Employment as a target

José María Fidalgo. Professor. IE Business School

10 January 2011

Unemployment has driven many Spanish families to despair. What they need to inspire them to fight for a better future is a national plan based on strengthening SMEs and added value in business.

People are starting to be afraid. People who have lost their jobs are frightened because they see no future. And people in families where nobody works are desperate. And the hundreds of young men and women who go back home with their university qualifications and carry on sending their curricula are stressed and frustrated because they studied for something they can´t use to get a job. And they hear nothing encouraging in the debate embittered by the fight for power among the political elite, nothing that tells them "they are thinking about me". If economic crises didn´t cause unemployment they would pass almost unnoticed by most of the population, by people whose only source of wealth is their salaries.

When the real-estate bubble burst in Spain, when levels of employment collapsed and the debts of the public sector, businesses and families rose, when struggling banks stopped lending to businesses and employment continued to fall, the people who thought that Spain’s financial institutions would have resources thanks to support from the authorities finally lost faith as the situation went from bad to worse.

We need a plan for a country led by the state and civil society that is more heavily committed to the future than the one we have at present. And it should already be in place. The public sector has reached its limit. If we don´t want to sink under the weight of our debt interest, it needs to put a firm limit on its spending. But it also needs to do more.

It has to make a firm commitment to reactivating a key segment of the business fabric: medium-sized enterprises. Only they can absorb the injection of technology and innovation and only they are the right size (between two hundred and one thousand workers) to be able to increase their productivity and competitiveness at the same time. It is they who can now seek to enter the foreign sector and do something for our poor trade balance, creating processes to produce goods and services with high value added. Thus they would generate a business ecosystem that could grow in terms of both size and energy.

There are ten thousand businesses of that size and we would need around three thousand of them to survive and remain buoyant so that they can employ twenty percent of the working population in ten years´ time. They will serve to generate jobs based on worker qualifications, on the outsourcing of peripheral activities in terms of the value scale, and on positioning half of their production in the foreign sector.

To do that, and only that, it would be worth our while to create an intelligent and generous framework of technical and institutional support, with experts and authorities to say what, how and when. We need an intelligent and generous allocation of resources to ensure that risk is rewarded and that failures do not leave those that have taken the risk unprotected. We need a commitment to helping regenerate not only what has been damaged by the crisis, but also to ensuring that we do not base the future on weak and fragile low-flying projects ever again.

That would be the national target which would override other urgent projects in order to make sense of the much-preached-about-and-called-for austerity and sacrifices. That is the way to think about future employment and about an economy based on production and work, rather than speculation and the wheel of fortune. That would be the real signal, sent out from within, saying that we too can do it.

If we have not managed at least this in 10 years´ time, the demography and the new distribution of wealth on the planet that is being designed by the growth of the so-called emerging countries, which are poor, young, productive and prolific, the old rich countries that are non-productive and non-prolific will be relegated to the bottom of the pile and we will have lost our well-being, our more qualified human capital and, probably, our freedom.

Europe needs a project that makes us see ourselves as something more than a "union of consumers". Spain needs its people to see themselves as the winners of a better future that is up for grabs in a very difficult game in which they are "sweating blood". Europe needs to provide clear, straightforward leadership and Spain needs unabridged internal and external leadership with a clear focus on the future, because the situation as it stands makes no sense for a lot of people. This is why not only our so-called political institutions are being seriously undermined but every one of our institutions – which does nothing to encourage people to keep their shoulders to the wheel. We were told in the past that if people can’t see a more or less viable future, they won´t want to pay the "cost of the transition" because they will not see where exactly they are transitioning to.

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