Spain’s average salary falls 0.7% on rise in unskilled labour

7 July 2008

MADRID – A significant increase in unskilled labour has reduced the average Spanish salary by 0.7 percent, according to the latest figures by the Organisation for Economic Cooperation and Development (OECD).

The report, which analysed the world’s 30 biggest economies in 2006, shows Spain ranking second after Portugal in terms of greatest drop in real salaries – after factoring in inflation.

Although all Western countries have embraced wage restraint in recent years, Spain is one of the prime examples of this trend. After losing ground for an entire decade, in 2006 gross average salaries fell to EUR 18,369 a year, according to the global institution.

"If the average salary is falling, it’s because new unskilled workers are joining the labour force on low wages. This is not necessarily a problem, as long as they progress," said Paul Swaim of OECD’s employment analysis and policy division, which edited the report. "It would be a problem if the wages that are already in the market got smaller."

The dilemma is a complex one: whether to keep salaries high while preventing new employees from entering the workforce, or reducing wages to the point of creating a parallel job market that is much more precarious than the first.

This latter situation defines Spain during the recent boom years, when job creation focused on the least skilled sectors of the economy – construction and services – and on immigrant workers, who are more willing to accept lower wages.

[El Pais / Lucia Abellan / Expatica]