An analysis of tax data in Spain shows how austerity and labour market counter-reforms have slashed the wage share of the country’s wealth to new lows while corporate profits have soared. The findings by economist Gabriel Flores published in online newspaper Nueva Tribuna are:
- Labour income has declined as a proportion of GDP from 50% in 2008 to 46.9% in the first quarter of 2017
- Corporate profits after taxes, interest and dividends, have more than doubled from 8% of GDP in 2008 to 17.5% today
- Austerity policies have benefitted high earners but the lowest paid have seen a significant fall in income
- The 650,000 odd Spaniards on incomes above 60,000 euros annually saw a 10% rise in income, the income of the 6 million on less than 12,000 euros dropped by 8% and the 10 million on 12,000-60,000 euros a year increased by about 6%
- Despite high GDP growth rates in 2015-2017 (3%-plus), the trend towards greater inequality among the majority relying on wages for their income has been consolidated
- None of the above data includes the black economy, where low and insecure wages dominate.
“This strong growth in business profitability, based on the successive reforms of the labour market, has occurred at the expense of lower tax revenues of the state and lower labor income, multiplying social inequalities.
“All the inequality indicators show that, despite the high GDP growth rates between 2015 and 2017, the trend towards greater inequality has been consolidated among the majority that rely on wages.
“To reverse the inequality to pre-crisis levels it is not enough to increase the GDP growth rates; it is necessary to repeal the successive reforms of the labour market approved in recent years and to distance as much as possible the economic policy from the principles of austerity and wage devaluation that have guided government decisions.”
Flores calls for “an inclusive growth model in which the important thing is not the amount of growth but the redistribution and good management of growth to meet the needs of the majority, improve their welfare and secure an equitable distribution of income, restoring the principle of social, territorial and economic cohesion as a guide to economic policy.”
Source: Nueva Tribuna