The International Monetary Fund (IMF) has recommended Spain to implement “continuous wage flexibility” and to undertake more labor market reforms in the medium term, according to its annual report on vulnerabilities in the foreign sector, published on Tuesday.
“Structural reforms in response to the global financial crisis, in particular labor market reform, with the resulting wage moderation, and fiscal adjustment, helped to reduce imbalances,” said the body chaired by Kristalina Georgieva.
Furthermore, the Fund has ensured that in the event that the external vulnerabilities prior to the Covid-19 pandemic persist in the medium term, the country will have to carry out a series of reforms.
“Policies should increase competitiveness and carefully manage the burden of public debt. Boosting competitiveness through productivity improvements in the medium term would imply continued wage flexibility, reforms to tackle the duality of the labor market, the implementation of market reforms products and services and actions aimed at improving educational outcomes and education, “said the Washignton-based institution.
Likewise, the IMF has warned that the pandemic has left Spain vulnerable to the “volatility” of the financial markets, despite the fact that the policies of the European Central Bank (ECB) are aimed at improving liquidity and promoting stability.
It is not the first time that the Fund highlights the positive effects of the reforms adopted in Spain after the 2008 crisis. In February, a study carried out by the agency concluded that the labor reform approved by the Popular Party in 2012 improved employment and the Income equality without “significantly” affecting the risk of poverty rate.
However, the study published months ago also indicated that changes in the labor market caused a decrease in average hours worked, as well as an increase in involuntary part-time employment (those workers who have part-time contracts but would like to be full time).
This, together with the change in the construction model towards services, caused an increase in the rate of poor workers.