the governor of bank of spainPablo Hernández de Cos maintains that “workers will suffer a substantial loss of purchasing power in recent quarters.”
In his speech to the Commission on Economic Affairs at the Congress of Deputies this Wednesday, Hernández de Casas attributed this «Limited pass-through from prices to wages» For less incidence of wage guarantees in collective agreements.
However, he warned of the “risk” that, if inflationary pressures persist, these clauses will be shifted to wage negotiations and trade margins and, therefore, will result in a “second round of further indirect effects on inflation.”
Thus, he has maintained that “there is a certain exhaustion in this implied income agreement.”
loss second round effects“They arise when, in an effort to maintain their purchasing power, workers demand a wage increase in line with inflation, which increases labor costs and creates additional pressure on final prices”, he explained. Something that “isn’t happening enough.”
He added that indirect effects, which include the transfer of increased energy costs by companies to the price of their products, have already been “reflected” in inflation with “inflationary pressures beyond the energy component”. Governor.
Ask for Rental Agreement
The governor of the Bank of Spain has emphasized the need to “agree on an income agreement to avoid triggering an inflationary spiral that will only amplify the harmful effects derived from the rise in energy prices.”
The agreement, agreed between companies and workers in social dialogue, would include “sharing the inevitable decline in national income”.
On the one hand, there is a need for national coordination and the implementation of mechanisms that allow to adapt the agreement difference between productivity and activity Among companies and sectors, taking into account “families whose living conditions have been particularly affected by rising inflation”.
It has also discouraged that this final income settlement avoids formulas for automatic indexing of wages for past inflation, while considering it convenient that it considers multi-year commitments with respect to both wage growth and job protection. Is.
Focus fiscal policy on the weakest
Hernández de Cos described the fiscal measures taken by the government as positive, but temporary and focused on the needs of the most vulnerable households and companies, noting Spain’s high public debt and “asymmetric” influence between regions, companies and families.
It would be desirable to “focus efforts on supporting the lowest-income households, those most suffering from the effects of inflation, and companies most vulnerable”, he clarified.
It has also asked to avoid widespread use of automatic indexation clauses in expenditure items, to avoid reaction to inflationary process.
Bank of Spain warns of loss of purchasing power of workers