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Spanish government prepares for the future, reaches milestone agreement

Agreement for the future

The Government and social stakeholders sign a social and economic agreement on growth, employment and pension guarantees at Moncloa Palace.

The Spanish Government, trade unions and business leaders have reached a comprehensive Social and Economic Agreement that encompasses the reform of the pension system (see appendix), the reform of the Active Employment and Professional Training Policies, collective bargaining, industrial policy, energy policy and R&D;+i policy (Research, Development and Innovation).

This is an agreement aimed at growing the economy, fostering employment and guaranteeing the Spanish pension system. It is an agreement to join forces because it enriches the reforms laid out by the Government with the positions and ideas put forward by the trade unions and business leaders. It is an agreement to move forward together because only together, with a mutual commitment to the reforms and their objectives, can we overcome the challenges faced by the Spanish economy. In short, it is an agreement to inspire confidence among Spanish society, workers and investors.
Agreement for reform of active employment policies

What is sought through this reform?

1. To prepare the unemployed so as to improve their insertion in the labour market, in other words, to provide them with training to increase their chances of finding work and to steer training courses towards those activities in which there is a greater offer of work;
2. To better respond to the labour requirements of companies; and
3. To thus convert Employment Services into better instruments for helping workers find work and companies find the workers they need.

Two types of measures

The agreement for the reform of active employment policies contains two types of measures:

1. Structural measures:
* To transform and strengthen the Public Employment Services in such a way as to enable them to meet the new targets set by this reform. Each unemployed individual will receive a personalised service from the Public Employment Services, consisting of an individualised agenda, aimed at making it easier for them to find a new job;
* The programmes of active employment policies and the professional training included therein will be redefined in order to better adapt to the employability needs of the workers, to the needs of companies and to the socio-economic development of each autonomous region and each production sector.
2. An action plan for implementation now, in 2011, with 2 types of action:
* Measures to foster the hiring of young people under the age of 30 and the long-term unemployed;
* Programmes for professional re-training and economic assistance for those people who are no longer entitled to receive unemployment benefits.

Action plan with 2 programmes

1. Especially aimed at young people and the long-term unemployed.

This is a programme to foster the hiring of people from these two groups; the groups requiring the most urgent action.
What will it involve?

* In the first year of this Plan, those companies that create new part-time employment positions, with a number of working hours between 50% and 75% of what would be considered full-time employment, will be eligible for a significant reduction in Social Security contribution payments:
o 100% for those companies with less than 250 employees; and
o 75% for those companies with more than 250 employees.
* These reductions will be applicable to all part-time contracts, whether temporary or fixed.
* The corresponding contract must have a term of at least 6 months.
* The employment positions must be new; they cannot exist to replace other employees that the company already has on its payroll.
* Estimates show that 100,000 people could find work during the first year of this Programme.

2. Programme for those people who are no longer entitled to receive benefits (including a supplement of almost € 400).

This is a programme linked to training that will combine the re-training and/or professional re-insertion measures necessary for those people who are no longer eligible for unemployment protection to find a new job, especially in emerging sectors, and an economic supplement of almost € 400, for a period of 6 months, for those people who meet the requirements to receive it.

The beneficiaries will have the right to:

* Undertake a personalised training scheme to improve their ability to find work by participating in guidance and training activities to improve their employability;
* Receive said economic supplement.

This is a nationwide programme and the economic supplements will be paid and managed by the Government of Spain.

Agreement on Professional Training

* Objective: to guarantee that, in a few years time, 85% of all young people in Spain have, at least, received intermediate-level professional training. A relevant statistic: international studies indicate that only 15% of all work in the European Union in 2020 will be for people with no professional qualifications.

Main measures agreed:

* To increase the offer of places on professional training courses in the education system aimed at those sectors with the greatest potential for employment growth;
* To make progress on the recognition of professional skills acquired through work experience so that, with the appropriate complementary training, a professional training qualification or certificate of professional skill can be obtained. This measure is particularly aimed at the population that is currently unemployed and has no recognised qualification.
* Government and social stakeholders will draft a map of the professional training offer that can respond to the needs of the various production sectors and to the new economic growth model. This will enable the planning of a professional training offer.
* To increase the professional training offer online. The Spanish Ministry of Education currently offers nine online intermediate-level and advanced-level professional training cycles and the Agreement provides for an increase thereof to ten cycles for the next academic year (starting in September 2011).

Two commitments with a deadline

The Agreement also includes two commitments from the Government:

1. An employment strategy for the most mature workers.
To draft, following consultation and negotiation with the social stakeholders, a global employment Strategy for the most mature workers that includes measures to foster their continued presence in the labour market.
2. Capitalisation fund.
* To approve the creation of this Fund by means of a Draft Bill before 18 June 2011.
* Each worker will have access to such a Fund, fed into over the course of their working life, for an amount equivalent to a number of days of salary per year of service (to be determined).
* Access to the fund may be granted on the grounds of dismissal, geographic mobility, for the undertaking of training activities or at the time of their retirement.

A group of six experts will be set up, by agreement between the signatories to the Agreement, for the purpose of studying how this type of fund is operated in other countries and how best to adapt the same to the Spanish system.

Two commitments with a deadline

The Social and Economic Agreement includes a bi-partite agreement between the Trade Unions and Business Organisations on the basic criteria for the reform of collective bargaining. Among other things, the following can be highlighted from this agreement:

* any reform put forward must be based around the principle of respect for the autonomy of the social stakeholders to manage collective bargaining;
* the collective bargaining system has problems linked to its structure and general outline, to legitimisation, to internal flexibility, to innovation and content adaptation and to its response to difficulties, among other things;
* For the Business and Trade Union Confederations signing this Agreement, the Spanish system of collective bargaining must face up to the business reality and the reality being lived by the workers. To this end, there will be a need to better rationalise and structure collective bargaining agreements whilst also enhancing collective bargaining in the field of business, thus enabling its effectiveness and beneficiaries to be increased;
* Collective bargaining has also felt the effects of the economic crisis, especially in the last two years, which must lead negotiators to also tackle the process of adaptation to difficulties with greater realism and speed in any agreement that may be signed, as well as the criteria contained in the Agreement for Employment and Collective Bargaining for the period 2010-2012, in order to provide the necessary and urgent response to the viability of companies.

Finally, the signatory Confederations undertake to sign an Inter-Confederational Agreement that will include the agreements on the reform of collective bargaining.

Industrial and energy policy

The part of the Agreement related to industrial policy and energy policy has a dual purpose:

* To create jobs; and
* To generate sustained, long-term growth.

Agreement on Industrial Policy

Its objective is to increase the weight of industry in the Spanish economy. To this end, it is agreed to incorporate a number of elements into the Integral Industrial Policy Plan 2020 (PIN 2020) that was approved in December 2010. Among these elements are the following:

* To improve and strengthen the role played by the Industry Monitoring Centres in the formulation of industrial policy.

What are they? The monitoring centres are forums that have been set up since 2005 to undertake the task of monitoring, analysing and evaluating industrial activity.

There are currently 10 of them:

1. Electronics
2. IT and Telecommunications Technologies
3. Car and Truck Manufacturers
4. Capital Goods Manufacturers
5. Automotive Equipment and Component Manufacturers
6. Chemical Industry
7. Textile-Confection
8. Wood and Metal
9. Paper
10. Construction

* To strengthen ENISA and CERSA in order to improve the financing offered to industrial companies. ENISA and CERSA are two entities through which the Spanish Government provides financial support and covers risks, respectively, to SMEs and entrepreneurs.
* Creation of a Meeting Forum comprised by the Spanish Government, Trade Unions and Business Organisations and the autonomous regions in order to examine State and Regional industrial regulations and to propose solutions to any possible dysfunctions or overlapping that may be detected.
* Commitment to the development of the electric vehicle as an industrial project, as well as in terms of its energy- and environment-related aspects.
* to this end, industrial plans will be developed that seek the development of a technology and the export of knowledge in this field.
* the electric vehicle is an effective instrument for increasing efficiency and sustainability in the transport sector and will contribute towards reducing the environmental impact of transport as it represents a replacement for fossil fuels.
* Commitment from the Spanish Government to undertake a reform of the Spanish Institute for Foreign Trade (ICEX) aimed at strengthening its financial capacity and measures enabling assistance to be provided to companies in terms of their internationalisation strategy. The foreign sector and internationalisation must play a key role in the recovery of the Spanish economy.
* To incorporate the current Action Plan to Reduce Administrative Burdens into the Integral Industrial Policy Plan 2020.
* The Plan to Reduce Administrative Burdens is aimed at identifying and removing all redundant, out-of-date or unnecessary administrative burdens and to revise those processes that can be simplified or performed via telematic channels. This will facilitate both the setting up and operation of companies, as well as reduce the cost and time involved in administrative tasks.
* Inclusion of infrastructure and housing policies in aspects of urban redevelopment and residential housing projects, with a particular focus placed on improved energy efficiency. The Agreement contains a section dedicated to the development of energy services companies. The emergence of these companies, as yet unknown in Spain, will generate the creation of a new economy sector that will occupy an important niche in the market and will enable part of the labour from the construction sector to be absorbed and a new employment sector specialising in the field of construction to be created.
* Updating of the Strategic Infrastructures and Transport Plan (PEIT) given the importance of transport for the competitiveness of the economy.
* The Working Group on Industry and Energy for Strengthened Social Dialogue, in collaboration with the Industry Monitoring Centres, will be responsible for monitoring, evaluating and eventually reformulating the PIN 2020.

Agreement on Energy Policy

Based on the premises that:

1. the Spanish economy must overcome an excessive dependency on fossil fuels and configure a combination of energy sources that can be sustained over time; and
2. that the energy strategy must also obtain a reasonable cost for energy that does not prejudice economic activity in Spain.

The most relevant points of the Agreement are the following:

* The Spanish Government and social stakeholders, through the Working Group on Industry and Energy for Strengthened Social Dialogue, will formulate proposals regarding the energy mix (the combination of energy sources with which Spain will cover its supply demand) between now and 2035.
* A diversified offer of energy sources will be maintained, taking the mix approved by the Sub-Commission for Analysis of the Energy Strategy of the Lower House of Parliament as a benchmark.
* Seeking a greater electrification of the Spanish economy and ensuring compliance with the European targets to obtain a 20% quota for final renewable energy by 2020 and a 10% quota for renewable sources in the transport sector.
* In order to achieve this objective, it will be necessary to enhance electricity and gas interconnections to a point at which the targets set within Europe are met.
* Drafting of a new Renewable Energies Plan 2011-2020 that will include a similar target to achieve the renewable energy objectives forecast in the 2020 mix so as to strengthen the technological and industrial leadership of Spain in the field of renewable energy.
* This will mean more than doubling current electricity production with renewable sources. The support policies will place an emphasis on fostering innovation, technological development and competitiveness.
* To promote energy saving and efficiency by developing an energy services market:
* This will require the establishment of support measures for financing energy services companies.
* A new Renewable Energies Act and a new Action Plan on Energy Saving and Efficiency 2012-2020 will be approved.
* Current awareness campaigns with the public will be maintained in order to foster a responsible use of energy.
* To support better management of demand so that consumers can take advantage of the price differences that currently exist within a single 24-hour period (greater consumption during peak hours and very low consumption during off-peak/night hours, mainly).
* To this end, it will be necessary to promote smart electricity grids.
* Remote metering of consumption.
* The creation of mechanisms that promote consumption during periods of lesser cost for the system.
* To intensify the research and development of CO2 capture and storage technologies.

Agreement on Innovation Policy

The Social and Economic Agreement reached between the Government and the social stakeholders expressly recognises R&D;+i (Research, Development and Innovation):

1. as the only way to consolidate a new, more sustainable economic growth pattern; and
2. as a guarantee for improved business competitiveness, which impacts on the creation of quality jobs.

This Government has made great efforts to support R&D;+i by doubling the resources earmarked for this area since 2004 and by increasing the number of researchers in Spain up to the European average. This commitment is now being strengthened with the added effort and commitment being made by the trade unions and business leaders.

As a result:

* The R&D;+i policies will maintain the priority status given to them by the Spanish Government to date;
* The efforts being made to meet the targets set by the State Innovation Strategy will receive more backing than ever.

Actions included in the agreement

The agreement aims to strengthen a number of actions that are already under way and to promote other actions planned for the future, all of them related to innovation and encompassed within one or another of the following 3 lines of action:

LINE 1: Creation of new jobs

In order to create qualified jobs, it is agreed to:

* Strengthen and continue the National Human Resources Programme of the National R&D;+i Plan and the INNCORPORA Programme. This will improve the training given to and the labour reinsertion of young people at R&D;+i centres and companies;
* Launch a new Risk Capital Fund. This will make it easier for economic entrepreneurs to gain access to the resources necessary to set up and consolidate viable companies, thus leading to the hiring of qualified workers;
* Consolidate stable employment and a clearly-defined career for people working in the field of R&D;+i through the future Science, Technology and Innovation Act.

LINE 2: Transfer of knowledge and public-private cooperation

In order for the research to generate new products and services, it is agreed to:

* Give priority to R&D;+i in the Human Resources policies adopted by the Public State Administration Services, in particular through the Offer of Public Employment from the General State Administration Services;
* Foster the mobility of professionals between research organisations and companies for the undertaking of joint R&D;+i projects, as provided for by the future Science, Technology and Innovation Act;
* Promote public-private cooperation in the sectors of Energy and Healthcare due to their impact on job creation and improved quality of life;
* Offer incentives and benefits to newly-set-up innovative companies through the "Young Innovative Company Statute".

INE 3: Promotion of new sectors and innovative public procurement

In order to promote an innovation culture in companies, it is agreed:

* That all invitations to tender, tenders to contract and procurement undertaken by the Public Administration Services will encourage companies (particularly SMEs) to make efforts to offer products and services of an innovative nature.
* To this end, a MAP OF INNOVATIVE PUBLIC PROCUREMENT will be published. This map will identify those tenders whose public procurement processes are susceptible to the application of criteria to promote innovation.
* To increase the spread of innovative Spanish products in order to improve the visibility of innovative Spanish companies.

Appendix

AGREEMENT FOR REFORM OF THE PENSION SYSTEM

PURPOSE


* To strengthen the public pension system in light of the challenges posed by the demographic and social situation forecast in the coming decades.
o It removes all risk of financial imbalance.
o It enhances solidarity and commitment between generations.
o It guarantees pensions in the future.
* To inspire confidence and peace of mind among Spanish society by strengthening something of such vital importance to the Spanish Welfare State as the Public Pension System; one of the best in Europe.

DRAFT BILL

On Friday, the Government of Spain gave substance to the reform of the pension system in a Draft Bill. This document follows the same line as the Social and Economic Agreement signed today and considers the recommendations made by the Toledo Pact, which were approved by the Lower House of Parliament on 25 January 2011.

MAIN LINES OF THE PENSION REFORM (Draft Bill)

RETIREMENT AGE

(Currently set at 65 and requiring 35 years of contributions to the Social Security System to retire with a 100% pension)

The demographic challenge and the increasing life expectancy of the population make it necessary to progressively raise the legal retirement age to 67. However, it will also be possible to enjoy early retirement under certain circumstances:

Various possibilities:

* Retirement at 65 with a 100% pension when a certain period of contribution to the Social Security System can be demonstrated, which will be gradually raised to 38 years and 6 months. It will also be possible for those people who do not meet this contribution period requirement to retire after the age of 65, although a reduction coefficient will be applied to the actual amount of the pension they receive.
* Retirement at 67 with a 100% pension if contributions to the Social Security System have been made for a period of 37 years.
* It will also be possible for those workers who undertake activities in particularly dangerous or arduous situations to retire before reaching 67.
* Mothers who may have interrupted their working life to care for their children may bring forward their retirement age by 9 months per child up to a maximum of 2 years provided they meet certain contribution requirements.

Furthermore:

* Partial retirement is maintained at 61, but contribution will be full and complete for both the relieving and relieved worker.
* The case of special retirement at 64 is discontinued.
* The incentives for voluntarily extending one's working life are increased.

EARLY RETIREMENT

(Currently an option from 61 and subject to a reduction coefficient on the pension per year ahead of the standard age of 65)

* This will continue to be an option, but from 63 and with a reduction coefficient, provided that a minimum contribution period of 33 years can be demonstrated.
* Under exceptional circumstances, in situations of crisis, workers will be able to retire from 61 when they have contributed for at least 33 years.

CALCULATION OF THE PENSION

(Currently calculated on the last 15 years of working life)

* This will gradually be adjusted to 25 years of working life and will take place over a transitional period of 10 years.

MINIMUM CONTRIBUTION PERIOD

In order to have the right to receive a retirement pension
(Currently set at 15 years)

* This will remain at 15 years

SIGNIFICANT CHANGES

(Which will benefit young people)

It is increasingly common for young people to enter the labour market through training or research programmes that, in some cases, do not cater for contributions to the Social Security System.

* Those companies that finance these programmes will be required to pay contributions to the Social Security System for the beneficiaries, who will obtain such protection as corresponding to a training contract.
* Furthermore, it will enable contributions, on a one-off basis and a maximum period of up to two years, to cover the contribution gap in the initial years of the working life of workers in those situations where there was no obligation to pay contributions in the past but where such an obligation does exist today.

IMPROVEMENTS TO MINIMUM PENSIONS
(For single people)

* The reform also strengthens the protective role of the System by improving the minimum pensions paid to old age pensioners who live alone, whether they receive a retirement, incapacity or widowhood pension.

AGRICULTURAL WORKERS

Those agricultural workers who contribute separately through the Special Agricultural Workers Regime will become part of the General Regime by means of a system that guarantees the equivalency of their contributions.

SELF-EMPLOYED WORKERS

As regards the Special Self-Employed Workers Regime, the minimum contribution bases will be increased over the next 15 years in a similar fashion to the increases applied to the General Regime in order to provide equivalency between the protection they receive and the protection received by employed workers.

THE FIRST SOCIAL AGREEMENT SINCE THE TRANSITION TO DEMOCRACY DURING A PERIOD OF CRISIS

* This is the first time that an agreement has been reached between the Government and social stakeholders in a period of economic crisis.

A great number of agreements of varying content and magnitude have been signed between the various governments and social stakeholders since the transition to democracy, but NEVER in a period of economic crisis.

Would it not be an exaggeration to say that this agreement is the most important agreement since the Moncloa Pacts? No, it would not.

It should be remembered: that the sound judgement and significance of the Moncloa Pacts were not recognised until several years after they were signed.

* And regarding the social and economic agreement signed today:
o Its scale is marked by the far-reaching implications and importance of its content, which ranges from pensions to employment policies and includes collective bargaining, professional training, energy policy, industrial policy and R&D;+i policy.
o The reform of the pension system agreed in this document is the most important and far-reaching to have been devised since the transition to democracy in Spain.
o And, in terms of collective bargaining, the reform agreed here will be the first such reform in 30 years.

Therefore, in light of the content of the Agreement and due to the scale and huge significance of the reforms agreed, it would absolutely not be an exaggeration to say that this is the most important social Agreement in Spain since the Moncloa Pacts.

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