Spain - economy: Wages in the target

A central tenet of the new government's policy programme is to introduce labour market reforms to improve the economy's longer-term competitiveness. Restrictive labour laws and a high degree of wage regulation have persistently undermined the Spanish economy's capacity to improve skills and productivity. The prime minister, Mariano Rajoy, seems determined to push through radical changes to the rigid two-tiered structure of the labour market and decentralise collective wage-setting procedures, although implementation risk suggests that their overall impact over the near term will be modest. Recent data underline the need for reform, with employment declining sharply in the final quarter of 2011 and the rate of youth unemployment rising close to 50%.


Download the full report (here)