The OECD predicts that Spain will be one of the countries where wages lose the most purchasing power

The OECD places Spain as one of the countries with the biggest drop in real wages, according to a study published this Friday on the job prospects for 2022. "The growth of real wages in Spain fell sharply in 2021, and is expected to continue to fall by 4.4% in 2022," warns the international organization. The data doubles that of the average of the countries of the so-called "club of rich countries" and is only behind Greece, with a fall of 6.9%, with the data available to the organization.

The battle to raise wages in 2022 is served: employer resistance and runaway inflation

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Faced with skyrocketing inflation, wages and purchasing power are suffering in many countries, but in some the deterioration is greater. The OECD forecasts that Spain will be one of the countries most affected in this regard, followed by Italy, with a drop in real wages of 3.1%.

“The strength of the labor market created labor shortages in the tourism, agriculture, construction and technology sectors. This contributed to the increase in nominal wages in 2021, but in a context of accelerating inflation, it was not enough to protect purchasing power”, analyzes the OECD in the case of Spain.

In 2021, wages did not grow enough and inflation has already begun to rise strongly, but the situation has worsened in 2022. Prices have skyrocketed to levels of almost four decades ago while the agreed wage increases are being four times lower , according to the data of the collective agreements. The salary increase agreed in the agreements until August stood at 2.6%while the rise in the interannual CPI that month reached 10.4%.

The 4.4% drop "represents one of the strongest declines in real wages observed among countries for which data is available," warns the OECD.

The study points out that this decrease in real wages translates into "a substantial cut in the purchasing power of workers, especially for those who receive the Interprofessional Minimum Wage (SMI), since consumer prices in Spain continue to rise to levels all-time highs."

Salary battle in Spain

The CCOO and UGT unions are urging the bosses to sit down to renegotiate a wage agreement at the state level, after talks broke down in May. The trade union centrals accuse the CEOE of "blocking" wage increases and are warning of an increase in conflict and mobilization starting in the fall.

From the Government they are also urging the social agents to reach an agreement on salary matters, although in a different way. In the socialist area of ​​​​the Executive, the call for negotiation is general for unions and businessmen, while from United We Can, Vice President Yolanda Díaz has expressly pointed out the employers for getting up from the table and not wanting to negotiate. Thus, Díaz has demanded that the businessmen resume the talks and has shown her express support for the unions in her announcement of mobilizations.

Emphasizes the ERTE to contain unemployment

The OECD has also highlighted in its report to Spain for the reduction of unemployment. “The unemployment rate in Spain fell from its peak of 16.4% (in September 2020) to 12.6% in July 2022. The current unemployment rate is below the pre-crisis level (13.9% in December 2019)”, he collects in his specific note on the country.

In addition, the agency highlights that "the Temporary Employment Regulation Files (ERTEs) have contributed to limiting the increase in unemployment." In any case, the OECD recalls that "despite the recovery of the labor market in Spain, the unemployment rate remains structurally high, and entry into the labor market is difficult for young people".

The study also indicates that “the employment market in Spain recovered strongly” last year thanks to the recovery “of the tourism sector and the general need to fill vacant positions as restrictions related to COVID-19 are lifted” .

However, he considers that this positive trend could be affected by the war in Ukraine, the increase in energy prices and uncertainty, which could deteriorate “business confidence” and slow down “the manufacturing and services sectors”.

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