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Harmful inequality

precariousness and wage stagnation compromise growth

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Harmful inequality

The Catalan crisis, with all its importance, should not make us forget one of main problems that worries Spaniards. The increase in inequality, with its obvious aftermath of increased risk of poverty, is not only a factor that threatens economic growth. The combination of precarious employment and low wages affects young people, families and jeopardizes pensions. It damages, in short, social fabric and generates political disaffection.

The measures of inequality — aggravated by 2007 crisis and by coarse-stroke economic policies (wage cuts, budgetary restrictions, elimination of labour rights) applied in Spain since 2012 — are indirect, but according to Reports by international agencies show that in Spain it is higher than in Europe. The precariousness of incomes and instability of work, principal causes of inequality, affect especially to young people, but also to retirees (fall of purchasing power of pensions) and to average incomes.

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A serious problem deriving from inequality (and risk of poverty; in Spain re are five percentage points above European average) is that it causes social unrest, one of most toxic factors for political stability. In addition, it is not a recommended base to ensure stable growth in medium and long term. The economic system can absorb its effects in short term as long as re are expectations of improvement: correction of precarious hirings, progressive increase of salaries to acompasarlos to pace of economic revival and retirement income Don't lose any purchasing power. But if re is no expectation of change, consumption will begin to resent, starting with that of durable goods, and domestic demand can begin to accuse its effects from 2018.

Despite repeated warnings from many international bodies, in Government — limited by minority operations and crisis in Catalonia — it is not just assimilated (i.e., understand and act accordingly) that favorable external conditions are going to Disappearing within approximately one year. The interest rates of euro will not always be maintained at current levels and price of crude oil tends to rise more than to be maintained.

It is refore necessary — and when a few months go by, it will also be urgent — to plan two fundamental policies: that of income and prosecutor. Wage stagnation must be halted, because it ruins productivity, and it is possible to change most damaging aspects of labour reform. In fact, Ministry of Employment wants to put timid recruitment reforms on scene. Neir in terms of economic nor social self-esteem is acceptable to maintain youth employment rates around 40%. At same time, it has to increase state's collection capacity, so that it can sustain social protection network in better conditions than today.

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