An employment crisis worse than in Spain, there is nowhere else in Europe. The unemployment rate is approaching the mark of 20 percent. Many employers now insist on cuts in wages, to determine their position in the competition to improve. Companies must apply for the protection of creditors, dismiss employees.
Spain is in a dilemma, says economist Dominic Bryant of the bank BNP Paribas SA in London. "The solution to the problem of competition tightened their debt problem. And wage cuts weaken the domestic economy."
Since the housing prices began falling in 2007, is the reward of the construction worker Patricio Zuniga fallen by half. Together with his wife, he now earns only 2000 euros per month, but 1680 Euros for the mortgage loan is due. "We always make it just so until the end of the month and already use our savings back," said the 40 - year-old from Madrid. Who cuts in pay is not accepted, just get told yes he can go.
After the bubble on the housing market over a year ago and burst of the economic buoyancy of the construction boom has disappeared, Spain is in the worst recession for more than six decades. In addition, the country suffers including that with the abolition of the peso in favor of the euro the competitive advantage of a weaker currency has lost. Economists like Luis Garicano from the London School of Economics assume that only sustainably lower wages and prices in the position of the country in the European competition could strengthen again.
An entire decade, the economic performance of Spain for nearly four percent per annum growth, the country was an important engine of the European economy. Wages and prices rose, it became increasingly expensive real estate. In consequence of this upward spiral of the Spaniards accumulated 800 billion euros of debt. Measured by gross domestic product reached the debt of the Spaniards from real estate and consumer loans 2008, a share of 70 percent. In no other major economy in the euro area, the relative burden of debt so high. For comparison: In the European average, the debt ratio at 45 percent of economic output, as data from the European Central Bank show.
The salary level in Spain is still growing, where unions are influential. In March it was 3.5 percent above the value in the same period last year. With rising unemployment, but this is likely to change. The VW subsidiary Seat agreed with their employees already have a zero. This made the company is a condition for the production of the Q3 small SUV from Audi to Spain to give.
"If the slowdown begins, the unionized workers to relate, they are sensitive to developments in the overall economy," says Gerogorio Izquierdo, head of analysis at the Institute for Economic Studies in Madrid.
The salaries of temporary workers are already being reduced. In Spain, their share of the working population at 29 percent and thus twice the average of the European Union. Example Pedro Sanchez. Of safety has this year received a pay cut by 25 percent accepted to meet its short term contract to keep. With the earnings decline to 900 euros, it is now difficult for him a loan for a total of 3000 euros to repay. "You can imagine how worried I am," says the 30 - year olds.
The economic burden of the debt is increased, that Spain is one of the countries suffering most from the threat of deflation. In March, the first consumer prices since 1952 has fallen on an annual basis. In May, they went back 0.8 percent. In the euro area as a whole stagnated prices.
"Deflation increases the debt burden," says Gayle Allard, vice-rector of the business school Instituto de Empresa. "A constellation of factors worse than it is here to observe, is hard to imagine.