Saturday, January 28, 2023

UK and Spain: different economic policies, different social climate

Britain is probably the developed country most affected by civil unrest and labor strikes. Why this situation? Let’s recap a bit so we can understand what’s going on.

United Kingdom, founded in Thatcherian neoliberalism

conservative revolution and the neoliberal model promoted by British Prime Minister Margaret Thatcher between 1979 and 1990 meant an abandonment of the industrial economy and a commitment to a new economic model based on emerging finance and sustained growth la city Londoners.

However, the financial crisis of 2008 revealed the enormous limitations of an economic model that originally benefited the elite and those belonging to the labor market. la city,

From the 1990s to 2015, the United Kingdom deindustrialised, its trade balance evolved towards a chronically negative position, its public sector became precarious and consolidated the gradual replacement of industrial employment by precarious jobs. and poor pay from the service sector (waiters, cooks and all kinds of personnel oriented to the tourism sector).

As a result, its per capita GDP has clearly surpassed that of the United States, Germany, Canada and other developed countries since 2008, and its labor market has suffered a sharp wage devaluation.

It is in this economic context of rising social inequality, gradual increase in poverty of the working classes and high uncertainty of the public sector, where the political drama of Brexit is set, which prompted the British government to invoke Article 50 of the treaty. union and apply to leave the EU in March 2017.

Since the referendum for the United Kingdom’s departure from the European Union in June 2016 and the subsequent resignation of James Cameron, the country has had four prime ministers (Theresa May, Boris Johnson, Liz Truss and Rishi Sunak). . The European Union has lost a good part of its market share and in 2022, it is expected to reach an inflation rate of 11%, which has significantly increased the standard of living of a large part of its population.

The reaction of its citizens to this economic, political and social scenario has been one of great malaise, which has been channeled through waves of strikes in the public sector, rail transport, public health or airport workers, and has affected the country’s economy. almost completely paralyzed. Economic activity since the fall of 2022.

Spain, a service economy

Spain, like other EU countries, has gone through an economic process relatively similar to that of the United Kingdom, but with some significant nuances. The Spanish economy has been increasingly outsourced since the 1980s, with a significant tourism sector, which is expected to account for 8% of Spanish GDP in 2021 (up from just over 12% before the pandemic) and 11% of total business. % Was.

However, the deindustrialization process has been more moderate and, to some extent, has been offset by the significant weighting of the manufacturing sector (5% of GDP in 2021).

Similarly, the labor market has faced extreme uncertainty and high wage depreciation, especially from 2008 to 2020. However, social unrest is rare in Spain, as reflected in statistics on strikes and lockouts compiled by the Ministry of Works.

According to data collected between January and September 2022, the number of strikes is slightly higher than those recorded in 2021, but their social impact is much lower: 520 strikes and 112,704 participants. Furthermore, most of them are registered in the private sector (43.6% of manufacturing) and, fundamentally, they belong to the collective bargaining process. So, what circumstances have been able to affect this relative social peace in terms of crisis and inflation? We can point to three major factors:

  1. Although the economic paralysis caused by the COVID-19 pandemic had serious economic consequences for Spain, with GDP expected to decline by 11.3% in 2020, the labor market and especially the unemployment rate behaved relatively positively. In 2020, the unemployment rate barely increased by 2% compared to the previous year (16.13%), which later declined to 13.33% in 2021. The main explanation for these figures lies in the application by the Spanish government of ERTE. The harshest period of the pandemic. This initiative of the government, which benefitted 3.38, 2.99 and 1.83 million workers between April and June 2020, allowed a good portion of business to be maintained and the incidence of the pandemic in unemployment figures to be quite modest.

  2. The protective role of the European Union during the pandemic period. It is necessary to highlight two very important elements contributing to reducing the economic and social impact of COVID-19 in European countries: the EU’s coordinated strategies for the procurement and distribution of vaccines during 2021 and, in particular, NeXT Funds Generation EU, which make up the EU response to the pandemic and which seeks to provide economic support to Community countries through subsidies and credits to a total value of 750,000 million euros, of which 140,000 million correspond to Spain.

  3. The economic policy developed by the Spanish government with the aim of increasing social security has had a calming effect on the population. legislative initiatives such as the 2021 Labor Reforms, which have provided stability to hundreds of thousands of workers; increasing SMI from €735 per month in 2018 to €1,000 per month in 2022; Revaluation of pensions according to CPI or application, in 2022, of anti-inflationary measures such as the cap on gas, which sets limits on the price of electricity in the energy markets of Spain and Portugal, and which has made Spain 2022 (5.6%) The country with the lowest inflation in the European Union.

The sum of these factors means that, in contrast to what occurs in the United Kingdom, social unrest in Spain has been of low intensity and hardly had any impact on Spanish society.

Another issue is polarization and outcry Political, which mainly comes from political parties and the media, but that’s a topic for another article.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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