Job insecurity is not an exclusive characteristic of the Spanish labor market. The recent increase in the weight of contracts with few hours or low salaries has been common to practically all the countries around us. However, after forty years of, in part, dysfunctional regulation and reforms with a variety of results, this increase has been endowed with a particular and idiosyncratic imprint that detrimentally affects our workers and specifically certain groups in the face of others.
In a work in progress and whose first results were presented in the report Inequality and the Social Pact of the La Caixa Foundation, analyzed the evolution of wage inequality in Spain from 2010 to 2018. To do this, it took advantage of three waves of the Wage Structure Survey to understand how and why wage inequality changed. And the results, although not expected, were less relevant.
The first thing that could be said is that wage inequality, which is usually countercyclical, would have increased during a good part of this period. Said increase would not come from a greater dispersion in the hourly payment of the workers (salary) but rather from an increase in the dispersion in the hours worked per year (composition). The main reason would be a drop in labor intensity –hours worked per year–, particularly in the group of workers who were already at the bottom of the wage distribution. Thus, inequality increased due to a fall in the salary income of those who earned the least compared to an opposite evolution for those who earned the most. Due to an increase in precariousness.
Regarding the population especially affected by said increase in inequality, he found that it was particularly among young people, women and workers with a low level of education where inequality increased the most. To this we should add that, for these groups, average wages also grew less than that of those who earned the most.
Focusing on the young, the graph on the right shows how they experienced a drop in average wages over the past decade, something that did not happen for older workers. In addition, as I have anticipated, this fall was accompanied by a rise in wage inequality. Given the aforementioned reasons, the increase in precariousness, intense among the youngest, raised both their wage gap compared to older workers, but also raised wage inequality among them, thus increasing labor and income uncertainty. whom they faced.
This last statement leads me to the second part of today’s column, which aims to assess the possible effects that this greater uncertainty or income risk may cause. Last Tuesday we had the honor and pleasure of receiving Professor Manuel Arellano at my university, invited by the Dean of the Faculty of Business Sciences. Professor Arellano brought us a work with the economists Stéphane Bonhomme, Laura Hospido, Micole de Vera and Siqi Wei. In this work, the authors analyze income risk, or salary risk, that is, the assumption of income uncertainty by workers in the near future. Among their main results they found that said risk increases in recession and decreases in expansions. In addition, they find that this risk is greater for young workers, also the least educated and women.
Combining both lines of results, what is evident is that with the Great Recession we inaugurated a period in which income and risk inequality especially harmed certain groups of workers, particularly young people, and more intensely than in periods previous. The greater labor and income uncertainty would generate tensions between those who make up said population groups and who ultimately make decisions that affect society as a whole. Among these decisions, we can highlight the investment in education inside and outside companies, savings and even having children, all of them deeply conditioned by these risks.
Are there reasons to think that this will change for the better? There are, as there are also against. I will never tire of saying that the recent labor reform can help reduce such uncertainty, so its effects can go far, far beyond mere labor variables. But, nevertheless, other factors can intensify the process. Technological advances, which do not stop, continue to be deeply polarizing. Part of our youth does not have the knowledge, skills or abilities to face the new challenges that are facing us. The Spanish economy has not shown signs of improving its efficiency for decades. To this, let us add policy decisions that continue to guarantee future income for those who already face an honorable closure of working and natural lives while barely mitigating the income risks of those who have to make the decisions for which one day we will be a thing or another. other.
In short, the decade prior to the pandemic was not the best in terms of the evolution of certain labor parameters. If we believe that this affects and remains contained on the margins of the labor market or of certain population groups, we are delusional. In particular, if these costs fall on a single population group responsible for what we will be in two or three decades.
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