Is Pedro Solbes misreading, or misleading? That is the question.

In case anyone who follows this blog hasn't guessed by now, I have very little faith in Spain's Economy Minister, Pedro Solbes -- not that I have much faith in any of his colleagues, either. However, he holds a special place in my disdain because of what can only be his misreading of, or misleading about the economy

When he served in Brussels as European Commissioner for Economic & Financial Affairs (1999-2004), he denied that the introduction of the euro contributed to inflation. Then in December 2007 he said, "When I was in Brussels, I said the opposite, but now I can say that the euro has had an inflationary effect on low cost items." Was that a misreading, or was he misleading?

At that same time he predicted that Spain's inflation rate, which was 4.1%, would go below 3% by March 2008. Solbes was wrong again, as by April it had risen to 4.6%. By May it was 4.7%. Misreading, or misleading?

Solbes continued to deny there was an economic crisis through the first half of 2008, as people lost jobs, the cost of living soared, the real estate bubble burst, and the economy just generally went into the toilet. In May Solbes equated "crisis" with "recession," and added, "To talk about recession is exaggerated." Misreading, or misleading?

It seemed like he might be ready to admit the truth when it was leaked to the media that he used the word "crisis" in a June 10th closed door session of parliament. However, on June 11th he qualified that by saying, “Yesterday, the only thing I said was that we need to prepare for a crisis, but I never talked about 'the crisis.'” The official line from the Socialist Party spokesperson, José Antonio Alonso, was that Solbes had had a “slip of the tongue.” Misreading, or misleading?

Then to muddy the water further, he said on June 13th that while the Spanish economy was experiencing an “abrupt adjustment” he didn't use the word “crisis” because that would be "abusing a false affirmation. Crisis means that everything is going badly and that every other thing is going well, neither one thing or the other.” Misreading, or misleading?

By July he had finally started using the "C" word publicly, even declaring in one interview, "For me, this is the most complex crisis we have ever experienced because of the number of factors that are on the table." But around then he had moved on to avoiding the "R" word. In an interview in August he said, "We think there will be very low or flat growth in the coming quarters, but we are not thinking of a recession." Misleading, or misreading?

Last summer Solbes and Company forecast that Spain would avoid recession and that the GDP would actually grow a full 1%. This was very different from what most other economists were saying. Then yesterday he and the Government belatedly acknowledged the country is in a recession when he announced that his ministry was changing the forecast from one of GDP growth to one with a 1.6% drop. Misreading, or misleading?

Of course, there are still many non-government economists who are not as confident as Solbes, with some predicting the Spanish economy will contract as much as 3% this year. Neither the dire views of others, nor his lousy performance so far, seem to have given him pause. Indeed, while finally admitting he was wrong yesterday, he also had the temerity to make yet another prediction. According to his crystal ball (which must be what he uses in lieu of economic theory), 2009 will see the worst of the crisis, 2010 will witness GDP growth of 1.2%, and 2011 will experience a jump up to 2.6%. Misreading, or misleading?

Of course, people here say that Solbes is only delivering the information Prime Minister José Luis Rodríguez Zapatero wants him to, and I don't doubt it for a second. Certainly the buck stops with Zapatero, but it would be nice to have an Economy Minister who told the PM and the people what they needed to hear.

Instead what is it exactly that he offers? Is it misreading, or misleading? Double-speaking, or misspeaking? Denying, or lying? Call it what you will, but it does not often resemble the truth.

Finally, one more question: if you were running a business, would you hire someone with a track record like this?

Dios nos ayude, amig@s,

Carloz

Minimum Wage Spain = Salario Mínimo España

Some years ago I asked a Spanish colleague what the minimum wage was here and was met with a puzzled look. When I explained what I meant further, he said he didn't think there was such a thing -- an average, perhaps, but nothing guaranteed. This person was a professional with a post graduate degree, so I thought if he did not know, then there must not be such a thing in Spain.

Eventually, I learned that there is indeed such a thing, but that it is not a guaranteed hourly wage, but a monthly salary. The Spanish minimum wage is called the Salario Mínimo Interprofesional or the SMI and has existed since 1963. It supposedly pertains to all occupations, businesses and economic sectors. It is adjusted at regular intervals, usually each year, although the law allows for bi-annual adjustments. It is based on "normal working hours" (whatever that means), and is established according to various economic indices such as productivity, retail-price index, etc., and is protected from seizure by creditors.

I've read that since the SMI is so low, only about 0.7% of the employed population is affected by adjustments to it -- or 140,000 people. However, it is said to have an important indirect impact because the SMI is used as a reference point for establishing pensions and for collective pay negotiations. Spanish unions claim that it effects the remuneration of one million employees. That leaves about 18,860,000 people who are not affected.

In addition, before moving here and since living here, I have continuously heard and read that employers are supposed to pay their contracted employees 14 monthly payments a year, not 12. In the 9 years I have lived here, I have never received the two extra payments.

Anyway, I write all of this as background to the news that Prime Minister Zapatero announced yesterday that the SMI would go up 4%, to 624 euros a month. It is the lowest increase in the past five years. It is also much lower than the 7.5% a year that would be necessary for Zapatero to reach his campaign promise of a monthly SMI of 800 euros by 2012. So, now he's promised to raise it by 8.6% a over the next 3 years.

Yesterday the Government also approved a 2.4% raise in pensions for 2009. The average pension will be 741.62 euros a month.

It is estimated that the cost of living in 2008 went up 5.3%.

I suppose many Spaniards will be counting their pennies as well as their grapes when the clock strikes midnight next Wednesday.

Let's hope that 2009 is a better year in Spain and everywhere!

Saludos amig@s,

Carloz

Main sources: European Employment and Industrial Relations Glossaries and El País (Un final de ciclo amargo and El Gobierno eleva un 4% el salario mínimo, a 624 euros.)

The Spanish Constitution is 30 years old

It's a typical Constitution Day - Immaculate Conception "puente" (long weekend) here in Spain -- lovely weather, Christmas decorations everywhere, people milling about, restaurants packed with diners, politicians talking nonsense, etc.

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On this 30th anniversary of Spain's Constitution, opposition leader Mariano Rajoy has accused Prime Minister Jose Rodrigo Zapatero of destabilizing Spain. In case anyone might think he was mincing words, he threw in terms like irresponsible, frivolous and disturbing.

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Rajoy has assured everyone, however, that he did not want to cast a shadow over the country's celebrations. I suppose he simply wanted to get as much press coverage as possible -- which he seems to have done, as he's right up there on most front pages, along with reports on the Royal family's plans for today and Zapatero's revelation that in his opinion the Spanish Constitution, "has been, is and will be useful."

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I'm not sure if Z's remark was an example of faint praise or faint oratorical skill.

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We can only hope that no politicians will feel a need to comment on the Immaculate Conception.

Chao amig@s,

Carloz

Crisis? What crisis?

Spanish Prime Minister Jose Luis Rodriguez Zapatero finally presented his new government's economic plan on Saturday, while avoiding saying anything that might make it sound like Spain is facing serious economic problems. I think the reaction published in this Sunday's El País hit the nail on the head:

“Crisis? What crisis? 'A difficult scenario', 'a difficult period of adjustment' or 'a deep deceleration of the economy'. These are some of the terms the president of the government, José Luis Rodríguez Zapatero, employed yesterday when referring to the current state of Spain's economy, which receives a blow each time a new economic indicator is revealed. The president attributes the deterioration to external factors (increased oil and food prices). Still, he announced a package of 'structural reforms' to make things more tolerable. There is nothing new in this battery of urgent measures.

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Unemployment is on the rise, inflation has gotten out of control, sales of homes have collapsed, sales of cars cannot even get off the ground, and the gross domestic product is losing wind. But Zapatero resists thinking that this is a crisis situation...

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The measures were neither new nor quantified. ...one consists of a 30% reduction of administrative charges that businesses bear. [However,] This was an action that had been announced in April of 2007...with the aim of lowering bureaucratic costs by 2012... ...other plans [included enhancing] railway competition and energy sharing with France.”

And this less than enthusiastic coverage was from a news organization sympathetic to Zapatero's socialist party! Imagine what the center and right leaning media wrote!!

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Most distressing to me was the revelation that this “plan” is to be incorporated into a national program of reforms which will be presented to the European Commission in October. A lot can happen between now and October!! What is the government planning on doing to address the so-called “difficult scenario” before then -- more thumb twiddling?!!!

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Perhaps the most interesting part of the El País report was the following:

“Microphones are treacherous -- above all when they are on without the speakers' knowledge. That was the case yesterday with the President of the Government, José Luis Rodríguez Zapatero, and the owner of Planeta Publishing Corp., José Manuel Lara, who before the presentation made several recommendations regarding the crisis, as recorded by Channel Four:

Lara: 'For the time being, [the crisis] is not going to stop. I am afraid it's going to get worse in the second half of the year. That's what I fear.'

Zapatero: 'It's not clear'

Lara: 'I would advise that you not burn yourself...'

Zapatero: 'What?'

Lara: 'You shouldn't speak; have [Finance Minister] Solbes speak. You shouldn't burn yourself, because it could look bad as president'.

Zapatero: 'There is another factor you have to consider. That is, if you instill a lot of pessimism, if you don't say anything positive...'

Lara (interrupting him) : 'No, no, you make the crisis worse, yes, yes. ..'

Zapatero: 'That's what we're doing.'

Lara: '...but let the the Economy Minister, the Industry Minister affect optimism and the president be reserved. That's what I mean.' ”

Well, it seems we get a lot of optimism from Zapatero, Solbes and others, but not much action. Meanwhile, other Sunday headlines about the economy were not so optimistic: "The worst is yet to come" , "Everything about the crisis" , and one headline which quoted the President of the European Bank, "We must stay alert, now is not the time for complacency." It sounds like others believe that optimistic talk is not realistic.

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To be fair, from this consumer's viewpoint there was at least one good piece of news that came out this weekend: Spain's state-regulated electricity prices will not rise by the 11.3 percent the industry was hoping for. During an interview with the radio network Cadena Ser, Zapatero said the increase would be close to the rise in inflation. "The National Energy Commission proposal is not going to be adopted by the Government of Spain," he stated. Spain's inflation hit a record high of 4.7 percent in May, so I am hoping rates won't go up much more than 5%. If that's what happens, many of us in Spain will let out a “Phew!” of relief while bracing ourselves for whatever comes next in this non-crisis that the government seems dead set on being so upbeat about.

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Hasta luego amig@s,
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Carloz

Zapatero Zaps Opposition

Well, that's a bit of an exaggeration, but it had a nice ring to it. Anyway, Prime Minister José Luis Rodriguez Zapatero's socialist party, the PSOE, did win yesterday's national election. However, they only gained one seat in the Congress of Deputies (from 168 to 169 out of a total of 350), which means they are still a bit short of an absolute majority. (Seven, to be exact.) Mariano Rajoy's conservative party, the PP, picked up 6 seats (from 148 to 153). This increase might be enough to assure that Rajoy stays on as party leader, although he was not seen or heard from today.
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The enigmatic conservative Catalan party, CiU (Convergence and Union), is the only other party that increased its seats, going from 10 to 11. With the ruling socialist party not having a strong majority, this Catalan nationalist party could have significant influence in the new parliament.

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Perhaps the most interesting result of the election was the drop in votes for smaller parties: the ERC (Republican Left of Catalonia), which advocates independence for Catalonia, went from 8 seats to 3. Another of the regional nationalist parties, the Basque EAJ-PNV (Basque Nationalist Party), lost one seat to go down to 6. The left wing IU (United Left) went from 5 to 2 seats and the party leader, Gaspar Llamazares has since announced that he would resign. The few remaining seats went to CC-PNC (Canary Island Coalition - 2 seats), BNG (Galician Nationalist Bloc - 2), UPyD (Union, Progress and Democracy - 1 seat) and Na Bai (Navarre Yes - 1). The Aragonese Council and Basque Solidarity parties did not garner enough votes to win parliamentary seats.

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Interestingly, in the Senate, where there are currently a total of 259 seats, the PP (Popular Party) technically won more seats than the PSOE (Spanish Socialist Workers Party), although both parties declined in their total numbers. The PP went from 102 to 101 seats and the PSOE went from 81 to 89. There are more seats in the Senate and 56 of those are not elected but are appointed by regional legislatures. Of the other elected seats, 12 were won by the Catalan Coalition called Entesa (Catalan for "understanding") which is made up the Catalan socialist party (PSC), the ERC, ICV (Catalan Green Initiative) and EUA (United Alternative Left); 4 were won by CiU and 2 by the EAJ-PNV.

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Of the two houses, the Congress of Deputies has more power, including the authority to choose the Prime Minister and the ability to override most Senate decisions with a majority vote. Apparently one unique power of the Senate is to appoint judges.

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At his party's headquarters in Madrid, Zapatero gave a victory speech in which he paid tribute to victims of terrorism and their families, including the Basque socialist party member, Isiais Carrasco, who was assassinated by ETA last Friday. He then went on to say he would continue with things he has done well and correct his mistakes. Today the media seem to be presenting him as humbler and ready for dialogue. Only time will tell.

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I suppose among the things some voters view as accomplishments during his first 4 years were withdrawing Spanish troops from Iraq in 2004, giving more autonomy to the Regional Communities that make up Spain, making divorce easier and legalizing same-sex marriage. However, these are not things that touch on most Spaniard's day to day lives in a significant way. In fact, on the subject of the economy, which effects everyone, I hear many people (even some who say they voted for him) grumbling that he has done nothing to address it. Many people seem to think he has more or less just let it coast along, pretty much on autopilot -- and now it seems to be crashing.

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So, why did Z's PSOE win in the Congress of Deputies? Well the consensus among people I've talked with is that people voted against parties rather than for a party. Perhaps people were tired of the squabbling caused by the smaller separatist and nationalist groups. Perhaps the PSOE's publicity aimed at making people frightened of the PP worked. Perhaps the PP's own broken-record mantra of fear mongering against immigrants and bemoaning the decline of "Spanish" family values put people off. Perhaps no other parties seemed to be offering meaningful alternatives. Perhaps people simply preferred Zapatero to Rajoy, as opposed to the PSOE to the PP. (Surveys indicated that Zapatero won the televised debates he had with Rajoy, which were watched by many Spaniards.)

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One final note: at 75%, voter turnout was as high as it was in the 2004 election. How does that compare to voter turnout in your country? It puts mine to shame.

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Chao amig@s,

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Carloz

English in Spain

According to a recent survey by researchers at IPSOS, 81% of Spaniards do not know English well, while only 4% have an advanced level of knowledge. Looking closer at the results, 20% have a basic knowledge, 19% very basic and 15% intermediate.
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Perhaps even more revealing were the findings that only 2% of the population are currently studying English and that 73% have never studied it outside of the basic classes provided in the country's school system.
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The highest percentage, 51%, of people lacking the ability to communicate in English occurred in towns with populations under 10,000. At the other end of the scale, 36% of those in metropolitan areas over 750,000 inhabitants could not communicate in English.
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Among respondents from 25 to 45 years of age, 46% of the women did not know English, compared with 38% of the men.
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As for educational background, 48% of those that had not attended university said they did not know English, followed by 39% with a basic level, 11% intermediate and 2% advanced. Of the 40% of those with university studies, 40% possessed an intermediate knowledge of English, 37% basic, 14% advanced and only 8% said they did had no knowledge of the language.
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By geographical areas, the largest percentage of those who did not know English were in the center of Spain (57%), followed by the south (50%), and the northwest (31%). The areas with the highest concentration of advanced levels were in the metropolitan area of Madrid (8%) and the East Coast (7%).
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Among people between 25 and 45 years, only 2% were currently studying English. The majority of these were doing so in an academy (54%) or via the Internet (22%). Other options were self study courses (13%), classes at work (11%), distance learning (9%) with a private teacher (8%) and at a city's publicly funded Official School of Languages.
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Among those not currently studying English but who had taken a course in the last five years, the most popular choice was a language academy (58%), followed by a distance course (11%), a private teacher (10%), studying abroad (10%), and Internet (3%).
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Although a majority of those surveyed thought it was very important to know English, 43% of those not currently studying the language cited a lack of interest as their reason for not doing so.
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Well, it looks like there is real need for the promises the two major political parties have made in the current electoral campaign about implementing programs are supposed to result in all high school graduates 10 years from now being fluent in English. Interestingly, neither of the candidates for Prime Minister (Zapatero and Rajoy) speak English. And for those of you who may have heard former Prime Minister Aznar speaking English on the news, he only learned it after he left office.
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Chao amig@s,
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Carloz

Z promises more English, Rajoy more Spanish

Z is the Spanish Prime Minister, José Luis Rodíguez Zapatero. One of his latest campaign promises is to put 20,000 native English teachers in public schools -- 12,000 part-time teachers and 8,000 English language assistants -- if the Socialist party wins the March 9th general election.

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Meanwhile, challenger Mariano Rajoy has said that if the Popular Party wins he will pass a law giving parents in Spain the right to have their children enducated in Spanish. This is actually aimed at the Autonomous Region of Catalonia, as public education here is conducted in Catalan. (All other Autonomous Regions where two languages are spoken give parents the option of sending their children to Spanish language or local language schools.)
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¡Vamos a ver!

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Carloz

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P.S.

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If you want to read more on the Spanish election, the BBC news website today ran a pretty good little overview of it in an article entitled, "Spanish PM Faces Voters' Verdict." I especially liked the following line in the article: "If the US election is a marathon, Spain's is a sprint." Thank God for that!

It's election time!

Not the US election, but the Spanish election. On March 9 Spaniards will go to the polls to vote for Parliament -- 350 seats in the lower chamber, the Congress of Deputies ,and 208 seats in the upper chamber, the Senate. The make-up of the Parliament determines which party (or which coalition of parties) selects the Prime Minister, who is also referred to as the President of the Government.
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The two major parties are the conservative PP (Partido Popular - Popular Party), led by Mariano Rajoy and the PSOE (Partido Socialista Obrero Español - Spanish Socialist Workers Party), led by the current Prime Minister, Jose Luis Rodriguez Zapatero. Other parties include:the United Left (IU), Convergence and Union (CiU), the Republican Left of Catalonia (ERC), and the Basque Nationalist Party (PNV).
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Compared to the USA, campaigns in Spain are relatively brief -- thank God! While there is plenty of maneuvering and posturing for a few months before the election, advertisements are only allowed during an officially designated campaign period. For example, on January 14 of this year the Spanish government approved the dissolution of Parliament and called for general elections on March 9. The official electoral campaign runs from February 22 until March 7.
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However, before the advertising begins parties issue statements, candidates make promises, polls are conducted and the media covers it all. So far the PSOE has promised to a 400 euro tax rebate for all citizens, while the PP has said it would require immigrants to sign a "contract" promising to learn Spanish, adapt to the culture and traditions of Spain and obey the nations laws. Both parties promise more nurseries and pre-schools, higher pensions and to plant trees to combat climate change. (The PSOE was the first to come up with the tree offer, and said it would plant 45 million trees nationwide. Last week the PP upped the ante by promising to plant 500 million! So, either way, Spain will be greener by 2012, right? Yeah, right!)
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As for controversy, well, the Spanish Catholic Church got into the act by issuing a letter telling its members not to vote for parties that support abortion rights and gay marriage -- in other words, don't vote for the PSOE. (The Zapatero government introduced full gay marriage in Spain in 2005. The PP has said it does not intend to overturn it.) The Government was so bothered by the Spanish Bishop's Conference intrusion into the political process that it had its ambassador to the Vatican make a formal complaint. (The Pope has yet to respond -- and if he does, I'll bet it's with a similar letter of his own.)
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The economy is a major issue and will surely affect the outcome. The Spanish housing market bubble is deflating, if not exactly bursting, with prices beginning to fall; price increases for basic necessities have been sharp; unemployment is rising; and because of world-wide economic instability, Spaniards seem to be a little jittery in general. This has been a rather recent turn around, coming after a few years of steady economic growth.
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This change in exonomic fortunes probably has done more than anything else to allow the PP to cut into the PSOE's lead in the polls. A month ago, the PSOE was widely seen as having the best chance at victory. Now, according to one major survey reported on in today's El Pais, the PSOE has only a 2.9% lead over the PP.
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So, who will win? ¿Quien sabe?