Spain policies for a sustainable recovery

OECD Perspectives
october 2011

Key OECD Recommendations for Spain

• Continue improving fiscal sustainability. Measures for achieving government deficit targets need to be specified, and the least distorting taxes should be raised where necessary. In particular, the use of preferential VAT rates could be reduced, VAT exemptions removed and environmental taxes increased. Budgetary rules for regional governments should be reformed.
• Complete the restructuring of the savings banks. Further reduce the presence of regional and local governments in savings bank governance and activity. Support them if further capital injections are needed.
• Push reform of collective bargaining further Firms should not be forced to adopt collective wage bargaining outcomes. Social partners should abandon wage-indexing clauses once and for all.
• Boost productivity growth Product-market reform needs to be deepened by strengthening competition in retail trade and professional services.
.  Reduce the dualism in the labour market. Consider introducing a single permanent employment contract with lower severance entitlements, together with stricter enforcement of regulations on temporary contracts.
• Place greater emphasis on activating the unemployed and upgrading their skills. Offer them more support and require them to take part in labour-market activation programmes, particularly after a long period of job search. Stress continuous training and the need to keep skills and qualifications up-to-date and adapted to market needs, both present and future.
• Improve the job prospects of the most vulnerable groups Place emphasis on policies and incentives specially targeting young people, immigrants and workers.
• Strengthen services for lower-income groups, especially families with dependents, to avoid the adverse consequences of a deterioration in their economic situation.
. Guarantee the long-term stability of public pension by raising the effective retirement age as planned.
• Restrict eligibility for early retirement by introducing incentives in the pension calculation formula that would encourage people to work longer.
• Expand people’s contributions to private pensions through better incentive mechanisms and improving the framework for shielding private pensions from the effects of financial volatility.
• Increase support for R&D and innovation activities and foster links between science and industry.
• Promote mobility and strengthen human resources for science and technology.
• Improve the management and assessment of innovation policies 
. Strengthen the science and technology base  focusing on excellence, and create a critical mass of knowledge and highly skilled human capital. .Provide targeted support for renewable energies in a transparent way that is cost-effective and technologically-neutral, in order to set a stable policy framework that will encourage private investment in renewable energy while keeping prices affordable to consumers.
 • Effectively implement the recently adopted Sustainable Mobility Strategy in order to reduce transportation emissions.
• Develop a strategy to gradually raise prices to cover the full costs of providing water, taking into account the attendant institutional changes and social impacts.
. Raise fuel taxes and phase out subsidies to coal to internalise enso as vironmental costs more effectively, and thus reduce energy demand and help reduce government deficits.
. Continue investing in early childhood education and car especially coverage for the most deprived sectors, and prioritise policies targeting quality, by focusing on staff issues, curriculum and data.
• Increase the proportion of students graduating from upper secondary education through early interventions in primary and lower-secondary and reducing repetition, and provide support for students on the verge of dropping out.
• Make vocational training more attractive, and support pathways into more academic tracks in upper-secondary and into tertiary education.
• Help schools be effective by giving them greater autonomy, especially in decisions on teacher hiring and course content and providing school principals with appropriate training and support.
.Introduce a student loan system related to family income, for all tertiary students including those in the vocational stream.
• Link universities’ financing more closely to outcomes to give them greater independence, especially in setting pay and working conditions.



http://www.oecd.org/dataoecd/45/46/44686629.pdf