Debate over sustainable economy bill

On 27 November 2009, the Spanish government approved a sustainable economy bill which will be discussed in the parliament in the coming months. The lack of consensus between the different political forces suggests that the government will face a difficult negotiation process to develop this ambitious project, which aims to change the Spanish productive model. The government is hoping to move away from labour-intensive activities to high technology industry.

Main measures of new law

A new sustainable economy bill sets out different measures and proposals of various ministries within one document. It aims to turn Spain’s productive model characterised by excessive dependence on labour-intensive activities, especially in the construction sector, towards another model that rewards high added-value, technology-intensive activities. This would be achieved through a regulatory framework and tax incentives directed at promoting increased competitiveness among companies in a knowledge-based economy.

The three fundamental axes around which the law is expressed are the improvement of the economic environment, competitiveness and environmental sustainability.

  • With respect to the first axis – improving the economic environment – the salient measures are intended to increase the regulation of the financial markets and, above all, to introduce austerity plans and rationalise the public administration. The government must draw up these proposals within a six-month period to improve efficiency and reduce the state deficit.
  • In relation to the second axis concerning improving competitiveness, the bill introduces professional training reforms in response to insistent calls of the social partners. These reforms will facilitate the transition between different educational and vocational systems, and adapt the training supply to the specific requirements of companies in Spain. In addition, the reforms aim to foster increased cooperation between local training centres and companies. In the same way, measures are established to encourage cooperation between universities and enterprises; this will be achieved through shared work in technological parks and by legislative modifications that award university centres control over their research, allowing them to participate in the capital of mercantile companies and economically exploit their results in research and development (R&D).
  • In the third axis, that of environmental sustainability, the law introduces a series of regulatory principles intended to meet the environmental objectives of the European Union. Among these, the most notable provision in line with government priorities uses deductions to encourage the renovation of dwellings, and eliminates deductions for purchasing dwellings after 2011 for people on annual incomes of over €24,107.20. This measure aims to put a brake on the dominance of the construction sector up until now, by redirecting investment towards other economic sectors of greater long-term potential.

Political views

After the presentation of the bill in the lower house of parliament (Congreso de los Diputados) on 27 November 2009, most of the political parties expressed varying degrees of criticism. The Popular Party (Partido Popular, PP) disagreed with the absence of measures aiming to reduce the cost of factors for increasing competitiveness. The Catalan nationalist party, Convergence and Union (Convergencia i Unió, CIU), regretted the lack of measures aiming to maintain and create employment.

Within the block of parties that have supported the governing Spanish Socialist Workers Party (Partido Socialista Obrero Español, PSOE) in this legislature came rather more moderate criticisms from the Basque Nationalist party (Euzko Alderdi Jeltzalea-Partido Nacionalista Vasco, EAJ-PNV) and the Republican Left of Catalonia (Esquerra Republicana, ERC). Although recognising the validity of some of the ideas, these parties regretted the lack of consensus for developing them, and also questioned why many of the proposals have not been included in the 2010 budget.

The Minister of Economy and Finance, Elena Salgado, strongly defended the bill in an interview with the daily newspaper El País on 29 November 2009. Minister Salgado argued that, in the short term, the incentives for renovating dwellings, the fight against non-payment and the sustainable economy fund would have a positive effect on employment, while the deeper measures aiming to change the productive model deal with reforming professional training and nurturing innovation and knowledge.

Views of social partners

With regard to the social partners, the most representative trade union organisations, the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CCOO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT), welcomed the reform of professional training. However, they criticised the lack of content in areas such as industry policy, tax fraud, the illegal economy and job quality.

Meanwhile, the main employer organisation, the Spanish Confederation of Employers’ Organisations (Confederación Española de Organizaciones Empresariales, CEOE), published a communiqué in which it stated that it shared the government’s views on the regulatory principles of the project with respect to the efficient management of the public administration and energy savings. However, CEOE regretted the absence of measures intended to promote ‘flexicurity’ in the working environment and to reduce corporate tax.

Pablo Sanz de Miguel, CIREM Foundation

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