OECD Economic Surveys: Spain 2000/2001 Volume 2001 Issue 16

Table of contents
Basic statistics of Spain (2000)
Assessment and recommendations
I. Macroeconomic performance
	Macroeconomic developments: the economy is cooling off
		Household spending has weakened
			Figure 1. Recent consumption indicators
			Figure 2. Household demand and saving ratio
			Table 1. Financial position of the economic sectors
		Business investment growth has slowed significantly
			Table 2.  Financial performance of non-financial firms
			Figure 3. Unit labour costs and prices by sector
		Stronger net exports have offset the slowing of domestic demand
			Figure 4.  Contributions to GDP growth
		The current balance has deteriorated because of the oil bill
			Table 3. Balance of payments
			Figure 5. Competitiveness indicators and export performance
		Employment growth is still buoyant, although a little slower
			Figure 6. Employment and unemployment: key features
			Box 1. Recent and future changes inthelabourforcesurveymethodology
			Table 4. Labour productivity growth
			Table 5. Potential output growth
			Box 2. What is the potential growth of the Spanish economy?
		Inflation has accelerated with the oil price rise and the emergence of bottlenecks
			Table 6. Inflation decomposition: comparison between Spain and the euro area
			Figure 7. Consumer prices
	A supportive macroeconomic policy led to strains in the economy
		Figure 8.  General government budget
		Figure 9. The macroeconomic policy stance
		Deficit reduction since1997 is attributable to cyclical and structural factors
			Table 7. The fiscal consolidation process
			Figure 10. The government deficit and the structural budget balance
		The2000 and2001Budgets
			Table 8. General government accounts
		Assessment of fiscal policy in2001
	Challenges for fiscal policy in the medium term
		Table 9.  Stability Programme 2000-04
	The fiscal stability law
	Prospects
		Table 10. Short-term prospects
II. Reform options to boost sustainable growth
	Figure 11.  Total factor productivity growth
	Box 3. Has the “new economy” arrived in Spain?
	Table 11. Recommendations for further structural reform
	Labour market reforms
		Figure 12. Temporary employment contracts by sector
		Figure 13. Part-time employment in international perspective
		Figure 14. Incidence of unemployment by age and sex
		Employment protection remains high
			Table 12. EPL:severance payments
		Part-time employment has been made more flexible
		Wage bargaining should be decentralised
		Active and passive labour market policies need to be carefully designed
	Product market reforms
		The competition policy authorities need more resources
		Subsidies to industry and agriculture distort economic activity
			Figure 15.  State aid in EU countries
		Water policy should focus on demand management
		Telecommunication liberalisation is progressing rapidly
			Figure 16.  Telephone charges in selected countries
			Figure 17. Internet subscribers in the OECD area
		Electricity generation and distribution are highly concentrated
			Figure 18. Electricity prices in selected OECD countries
		Steps have been taken to enhance competition in oil distribution
		Liberalisation of gas distribution has been accelerated
		Despite recent progress, reforms are needed in the transport sector
		Other sectors
	Financial market reforms
		The banking system is adapting to financial disintermediation
			Table 13. International comparison of bank profitability
			Figure 19. Bank intermediation margins and profitability
		Banking on prudence
		Savings banks’ credit policies should not be distorted by political pressures
		The banking sector needs to adapt to future challenges
		Mutual funds intermediate a large share of investment
		Stock markets must prepare for deepening integration in Europe
			Figure 20. Private venture capital investment
	Public sector issues
		Decentralisation is advancing
			Table 14. Public employment and transfer recipients
		Health care reform focuses on the control of pharmaceutical expenditure
			Figure 21. Comparison of health care expenditure in OECD countries
			Table 15. Health care system indicators
			Table 16. Evolution of pharmaceutical expenditure
III. Ensuring the long-term financial viability ofthe pension system
	The ageing process will occur later but will be more severe thaninothercountries
		Box 4. The fertility decline
		Figure 22. Fertility rates and life expectancy
		Figure 23. Population trends in Spain and old-age dependency ratios
		Figure 24. Labour market situation
		Figure 25. Immigration: an international comparison
	Institutional arrangements for supporting the elderly
		Organisation of the pension system
			Table 17. Public pension schemes: number of pensions and expenditure
		Main features of the public pension system
			Box 5. The recent reform of the public pension system
			Table 18. Main parameters of public pension schemes in selected countries
			Figure 26. Pension expenditure in selected countries
			Figure 27. Pensions benefiting from the minimum complement
			Box 6. The pension scheme for central government civil serviceemployees
			Table 19. Retirement age and contribution duration for earnings-related pensionschemes
			Table 20. Replacement rates and rates of return for the main earnings-related pensionschemes
			Table 21. Replacement rates and rates of return for the general pension scheme
			Table 22. Expenditure of earnings-related pension schemes
		Early retirement has declined in recent years
			Figure 28. Participation rates for population aged55-64
			Table 23. Implicit tax rates for an extra year of work
		The private system of supplementary pensions is still little developed
		Family assistance is helping to limit poverty among the elderly
			Table 24. Comparison of pensioners’ income in selected OECD countries
		The elderly receive most of their care informally through the family
			Table 25. Comparison of old-age care and health systems
	The impact of ageing on public finances
		Figure 29. Pension expenditure projections
		Table 26.  Components of pension expenditure until 2050
		Table 27. Implications of changing certain parameters of the general pension scheme
	The options for reform
		Reforms are needed
		A sound fiscal policy is essential, but not enough by itself
		It will be difficult to avoid reducing the generosity of pensions…
		…which will have an impact on all schemes and require the harmonisation of their rules
		Early retirement incentives should be eliminated, particularly for public servants…
		…and disincentives for older workers to stay in the workforce should be suppressed
		Thought should be given to strengthening the private pension system or to making itcompulsory
		Achieving a higher participation rate within a less generous system
		Higher immigration is one possibility, but it has major limitations
		Better family services would increase female participation in the labour market
		Appropriate social services for the aged need to be provided
		The evolution of the pension system should be monitored regularly
			Box 7. Maintaining prosperity in an ageing society: recommendations for Spain
Notes
Glossary of acronyms
Bibliography
Annex I. Changes to the method of calculating the consumer price index
Annex II. The liberalisation package of June 2000
Annex III. Recent labour market reform measures
Annex IV. Uncertainties regarding the demographic projections
	Table A1. Demographic projections
Annex V. The Toledo Pact: measures to improve the public pension system and their impact
Annex VI. Internal rate of return of the public pension system
Annex VII. Corporate supplementary pension systems: pension funds and insurance contracts
Annex VIII. Calendar of main economic events