Moreover, managing a company requires certain skills – interaction, strategic, operational and control abilities – that also appear to be comparatively lower in Spain than in countries such as Germany, the United Kingdom, France and Italy. In any event, the indicators available on business management should be viewed with caution. It is not clear they distinguish appropriately between entrepreneurial capabilities per se, as opposed to structural problems arising from an institutional framework that constrains the capacity to organise firms’ productive resources. For instance, excessive Spanish labour market segmentation does not facilitate on-the-job training of either temporary or permanent workers. Thus, on top of improving entrepreneurial and employee capabilities, doing away with the excessive duality of employment contracts is fundamental for raising productivity. To conclude my thoughts on the importance of human capital, allow me to refer also to the need to improve the relationship between general government and the firm in two spheres: that of vocational training and that of innovation. On vocational training, it is essential that firms should be involved in the guidance of youths seeking their first job. But it is likewise necessary that the administration should evaluate and adjust the vocational training system as business needs evolve. Recently there has been much discussion of the virtues of dual vocational training, based on the positive results in other countries. But it is difficult to define how best to transfer a system such as Germany’s, with a high prevalence of large industrial corporations, to Spain’s very different business sector.

This will add to the information we already collect from surveys, official sources and the Bank’s Agency network 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Chart 5: Uncertainty indicator well correlated  Chart 6: Better correlated with investment than  with GDP growth  consumption  Source: ONS and Bank of England calculations  Source: ONS and Bank of England calculations  Chart 7: Rising uncertainty tends to shift new hiring  The first two speak for themselves: aggregate  towards temporary jobs  GDP growth is strongly correlated with uncertainty; on the demand side, the share of business investment is more sensitive than that of 6  consumer spending . The fourth is interesting. Although employment decisions are more easily reversed than most capital spending, permanent appointments do involve at least some degree of commitment and therefore might be susceptible to changes in uncertainty. The data seem to bear this out. Chart 7 plots the change in the uncertainty measure against the ratio of temporary to permanent job hires (as measured by the REC job market survey). The correlation is clear, including in the Source: REC survey, ONS and Bank of England calculations  most recent data. 6  Charts 5-7 display the bare correlations with uncertainty and don’t necessarily tell you about causation – it’s quite possible that weaker growth increases uncertainty about the future. But even after you attempt to control for this reverse effect, the impact of exogenous changes in uncertainty still appear very significant.