SPAIN: Wages in Spain are less sensitive to the cycle … – EntornoInteligente

SPAIN <- - AUGURE_NOTICIA_INICIO!>: Wages in Spain are less sensitive to the economic cycle than in other countries, according to Linde / Expansion / The Bank of Spain says in a report that wages “tend to rise when unemployment decreases and vice versa”, although less than in other countries.

The economic bulletin for June, the agency studies the evolution of wages to changes in the cyclical situation. Performs this analysis by data Continuous Sample of Working Lives (MCVL) and analyzes the evolution between 1987 and 2013.

He explains that “wages tend to fall in real terms, when it increases the unemployment rate and increase in the periods in which the unemployment rate is falling. ” Yes, he says, that relationship does not seem to be constant throughout the different phases of the cycle.

The report says that increasing the unemployment rate by 1 percentage point (pp) reduces wages in real terms by 0.24%, “while in a period of expansion is greater cyclical response of wages observed”.

In this way, the reaction is at a fork between 0 , 38% and 0.48%, depending on the level of unemployment, as

at the initial stages of expansions, when unemployment is still high, wages tend to be less responsive to improve of the economy as unemployment has fallen below its historical average.

In addition, the level of incidence between unemployment and the salary is lower than countries like the US, UK or Germany, some of these countries exceeds 1%.

And why this gap exists in Spain on these countries? One reason is the differences depending on the age of the workers, a variable that, in other countries, shows a high relationship with the degree of cyclical sensitivity of wages.

“The reaction of wages a variation of 1 pp in the unemployment rate moves between -0.41 from -0.65 in times of recession and expansion periods of low unemployment, “the Bank of Spain estimates. However, this vículo is lower with increasing age of the workers. “For workers with more than six years

old, the ratio of wages to the economic cycle is very low, with a coefficient of -0.13 in recessions and -0.33 in periods of expansion. “

Another reason is the degree of temporality of the Spanish labor market. The salaries of permanent are more permeable to the evolution of unemployment. In fact, they are almost twice as sensitive to rising unemployment when the economy is in recession and unemployment is higher than in the case of permanent workers (0.43 versus 0.21).

If evolution is analyzed in recent years, it is that the change in policy increased the possibilities for companies to adjust working conditions “to changes in the cyclical situation, through, for example, flexible conditions for sagging. ” And is that wages are ma? S sensitive periods of expansion and less recessive.

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