Rising inflation is having a negative effect on workers’ spending power and more so in Spain than anywhere else except Greece, according to a report issued recently from the Organisation for Economic Cooperation and Development (OECD). It estimates that real salaries (in other words earnings without the effect of inflation taken into account) will fall twice as much in Spain as in the average of the most advanced companies and will cause a 4.5% loss in purchasing power this year.
Some employees’ salaries have been protected to some extent by collective bargaining agreements and the average pay increase has been 2.6%. This is the biggest rise this century but is still well below the inflation rate, which was 10.5% last month.
The OECD also predicts that real values of salaries will continue to drop for the rest of this year, while inflation is likely to remain high.
The organisation says this cost of living crisis is disproportionately affecting households with the lowest income; these include workers whose jobs were hit hardest by the pandemic restrictions who, having managed to overcome that, are now having to spend a much larger proportion of their income on energy and foods.
The OECD is therefore calling on the government to look at ways to adjust official minimum salaries and maintain the purchasing power of those whose earnings are low.
At present there is a major debate in Spain about the minimum salary for 2023, with unions calling for it to be increased to 1,100 euros a month and businesses reluctant to pay any more.