Friday, September 29, 2023

Wages grew 6 points more than productivity during the pandemic

Our country has suffered three economic crises in the last three decades, all of which have had different effects and severity on the country. The last crisis, caused by the coronavirus, left behind the greatest decline in GDP in its entire history, which in 2020 was 10.8%, 3 times greater than the worst year of the Great Recession. However, compared to previous crises, the pandemic crisis reveals a context not seen before in times of recession. On this occasion, “productivity fell, inserting its nature into the normality of the economies around us, and which did not happen in previous crises. For the first time, the collapse of activity caused a decrease in non very serious work. And, secondly, because the real salary is maintained (increased slightly), despite the magnitude of the recession,” explained the UGT union.

For the union led by Pepe Álvarez, the fundamental factors that explain the evolution of the two values ​​are due to the “decisive support” of Erte and “the assistance given by the government to the companies, which partially preserved the productive fabric, jobs, and the income of millions of households.

Taking the entire study period (from 1992 to 2022) as a reference, the cumulative result of the same values ​​represents a growth of 11.3% in labor productivity and only 0.9% in wages. This circumstance causes a gap “with very important distributive and productive consequences: the companies win and the workers lose,” says the UGT.

According to the union’s research service, the goal for an advanced economy is to increase productivity and stability, because it is synonymous with development. This means prioritizing activities that create more value and more qualified and better paying jobs.

“After decades of delay, these changes seem to have taken place in the Spanish economy, which has generated a lot of work, but is essentially stable and in some activities with the most innovative capacity, as it has been since the pandemic is over, ” they explained, giving as an example the increase of 23.9% of people affiliated with IT or Telecommunications and 14.4% more in Professional, Scientific and Technical Activities, etc.

The union emphasizes the good functioning of the countercyclical policies applied as a result of the pandemic, the change of strategy of the European institutions (with NextGen EU funds) and the labor reform, ” which has been able to put job stability at the center of job creation”.

For UGT, the main difference between the measures taken during the Great Recession and those used during the pandemic is that, in the first case, an austerity policy was implemented that reduced spending , eliminated aid and exacerbated rising unemployment and the economy. Meanwhile, in the second case, stimulus measures are carried out through an expansionary fiscal policy that mitigates the negative impact, preserving employment and income.

1993 Crisis and Great Recession

In the last three decades in Spain there have been three economic crises, each of them of a different nature and magnitude. The first recession experienced by the Spanish economy took place between 1992 and 1993 (the year in which the effective fall in GDP occurred), was more industrial, and although short, it created a sharp increase in unemployment ( more than a million people) and caused a reaction, up to three devaluations of the peseta in nine months to try to gain competitiveness.

The second crisis occurred between 2008 and 2013 (although the same level of production as before the crisis was not reached until 2017) and was nicknamed the Great Recession by academics because of its severity. This Great Recession, which originally started in the financial sector but quickly spread throughout the productive fabric, means that from GDP growth rates above 3% and 4% to fall in GDP in the same proportion.

Nation World News Desk
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