If there is one area in which Spain has done its duties and outperformed other European nations, it is salary cuts. On Friday the IMF put forth a proposal to cut 10% more in salaries in order to create jobs for the unemployed, but the work that Spain has already done is significant and a key factor behind our increased exports, competitiveness and budget successes.
The collaborative spirit between companies and workers has created a small miracle: since 2010 payroll costs have dropped 7.1%, which is a more significant cut than in any other euro zone country.
Although inflection points have varied from sector to sector, from public administration to education, both social services and healthcare have figured out how to make the kinds of cuts needed to improve competitiveness througout Spain and jumpstart the economy. Fixing the real estate and financial industries would improve each sector in the business cycle. But these sectors have healed more slowly than others and have struggled to reduce labor costs.
