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Companies devote less to salaries and more to the dividend than before the crisis

The new productive model, with less weight in sectors such as construction, is less favorable for employees

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Companies devote less to salaries and more to the dividend than before the crisis

The Spanish economy has restored levels lost with crisis after a decade. And companies are best stops. Taken with closing data of 2007, photograph of non-financial societies reveals that, as a whole, se are in a rar better situation than in 2008. While household incomes are located in 686,071,000,000 and still lose 28,058,000,000 with respect to 2008, companies obtain 98,474,000,000 more, reaching 267,680,000,000.

The Bank of Spain has explained this process on several occasions: when faced with a financial crisis, companies reacted by raising ir margins to be able to finance mselves at same time as demand fell. I mean, y had to adjust costs. And fastest cut was job. In a few years, departing that companies dedicate to remuneration of salaried workers plummeted in 65 billion. Thanks to this brutal adjustment in midst of recession, y obtained that in 2009 ir incomes climbed in about 30 billion to 200 billion. And between that year and 2012 y remained stable around that figure despite collapse of domestic demand. At same time, many societies were more overturned with foreign markets, and interest payments began to descend at high speed. Exports and reduction of financial burden also contributed decisively to maintenance of benefits.

As soon as recovery came, corporate surpluses were shot back to 267 billion to close to 2017. At this stage of expansion, companies did not even have to improve ir margins. The increase in revenues reported by highest sales was sufficient. During those years of return to growth, remuneration of salaried workers also recovered. But clearly not at same rate. With 10 billion less, it hasn't even recovered levels of 2008 yet. And interest bill has been cut to 55 billion, thanks to ECB's monetary policy, debt reduction and disappearance of highly indebted firms.

What have companies done with this increase in revenues in amount of 98,474,000,000, 58% more than in 2008? They have practically managed to return to pre-crisis levels of investment. In addition, companies allocate 15,663,000,000 more to dividends, a rise of 33%, although proportionately devote less because it allows m low profitability of a low-rate environment.

But above all y have drastically lowered debt. They have gone from needing debt in about 44 billion in 2008 to getting about 34 billion of annual liquidity in 2017. Due to this funding capacity, debt has fallen to lead in 285 billion since 2009, hovering over European GDP levels. In hands of this process, according to data from Bank of Spain, have fattened ir capital in about 200 billion, so that ir liabilities are same size as in 2008, but with a much more sound structure: y are more capitalized with shares, have more assets Financial resources and are less dependent on debt and refore on swings of interest rates.

New Balance

In short, it is a new model with companies more healthy but much less favorable for employees. Much of se figures are explained by change in sectors operated during crisis. The construction, which is very labour-intensive, has been replaced by exports, which require fewer employees to produce same. In fact, GDP has been recovered with 1.6 million of less busy. In addition, service sector has also gained weight: as IMF's number two explains, David Lipton, in Spain, many workers displaced by crisis have ended up in less productive services and, consequently, worse paid. or in temporary jobs and in submerged economy, where it is more difficult to improve productivity and thus salaries.

On or hand, with very high unemployment, downward pressure on wages is even greater in those professions that require little training. The crisis has completely altered balance of forces. The unions denounce that labour reform has, in this sense, been decisive.

In any case, as highlighted by a report by European Commission, it seems that low inflation, competition from or countries and still recent memory of crisis have caused workers to diminish ir labour demands. Nor are companies all in same situation, Bank of Spain needed last month. And many are still reluctant to raise staff. For moment, in light of se data, recovery is not changing new balance of forces.

Competition problems

According to experts, behavior of companies seems logical in years of hard recession, when many were playing survival. But sharp upturn in surpluses recorded during recovery can hide not only a new working reality. "The numbers seem to also point to problems of lack of business competence in domestic market," says a senior administration. If so, companies would have even strengned ir market power, especially in sectors protected from foreign competition, retaining a higher share of benefits that could have gone into pocket of families through cheaper prices.

The last report of BBVA study service highlighted need for furr reforms, including those that "reduce margins in those sectors with extraordinary monopolistic incomes".

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