I can’t remember any other period in recent history with such purchasing power loss, both in the public and private sector, as the one Spain is experiencing since the end of 2008. Wages sharp fall is a result of the crisis and in the same time the crisis is getting bigger as effect of income reduction and the fall in consumption. When it rains it pours.
The wages decline puts Spain back in the beginning of the century. Some of the biggest gains of the last decade have been lost, as the 4 million unemployed know. There are very few debates and proposals about how to help them and mend the situation. One of the darkest aspects of the Spanish pessimistic spirit is that resignation towards unemployment and the increase of poverty, as former PM José María Aznar recently pointed out in a polemic TV interview.
Since last year, the depressing effect has spread to the pension scheme, which until now was the only hope for many families. Both former governments of the last ten years (Mr Aznar’s and Mr Zapatero’s) didn’t alter the pensions value. Mr Zapatero in 2011 neutralized growth above 2009 CPI, so we can say pensioners did not lose purchasing power and that pensions below the average won several points.
Rajoy has a problem with pensions for which he could pay a historical price; the situation is not his fault but these are indeed his circumstances. Someone should warn him that both him and the Spanish society have an enormous stake in pensions, which are now essential for consumption among the most defenseless population. He should not dare talking of recovery when pensions are in decline.