Malaga province workers lose nearly 2 per cent in purchasing power as prices outpace wage growth

The rise in the cost of key goods and services has been much higher in provinces such as Burgos, Cantabria and Toledo, where it has reached or even exceeded 5%.

Within Andalucía, Malaga shares the top spot with Cordoba and Granada, compared with the 4% in Seville or the 3.6% in Almeria, Huelva and Jaén. Across Spain as a whole, prices have not risen this much for more than three years, since early 2023.

At the same time, however, wages in Malaga province have only grown an average of 2.45%, which represents a loss of purchasing power of 1.85% for local workers compared with the 4.3% rise in prices.

Between January and August, a total of 64 collective agreements were signed in the province, affecting 32,334 companies and 257,192 workers. Of these agreements, the majority are company-level agreements, which include a limited number of workers (6,504) but involve even more modest pay rises (limited to 1.91%).

Meanwhile, the 13 companies and the more than 250,000 remaining workers covered by sectoral collective agreements signed this year in the province are set to receive pay rises averaging around 2.46%.

The agreements signed in Malaga do not stand out for their relative generosity, but rather for the opposite.

In Andalucía, the average pay rise is 3% (this also implies a loss of 1% in the purchasing power of workers in the region relative to regional inflation, which stands at 4%).

In some provinces, this agreed pay rise is slightly higher: Seville (3.47%), Cadiz (3.39%), Cordoba (3.23%) and Huelva (3.17%).

It is in Huelva where the least purchasing power is lost: it is less than 0.5%, bearing in mind that the CPI there stood at 3.6% in August.

In virtually no case in the rest of Spain do the agreed pay rises even match or exceed inflation: the sole exception is Murcia, where collectively agreed wages rose by nearly 6%, compared with inflation of 4.3%, resulting in a gain of 1.5% in purchasing power.

Across Spain as a whole, meanwhile, the 4.3% rise in prices over the last 12 months compares with the 3.04% average wage growth in the 2,889 collective agreements signed in the country so far this year, which cover more than 876,000 companies and over 8.8 million workers.

This means that, on average, Spanish workers are losing 1% of purchasing power. The decline the residents of Malaga have experienced is greater, at nearly 2%. In fact, the reduction in the purchasing power of wages in the province of Malaga is one of the highest in Spain, second only to Burgos (2.7%), Madrid and Toledo (2%).

In light of the inflation and wage figures, Javier Pacheco from the Comisiones Obreras trade union said: "The energy sector is passing on to consumers the higher costs caused by the crisis in the Middle East, while maintaining and increasing corporate profit margins to record levels, even doubling its profitability compared with the pre-pandemic period."

Given this situation and the loss of purchasing power for households, Comisiones Obreras has demanded that the government intervene in energy pricing, going beyond the current fuel subsidies.

Furthermore, the union has conveyed to employers its demand that negotiations for the AENC (agreement for employment and collective bargaining) resume and that wage increases be set between 4% and 7%.

The CEOE (Spanish confederation of employers' organisations), however, believes that if the average accumulated CPI so far this year stands at 3.2%, they raise the average for the entire year to just 3.4%, given their forecast of a "gradual normalization of maritime traffic in the Strait of Hormuz".

"This rise in the CPI in August should be considered temporary, as it is due to an energy supply shock, as reflected in the core CPI, which remains stable at levels below 3%," the employers' association asserts, thus implying that the argument of increased inflation will not be useful for unions to demand higher wages.

Some analysts view favourably the fact that, for the moment, the inflationary surge has not yet reached wages, as they believe that this could contribute to further price increases and fuel the inflationary spiral.

According to Cunef professor Santiago Carbó, as long as food prices remain contained, Spanish households will not suffer, given that there are generally high levels of savings, although these are concentrated primarily among high-income earners and families with older members.

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