And to end the year

This week there was an agreement on the reform of the labor market. The reform of the PP has not been repealed. It is a minimum agreement because it is what most interested everyone. Spain cannot afford to fail the European Commission regarding the commitments it has imposed on us to receive Next Generation funds, therefore, there is an agreement and it is minimal because only a minimum text makes it possible to have an agreement: the socialist part of the Government insists on its ability to agree on such an essential aspect, within the agreed deadline and with the approval of Brussels; The non-socialist part of the Government and the next alternative to the PSOE, explains that it is the most it has been able to achieve now, but that if it had more electoral strength, it would have gone further in repealing it; the unions are in the same line of possibility and the bosses argue that they have avoided a “total” repeal like the one demanded by a certain left and that they have achieved, basically, minor changes. Everyone wins.

Except for the unemployed and the precarious, whose underlying situation is structural and does not respond so much to specific labor legislation, but to its systematic non-compliance and to a productive model where an excess of good business, but bad companies, which only keeps lowering the cost of labor, weighs too much.

It costs a lot to understand that, if half of Spain’s electricity supply already comes from renewable energies that are offered around 40 euros MWh, the average price of electricity in the wholesale market has exceeded 340 euros MWh, doubling this year, on average, with respect to the previous one, for a similar demand. And it is even more difficult to understand the resistance to changing the rules of a so-called “marginalist wholesale market”, with rigid demand, designed for when the costs of the different generation technologies were not as disparate as they are now.

It is evident that in other European countries with which we share the same model, they have advanced much more than us in three aspects that greatly limit the relative importance of said market: the so-called PPAs, long-term bilateral contracts with an appraised price; the commitment to storage and the development of the so-called capacity market, as an alternative to the current one. Why is the same not happening in Spain? Mystery.

The commitment to renewable energies had its origin in the fight against climate change. The electricity sector was one of the highest emissions of greenhouse gases and eliminating carbon, as well as reducing the use of gas in electricity generation was essential. Then, the spectacular fall in costs as a result of technological advances (solar photovoltaic, for example, has reduced its costs by 90% in the last decade) gave rise to the hope that, in addition to reducing emissions, they would lower the price of electricity. At the moment, Spain is failing in both aspects: we neither reduce emissions as promised, nor do we lower the price of electricity.

The Paris Agreements set the goal of reaching 2030, having reduced CO2 equivalent emissions by 30%, compared to 1990, taken as the base year. Spain, which signed the Agreement, establishes in its recent Climate Change law, 23% reduction as a minimum objective. Well, if in 1990 we emitted 288Mtm, and we will close this year, twenty years later, with emissions just 3% lower, when GDP has not yet recovered from the pandemic, to think that the miracle will take place in the next nine years and we will meet the objectives, it is a bit excessive. Above all, because we lack the necessary policies to extend the reduction to the rest of the emitting sectors: construction, mobility, agriculture.

The drums of inflation they sound very loud. Fearing that a price-wage spiral will unleash, the Central Banks are already beginning to change their speeches and even their decisions: The Bank of England has already raised interest rates (from 0.10 to 0.25 %), the Federal Reserve announces that it will do so over the next year and the ECB, more reluctant, anticipates that in March it will abandon the purchase of all public debt at zero price, although it does not expect to raise rates before 2023. In all In any case, it seems that the era of unlimited and very cheap liquidity is coming to a leisurely end.

Given that the recovery is not fully taking off in Europe and it seems clear that fueling citizen unrest ends up giving votes to anti-democratic populisms, those responsible for economic policy are beginning to assume that maintaining a certain budgetary expansion is going to be inevitable for, at least, another five years, in which world supremacy can be settled in a pulse in which no one asks for the help of the European Union.

Related news

The review of the budgetary stability criteria for when their compliance is required again, once the pandemic has been overcome, is on the table and there are already several proposals that are being launched, such as the one made by the Commissioner for the Economy this week in a ceremony in which I had the opportunity to participate: accept that public debts have increased with the COVID and raise the limit of 60% of the GDP established (and breached) to 100. Alternatively, the COVID debt could be excluded, such as from the calculation of the deficit Total public investment or, at least, that associated with Next Generation funds could be excluded. In any case, don’t let the austerity obsessives rub their hands, because in terms of budgetary stability criteria, the past will not return either. Fortunately.

I finish with another test recent development of the great social marginalization to which we are subjecting young people in Spain: the Synthetic Index of Comparative Youth Development, which the Centro Reina Sofía has just published and where it is clear that, in three of the five indicators, our young people are much worse off than their European counterparts: education, employment and empowerment. Only in digital skills are they above, as well as in content related to quality of life. That the fact that they do well does not hide from us the tremendous gap of opportunities that we are creating for a whole generation. Leave it as my wish for the new year.