Some notes
Yesterday Madrid Angela Merkel walked. German Chancellor took the opportunity to speak with José Luis Rodríguez Zapatero the English economy. There were flowers and sticks. On the one hand our executive commended the measures taken, but on the other we challenged our collective bargaining system, urging us to link it to productivity and not the IPC. The measure is controversial and has already had the fronta rejection of the unions. As a picture is worth a thousand words, I leave three slides interesting
1) growth of labor costs in Spain and Germany since 2002 (Source: ABC) VS Evolution CPI (Source: Authors based on INE).
2) Evolution of the unemployment rate in Spain and Germany since 2002 (Source: ABC)
3) Productivity in the OECD
Conclusions:
1) Labour costs in Spain have been very rigid and showed a significant increase even in 2009 when our IPC barely grew. This is untenable from the point of view. By contrast, in Germany, and taking note that there is a "gap" of one year, labor costs saved some parallel with the rise and fall of inflation.
2) The labor market, as its name implies, is essentially a market. That is, there is supply and demand, and there should be an equilibrium price. When the drop in economic activity followed by a fall in the "price" (that is, wage costs), the result is a dramatic increase in unemployment in the current. With lower wage costs probably would not have destroyed so many jobs.
3) Because of the above, we productivity of the soil, which really makes us uncompetitive.
Much of the labor costs are tied to collective bargaining model of our country. As explained in the post "Spain, a perfect storm" , our system of collective bargaining for specific industries and provinces, is the most inefficient of all. It is preferable to a business to business (if USA) or a centralized system such as Sweden (the explanation is mathematical, not a mere vagary). As an example related to my industry visionary, the agreement presupposes Valladolid Vine wage increases of CPI + 0.85. The reality is that on average, the wines of Rueda in 2010 have fallen about 20% the price and all DO de Castilla y León around 8%. The auction we have this year: the windows are up 2% the price of the bottles by the rising cost of energy. The situation is untenable.
Thus, our Minister of Labor and our unions reject the idea of \u200b\u200bMerkel, our prime minister is removed from the midst ( "must be the unions and the employers to discuss the reform of collective bargaining whether wages should be linked to productivity or higher prices ") and the CEOE takes him unawares. In the background because our current system of collective bargaining benefits to those already unemployed, and those who are in power, because "to get his hands" would probably lose a step. For the unemployed, however, no one defends them.
Finally, I recall the post a few days ago about oil and energy. In 2006, Spain imported 100% of the uranium it needs, 99.5% gas and petróelo, 55% gas and 40% for diesel. Ie does not control the prices of key raw materials for the development of economic activity and have a very important role in the "basket" of IPC. Still, today more than 70% of our country agreements include wage revision clauses linked to the evolution of this indicator. Does it really make sense?
The debate should be open soon. The strike goes on and on, and few believe that at this 2011 the ending balance of unemployment will be better than the disastrous 2010 that just passed. Not for me to say that Merkel does everything well, but the German example should make us think and reflect on our labor market.
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