Wages in Spain fall for record four quarters in a row

Average wages in Spain fell for the fourth quarter in a row in the period July-September as part of what is known as an internal devaluation to recover competitiveness.

The National Statistics Institute’s (INE) latest labor cost survey, which was released Tuesday, showed that average monthly wages in the third quarter declined 0.2 percent from a year earlier to 1,801 euros, the lowest level since the third quarter of 2011. The fall was the first time salaries have declined for four quarters in a row since the current statistical series began in 1996.

The drop is largely explained by salary cuts in the public sector and the greater flexibility afforded to companies by the labor reforms introduced by the conservative Popular Party government in February of last year.

Including additional costs, such as compulsory Social Security contributions by companies, average wage costs in the third quarter rose an annual 0.2 percent to 2,460 euros after having fallen for the previous five consecutive quarters. However, adjusting for the number of working days and seasonal factors, average labor costs in the latest quarter declined 0.1 percent from a year earlier.

The INE said the average working day declined by 0.3 percent in the quarter, the equivalent of 7.1 hours weekly, of which 80 percent was accounted for by holidays. As a result of the fall, the average effective labor cost per hour in the quarter rose by 0.5 percent.