Employer’s association: new jobs and higher consumption not foreseen before late 2014

Barcelona (ACN).- The largest employer’s association in Catalonia, Foment del Treball, expects that the economic recovery in both Catalonia and the whole of Spain will not lead to a growth in employment and consumption until late 2014 or early 2015, as explained in the Report on the Economic Situation published on Thursday. The Director of Foment’s Economics and Taxation Department, Salvador Guillermo, said in a press conference that the economic recovery is being “consolidated”. Nevertheless, he added that ongoing structural reforms in the energy sector, public administration or the financial system should continue. According to Guillermo, the reduction of public deficit must be slowed down in order to avoid any negative impact on the economic recovery.

According to Guillermo, the main economic indicators suggest that Spain’s GDP could grow above the estimates of international institutions, such as the European Commission, which foresaw increases by 1% in 2014 and by 1.7% in 2015. Foment has calculated that GDP growth could reach around 2% this year, as “the recovery is gathering strength”.

The economic recovery is driven by exports

Guillermo pointed out that one of the main indicators driving forward both Catalan and Spanish economies are exports. The report reveals that the current account balance in Spain achieved a surplus in 2013, reversing the negative figure registered in 2012. Furthermore, the report notes that these exports have stabilized in recent months, especially in Catalonia, where tourism has once again broken new records.

By contrast, domestic demand has continued on a downward trend in the past months. However, there are indicators, such as households’ consumption, that are beginning to show positive signs, with a 0.7% increase in the last quarter of 2013. “In the coming months, domestic demand will make a positive contribution to GDP growth” according to Guillermo.

The recovery will not result in higher wages until productivity increases

However, the economic recovery will not benefit the people’s purchasing power in the short-term. Wages will continue being stable or even further lowered down until there is an increased productivity, according to Guillermo, who pointed out that economists usually consider productivity and wages to be deeply intertwined.

In this vein, the Chairman of Foment’s Commission for Economics and Taxation, Ramon Adell, who also attended the press conference, stated that wages had experienced a “very tough adjustment” in Catalonia and Spain during the economic crisis, along with prices and corporate profit margins. Adell also believes that wages will not increase in the short term and he hoped that they would not fall to “socially unsustainable levels”.