We Spaniards already sensed it, especially every time we have to go to the supermarket or the gas station, but now two of the most important economic institutions in our country confirm it: our salary is worth less and less, and the situation continues to get worse.
On the one hand, the governor of the Bank of Spain has indicated that the workers are enduring a considerable loss of purchasing power, as reported by the EFE Agencywhile the Economic and Social Council (CES) of Spain assures in its annual report that inflation is reducing the purchasing power of professionals as it had not done since 2012.
Loss of purchasing power. The ESC, in its annual report for the year 2021 recently presented, indicates that Spanish salaries had been gaining purchasing power almost uninterruptedly between 2014 and 2020, with the exception of 2017. In 2019 and 2020, in fact, the value of salaries would have risen by 2% on average thanks to the low inflation rates.
However, during the year 2021 the economic consequences of the pandemic have already begun to be felt, and the inflation that began during the past year, which reached 3.1%added to a rise in salaries lower than those registered before 2020, caused salaries to lose 1.38% of their purchasing power during 2021.
From bad to worse. And those CES data only indicate the beginning of the storm, since in 2021 inflation was only beginning to manifest itself. By 2022, different organizations nationals e international predict that the general rise in prices will reach 7%, more than double that of last year, and the European Union Statistics Agency ad this same Tuesday that during the month of May that has just ended, inflation reached 8.1% in the common market.
inflationary spiral. This progressive loss of purchasing power of the Spaniards worries the governor of the Bank of Spain, Pablo Hernández de Cos, who pointed out this Wednesday in the Economic Affairs Commission in the Congress of Deputies that, if it continues like this and does not remedy it in some way , the situation could lead the country into an inflationary spiral with unforeseeable consequences.
Hernández de Cos explained that, if the situation continues along these lines, the workers will pressure the companies to increase their wages, which will cause the companies to raise prices to compensate for this increase in the cost of work, thus generating a vicious cycle of inflation.
Solution? The governor of the Bank of Spain points out that, in order to try to avoid this inflationary spiral, it is necessary to agree on an income pact, that is, an agreement between workers and employers to distribute the cost of inflation equitably and avoid new increases accused of prices. The government and unions, in fact, have been negotiating an agreement of these characteristics for weeks, although, for the time being, unsuccessfully.
In a rental agreement, companies and workers agree to negotiate without a conflict taking place, since this harms the economy as a whole. In this commitment, professionals accept more moderate salary increases than would be required due to inflation and take into account business margins, while employers agree to slightly increase salaries, maintain employment and follow a moderate path of increase of prices that does not completely compensate for the increase in the cost of work.
Image | Andres P. Mohorte