Nominal labour costs in Spain have increased +2.1% in Q1 2019, compared to 0.9% in Q4 2018. It is the largest increase since Q4 2103 (+2.1%).
The cost of social security contributions increased +3.6%, which could be related to this strong increase, as strictly wage costs rose +1.7%. Experts at Bankinter recall that inflation in May was 0.8%, so that increases in purchasing power have been produced, which should be compensated by improvements in productivity to prevent a fall in competitivity.
At the same time, labour costs in the Eurozone have increased more than expected in the same period, with a loss of competitivity (+2.4% vs +2.3% estimated and +2.4% before). As a reference, it is the second largest increase since 2012 (+2.5% in Q3 2018). In terms of purchasing power it was good news because it increased more than CPI (+1.2%). But there is an imbalance with the increase in productivity (+0.3%) and a loss of competitivity of -2.1% (+0.3% productivity – 2.4% labour costs). To put it in a global context, in the US labour costs in March fell -0.8% while productivity increased +3.4%. In this way the US economy has improved its competitivity by +2.6%.