The Independent Authority for Fiscal Responsibility (AIReF) today kicked off a cycle of seminars on structural issues that have an impact on the sustainability of public accounts, with the aim of complementing its own analyses with a view to updating the Opinion on long-term sustainability that AIReF will publish in March 2025. The President of AIReF, Cristina Herrero, opened the first session and explained that rigour and transparency form part of all of AIReF’s analyses; hence, the interest in wanting to discuss and delve deeper into aspects that are hard to quantify but have a major impact on sustainability.
Specifically, Cristina Herrero referred to demographic projections; institutional aspects that affect pension systems and the dynamics of healthcare spending, among others; along with the assumptions on the potential growth of the economy and the macroeconomic environment in the coming years, which encompass elements such as productivity, participation rates and structural unemployment.
Given the technical difficulty of obtaining very long-term projections of these components of growth, most analyses introduce assumptions that project growth based on convergence to the levels of other countries or historical averages, together with sensitivity analyses. AIReF wants to go a little further in order to anchor its macroeconomic scenario properly at a time when medium- and long-term orientation is opportune and necessary.
The cycle of seminars will feature four sessions: the outlook for the evolution of productivity; the implications of the labour reform on employment and productivity; immigration, the labour market and the outlook for the evolution of participation rates, and the impact of increases in the minimum wage (SMI) on contributions and employment.
The first session held today focused on productivity, a central element of economic growth and the sustainability of public accounts, as the President indicated. In fact, she pointed out that increasing productivity fosters a virtuous cycle between growth and sustainability, by generating more tax revenue and thus relieving the tax burden on future generations. However, productivity in Spain is still below the average for the euro area.
The President recalled that reforms and investments are being implemented within the framework of the Recovery Plan that seeks to improve the functioning of the labour market. However, the enormous challenge of assessing their impact is still pending. Furthermore, the spread of Artificial Intelligence (AI) could bring about another technological revolution and have an impact on employment and productivity, although there are other elements that could have an adverse impact, such as demographic ageing and the shocks of recent years.
The first session was attended by the President of the National Productivity Council and advisor to the Bank of Spain, Juan Francisco Jimeno; the economist at the IVIE and the University of Valencia, Matilde Más; and the European Central Bank economist, Paloma López García.
