Exemptions from social security contributions for the workers affected have been approved, depending on the form and duration of the procedure, and workers subject to the sectoral mechanism will be required to follow a reskilling plan that includes training. Such arrangements have proven effective during eminently temporary shocks, such as the health crisis, suggesting that they could be equally valuable in temporary macroeconomic situations. However, they would not necessarily be as appropriate in other types of more structural processes, such as those that will foreseeably have to be addressed by the Spanish economy in the years ahead; in such instances, the sectoral form of the RED mechanism would be activated. Consequently, looking forward, it would be advisable to assess how effective this form of the RED mechanism is, compared with other mechanisms currently conceived for permanent restructurings (e.g. redundancy programmes), in terms of boosting the employability of the workers affected and maintaining their human capital, but also in smoothing the necessary cross-firm and cross-sectoral reallocation of resources. (ii) The challenge of training and increasing human capital Increasing the educational attainment level of workers and employers is also crucial to reducing structural unemployment, boosting productivity and fostering the creation of higher quality jobs. In recent decades, the Spanish population’s level of educational attainment has improved considerably. However, Spain is still behind its European peers in this respect. By way of illustration, in 2020 Spain had the highest early school leavers’ rate in the EU.

8  For its part, year-on-year growth in the prices of services and non-energy processed goods, which include processed food, stood at 4.3% in May. 3  of employment.9 Among the factors behind this worse relative performance of the Spanish economy is its specialisation in tourism.10 This sector has been among the hardest hit by the pandemic and, moreover, the recovery in inbound tourism has been slower in Spain. Indeed, the gap with the euro area has tended to narrow in the most recent period, given the improvement in activity in hospitality and leisure. However, there was still a significant gap in trade, transportation and hospitality; construction; and professional and administrative activities; as well as in industry, in part due to the importance of the automotive industry. Conversely, in the sectors that have led the recovery, such as financial activities and public administration, GVA has outstripped its pre-pandemic level in Spain more than in the euro area. From the standpoint of demand components, the difference visà-vis the rest of the euro area reflects the lower buoyancy of services exports,11 residential investment12 and private consumption.13 The role of economic policy in the pandemic crisis Economic policies worldwide have played a key role to mitigate the impact of the health crisis on the income and financial position of households, firms and financial institutions. The monetary, fiscal and prudential authorities have also taken complementary measures, adapting them flexibly to the health situation and the economic effects of the pandemic.