Thirty years of flat wages: Spain and Italy, Europe's exceptions
Spain and Italy are the only European countries with wages stuck at 1990s levels. The euro, the housing bubble and tax pressure explain the phenomenon.
English · Original discussion in Spanish · Published
Wage stagnation in Spain: thirty lost years alongside Italy
Spain and Italy are the only European countries where real wages have not grown in three decades. The figure, without nuance, points to a structural failure that began with joining the euro. Between 1998 and 2006, Spanish wage growth sank to Mexican levels, according to circulating figures. The construction bubble and the "convergence policies" of Aznar's government --as some recall ironically-- explain part of the mess. But the problem does not end there.
Gross wages in constant dollars have barely changed, and what little they have risen has been eaten up by tax pressure: income tax (IRPF) is not adjusted for inflation, so every nominal raise means a heavier burden. Some point out that "Sanchismo" has started to reverse the trend, while Meloni's Italy keeps falling. Others blame the unions, which only protest when the PP governs, and the drain of Spain's regional governments.
The drag of taxation and housing
The analysis of gross wages is misleading. With inflation eroding purchasing power and income tax (IRPF) brackets not updated, real net pay has been losing ground for decades. Add to this the cost of housing, which during the construction boom diverted any wage gains into mortgage payments.
Two opposing models
The debate is polarized between those who argue that the current socialist government is pulling Spain out of the wage pit --in contrast with conservative Italy-- and those who believe the stagnation is the result of decades of bad policies, regardless of the party in power. The only consensus: the recovery, if it exists, is so slow it is barely noticeable.
Related debates in the forum
Spain and Italy are the only European countries where real wages have not grown in three decades. The figure, without nuance, points to a structural failure that began with joining the euro. Between 1998 and 2006, Spanish wage growth sank to Mexican levels, according to circulating figures. The construction bubble and the "convergence policies" of Aznar's government --as some recall ironically-- explain part of the mess. But the problem does not end there.
Gross wages in constant dollars have barely changed, and what little they have risen has been eaten up by tax pressure: income tax (IRPF) is not adjusted for inflation, so every nominal raise means a heavier burden. Some point out that "Sanchismo" has started to reverse the trend, while Meloni's Italy keeps falling. Others blame the unions, which only protest when the PP governs, and the drain of Spain's regional governments.
The drag of taxation and housing
The analysis of gross wages is misleading. With inflation eroding purchasing power and income tax (IRPF) brackets not updated, real net pay has been losing ground for decades. Add to this the cost of housing, which during the construction boom diverted any wage gains into mortgage payments.
Two opposing models
The debate is polarized between those who argue that the current socialist government is pulling Spain out of the wage pit --in contrast with conservative Italy-- and those who believe the stagnation is the result of decades of bad policies, regardless of the party in power. The only consensus: the recovery, if it exists, is so slow it is barely noticeable.
Related debates in the forum
- The Asturian Employers' Federation will bring in 200 Peruvian workers to fill hard-to-cover vacancies · 24 replies
- Claudia has just graduated as a psychologist; let's discuss some of her opinions about men in a friendly way · 148 replies
- Sanchez says with a rueful face that he knew nothing about the PSOE's dirty tricks, that was Santos Cerdán's doing. · 28 replies
- This is what you find when you set foot in Switzerland · 57 replies
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (38 replies).
More summaries
-
Instagram's DMs reveal the high cost of asymmetric desire
An Instagram inbox flooded with messages highlights the economic and psychological toll of modern dating asymmetry, from housing costs to anxiety drug consumption.
-
Ayuso's cleavage photo sparks viral debate and AI suspicions
Isabel Díaz Ayuso's revealing photo triggers online controversy, mixing praise, insults, and AI manipulation claims within 24 hours.
-
Latin American groups accuse Pamplona mayor of racism over San Fermín ban
Latin American organizations accuse the mayor of Pamplona, Spain, of racism after banning them from San Fermín. The debate over identity and immigration is intensifying.
-
Nigeria: humanitarian strike or war over oil?
Trump bombs Nigeria to 'protect Christians'. We examine the oil interests, the rivalry with China and the multimillion-dollar cost of the operation.
-
Inurrieta: central banks can create unlimited money, but at what cost
Economist Alejandro Inurrieta says central banks can create money without limit. Critics warn that inflation destroys purchasing power. Reality or trap?
-
Julio Iglesias sues eldiario.es and Nacho Escolar for defamation
Julio Iglesias is suing Nacho Escolar and eldiario.es for defamation. The financial cost and the legal precedent could change investigative journalism in Spain.