Miguel Martín, CEO of the Spanish Banking Association, argued yesterday for the need to undertake internal devaluations over the next five or ten years, lowering corporate salaries and prices.
Economists agree with this strategy because it is the only way that companies can remain competitive and increase exports. Martín believes that this step is unavoidable for getting Spain out of a recession, because using the euro means that it can't simply devalue its currency.
The government should push the measure first. It can lower government worker salaries while providing more jobs.
Many companies have already made salary cuts. But for the cuts to have any effect on prices, they have to be applied to even more companies and sectors.
