The Spanish economy entrusts its foreign competitiveness to wage containment

The energy crisis is already affecting Spain's competitiveness in international markets. The latest update of the Competitiveness Trend Index (ITC), which the Ministry of Industry prepares every three months to monitor "the external competitiveness of the Spanish economy", recognizes that in the second quarter of the year -in full impact of the effects of the Russian invasion of Ukraine – Spain's competitive position deteriorated vis-à-vis its main competitor markets: the European Union and, more specifically, the euro zone. The Industry report attributes this deterioration to the unstoppable rise in the CPI, which shot up to 10.8% last July and widened the price differential with the euro zone to almost two points, and also to the higher relative price of value of exports in Spain compared to its major competitors. According to the data produced by the department headed by Reyes Maroto, Spain has been losing competitiveness for more than a year with the bulk of the euro economies, the market that acquires more than half of the goods and services it provides abroad and from which Between 35 and 40% of the goods and services purchased in foreign markets come from. In this period, exports from Spain to the euro zone have gone from accounting for almost 56% of the total to less than 53%. The economic asset of containing wages With domestic inflation soaring and increasingly far from the average level of the euro countries and the unit value of exports becoming 1.2% more expensive than in the euro zone and 3.6% that in the rest of the EU, only labor costs –determined by the evolution of wages– are sustaining the price competitiveness of the Spanish economy in its main markets. This is recognized by the report by the Ministry of Industry, which places unit labor costs as the only determining factor in the price-competitiveness of the Spanish economy, which is evolving more favorably than in the country's main competing economies. While unit labor costs would not have risen and would have even fallen slightly in Spain, in Germany, Italy, France or the Netherlands they have risen at a rate of 2.3%, 3.2%, 1.9% and 0.7% , generating a competitive advantage that is somehow compensating for the less favorable evolution of both the economy's general prices and the value of exports. MORE INFORMATION The CEOE warns companies: the rise in wages must be linked to employment and productivity What the data from the Ministry of Labor say is that in the agreements signed until last July, wages experienced an average rise of 2, 56%, far from the level at which inflation has been moving for a year, while the salaries of the more than three million salaried workers of public administrations have increased by 2%. This situation, however, could begin to change. UGT and CC.OO. They have already advanced that they will initiate a wave of mobilizations in companies in the coming weeks if more generous salary increases do not begin to be signed and even from the Government, the Minister of Labor, Yolanda Díaz, has not only encouraged the salary demands of the unions in the companies but yesterday he demanded that the Minimum Wage grow "more than ever" in the current context. The issue threatens to become a new source of tension in the conversation about economic policy in Spain. Both the Bank of Spain and, in a less forceful way, the Vice President of Economic Affairs, Nadia Calviño, have been in favor of containing wage increases to prevent encouraging second-round effects that make inflation chronic over time and further erode the already damaged competitiveness of the Spanish economy. Also on the table is the famous income pact, which businessmen and unions could not reach in the spring talks, but which continues to be the number one priority of the Government to guarantee social peace and a moderate evolution of wages and business margins in the face of the turbulence that they are coming

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