IEB Report

Political Economy

Fiscal devaluation

IEB Report 1/2013

The global nancial crisis has had a devastating effect on the Spanish economy. Its former dependence on the construction sector and its labour market characterised by the proliferation of low-productivity jobs have seen the unemployment rate rise to just above 27%. Despite this, it was not until 2012 that the nominal compensation per employee fell slightly, -0.3% (Bank of Spain, 2013, Table 1.1), while, despite an increasing number of news stories about the “brain drain”12and a notable increase in the number of displaced workers since 2007, the percentage of displaced workers still remains below the EU-27 average (Eurostat).