Porter Y La Ciencia Descriptiva

For the last thirty years, the Spanish unemployment rate has been high and cyclical. In fact, high employment variability is a singularity within the cyclic behaviour of the Spanisheconomy [1]. In the current financial crisis, for instance, the magnitude of net employment destruction in Spain has been significantly larger that in other European countries withcomparable GDP declines [2]. However, this relatively larger response by employment, along with greater wage inertia, is not a specific phenomenon to the current crisis, but ratherreflects a historical pattern. Behind this behaviour lie certain structural characteristics of the Spanish labour market mainly: (i) the wage determination mechanism (i.e., capacity ofwages to respond to macroeconomic shocks), and (ii) a rigid labour legislation [3,4].

From this perspective, this report examines the relationship between wages and employment inSpain over the last 12 years. Specifically, the study focuses on identifying the main factors controlling the pattern of the labour market, and the sensitivity of employment tovariations in wages. Several macroeconomic datasets (e.g., wages, labour force, employment levels, ICP and GDP) have been analysed (Tables 1-3) [5-7]. The report examines the correlationbetween these key indicators to investigate the relationship among wages and the labour market (i.e., supply and demand). The main conclusion is the little connection between wagesettlements and employment levels. A second outcome is that an increase in total population may have inhibited the overall growth in the Spanish economy to be translated into a long-termdecrease of unemployment. The report is concluded by briefly examining the factors (e.g., labour legislation) that could explain the observed relationship between wages and employment.