• Economy The pandemic will freeze wages and increase the pay gap between managers and employees in Spain

Spain is moving towards an economy and a labor market

at two speeds


The crisis caused by the coronavirus has widened the differences between the sectors that suffer the most from the consequences of the pandemic and those others that have not only been able to overcome adversity, but have improved their future prospects.

At the same time, the virus threatens a freeze in the rate of wage growth and a widening gap between the salaries of managers and base employees.

The excessive dependence on tourism and services, the lack of training in human capital, the inability to retain talent and low internal mobility are some of the ills that predict a pessimistic scenario for the next few years in the country.

This is warned by the experts who yesterday presented the Salary Evolution report 2007-2020, carried out by the consulting firm ICSA Grupo and the EADA business school and which analyzes data from more than 80,000 employees from all over Spain.

Restrictions on mobility and various economic activities imposed to contain the transmission of the virus for more than ten months have wiped out jobs and businesses in sectors with less value-added production and less qualified personnel, which already before 2020 had a negative trend in employment and remuneration data.

Industry, food or transport companies or the technological economy, on the other hand, are those that point to a future with a higher growth rate.

The dichotomy between services and technology, already very marked in previous years, will

be accentuated

by the health crisis.

Remuneration by sectors.

January 2021

Furthermore, the duality also extends to the bosom of the companies themselves.

Salary growth rates continue to widen the gap between staff categories.

Compensation for managerial positions and for ordinary employees continues to travel uneven paths, and as a result, the gap is widening.

According to the study, the remuneration of senior managers grew, last year, five times more than that of their subordinates (1,484 euros compared to 281).

In the case of workers who occupy an intermediate level, the distance from their superiors was even greater, since they obtained a rise of only 127 euros.

The authors of the report, which compiles data since the beginning of the financial crisis, emphasize that in the period analyzed, wages have grown "little", but have remained above "a low CPI" (16.7%).

Since 2007, managers' salaries have increased by 25.55%;

those of middle managers, 23.71%;

and those of employees, 20.13%.

They point out as "a negative factor" that the increase in purchasing power in Spain is based on the low rate of inflation and not as a consequence of the increase in emoluments.

Jordi Assens

, doctor in Economics and professor at EADA, points out that salary is "an indicator of the quality of any economy" and that in order to make it grow at a sustained and sufficient rate, we must bet on innovation and knowledge: "We can make labor reforms that take effect, but our productivity is still insufficient. '

Salary evolution.

January 2021

"We are not making progress towards acceptable social equity and a balance between wage and capital income", detects Ernesto Poveda, economist and president of ICSA Grupo.

But not all the changes that have occurred as a result of this crisis would be negative.

In his opinion, "the pandemic is acting as an accelerator of a much-needed modification in the model of remuneration of people, still very anchored in fixed salary indexed to the CPI."

Poveda considers that “new scenarios are opening up, with better designed compensation models that are fully aligned with the sustainability of the organization, that offer a greater variable component, as well as extra-salary, and that, therefore, manage to motivate and retain Workers".

In other words, he says, "finish coffee for everyone."

For the coming years, both experts consider that training must be complemented with policies that contain the flight of talent due to unemployment or low wages.

"Right now, we are training young people to keep them at home or to be unpaid scholarship holders," they diagnose.

The size of companies also influences the purchasing power of their employees.

The work of the consulting firm and the business school detects that micro and small companies are the ones that bear the brunt of the crisis, especially those that are dependent on "a more traditional economy" and far from new technologies.

Those responsible for the study point out that reconstruction funds from the European Union can be an incentive for the "urgent renewal" of the Spanish economy and to reverse wage inequality.

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