The European Central Bank’s (ECB) executive board member Jose Manuel Gonzalez-Paramo said that although the market’s perception of lack of commitment for fiscal discipline by certain EU region countries can’t be ignored, the common currency euro is certainly not at risk.
“The euro is definitely not in any danger. But there has been a lack of commitment by some governments, including Spain, to comply with the terms of the Stability Pact. But it’s very important to know what the market is thinking”, said Gonzalez-Paramo in an interview to ABC newspaper on Sunday.
Mr. Gonzalez-Paramo said that the key to Spain’s economic recovery lies in successfully reforming collective wage bargaining and the other structural economic reforms initiated by the country – like overhauling the pension system and labour laws, may prove inadequate.
“The key objective is the reform of the collective bargaining system. The country’s recovery lies there and not to be aware of that is doing the economy no favours”, Mr. Gonzalez-Paramo argued.
Linking salary to inflation is an incorrect metric and “prevents any adjustment to the labour market”, he added.
The Spanish government, employer’s associations and labour unions has failed to reach an agreement last week on collective wage bargaining, although they signed a broad agreement on job creation and industrial development.