The IMF and the European Commission's vice-president Olli Rehn are not the only ones to raise their voices in support of a major pact between companies and unions. The pact would lower salaries of Spanish workers by 10%, a measure that will create more jobs. The proposal that Rehn backed yesterday has not been well-received by the Spanish government, the opposing party and national unions and employer groups.
Despite the initial rejection, the proposla deserves to be looked at more closely because it aims at a communal objective: reducing Spain's startling high 27% unemployment rate to levels closer to the European average, which is just over 8%.
While it is true that Spain has made a major effort to cut jobs and salaries since labor reforms were passed in February of 2012, other ideas have not been fully explored by social agents. For example, so-called "mini jobs" could provide a much-needed boost to the labor market.
Further, experts that we consulted mentioned another variable that has yet to be explored: lowering social security contributions. Overall labor costs have been cut dramatically in Spain. Since 2010 they have dropped 7.1%. In the rest of the euro zone, these costs have risen by 1.2% on average.
Salaries have increased by 0.5% and 0.6% in 2012 and 2013, respectively. Despite all of that, there is a lot of work to do still, and in this sense the IMF and EC's proposal should be welcomed as a positive possibility.
