about to take bold structural measures, let alone their embarrassing similes. Too many promises have already been made and people are waiting for the day when some of them will be fulfilled.

Other left-wing parties in Europe know that they have to act on all fronts. The British Labour Party announced during its campaign that it would build 1.5 million homes in five years. The French New Popular Front promised to build a million. The figures indicate the seriousness of the situation in several European countries, those that long ago let the market deal with the problem.

Why such a lack of initiatives that have generally been limited to betting on tax incentives for homeowners? The CIS survey released this Friday has an answer. 76.1% of Spaniards live in a house of their property (48.1% have already paid for it and 28.3% are still paying the mortgage). 15.2% live in rented accommodation.

In a country of property owners, it seems that their interests are the ones that take priority. The Government should start to think that it needs to offer results that are at the level of what is a constitutional right. Carlos Cuerpo has said that in the face of this problem “There is no silver bullet.” True, you have to shoot more than once and it is better not to do it in the foot.

Source link