Spain is the economy least indexed to inflation among the large economies of the European Union (EU). Agents in our country – the State, companies or workers – are generally less linked to price increases, which implies, among other things, a greater vulnerability of families' purchasing power, according to a Moody's classification that compares different aspects of EU countries, such as union density, the percentage of collective agreements that are updated with the CPI (Consumer Price Index), or pensions or public salaries, the energy that is imported or the rigidity of prices –the resistance to variations.
This conclusion of the debt rating agency highlights the weak position of the workers in the income agreement. That is to say, the agreement to share the damage of inflation between them and the companies, which is requested by institutions such as the Bank of Spain or the Government itself, by moderating the growth of wages and limiting the improvement in business margins – the ability to profit from income, which increases with inflation.
According to the variables used by Moody's to compare the EU economies and their link to inflation, workers in Spain start from a position in which they have hard to get more than "pay restraint" before the current bite that suppose the price increases for the consumption capacity. And far away then is the feared spiral of prices and wages, which entails greater permanence of inflation combined with severe risk of recession.
The low union density in our country stands out, which is only lower in France. Barely 12.5% of workers are members of a union. In the neighboring country, 8.9%. This contrasts with 65.2% in Sweden, 49.1% in Belgium or 32.5% in Italy.
A priori, this low union density reduces the bargaining power of the workers, although this can be channeled in other ways, as the Ministry of Labor has shown in recent times through the increase in the Interprofessional Minimum Wage (SMI), the protection of the ERTE or the last labor reform.
What a government cannot achieve is to sign collective agreements linked to the CPI, which Moody's points out are not common in Spain, but neither are they in the rest of the large EU economies. As are the clauses for reviewing wages according to price increases, neither in the private nor in the public sector, with the exception of Belgium.
This reality is in force in the meager increases in salaries reflected month by month in collective agreements while inflation runs amok, with special cruelty with the lowest incomesconcentrating the greatest increases in energy and food, which are basic needs that can hardly be stopped consuming. The salary increase agreed until July it stayed at 2.56%, according to data published this Wednesday by the Ministry of Labor. That same month, the IPC advanced 10.8%.
Other figures show the same fact. Salaries grew only 2.9% in large companies in June compared to the same month last year, according to statistics from the Ministry of Finance on 30,000 companies, 40% of workers in our country. In May it was 3.4%, in April 5.5%, in March 4.1%, in February 3.2%. Inflation has not fallen below 7% since that month, and the average forecast of the European Commission for 2022 is 8.1%. In contrast, the sales of these companies increased by 7.6% in June and the pace has been even higher in recent months.
Moody's conclusion also collides with the voices that ask that the update of pensions in 2023 not include the CPI. This link also exists in Italy and Belgium, and "partially" in France, and appears as the only institutional defense against the bite of inflation. The only protected claim.
And, despite the forecast that pension spending will increase by 15,000 million, according to AIReF, the Government maintains the deficit target (difference between State income and expenditure) at 3.9% due to the higher collection that inflation entails, even despite the inevitable slowdown in growth.
Another variable that Moody's measures is the percentage of energy that each country imports with respect to its needs. In this case, Spain is above the average, almost 68%.
The agency also calculates the level of rigidity of prices in the face of variations, which in our country is one of the lowest, which means that the CPI will fall together fairly quickly if the energy crisis and the war end.