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Challenges in Measuring Wages in Spain: Insights and Recommendations

This study discusses the complexities in measuring wages in Spain, including issues with the informal sector, small firms, temporary employment, and data sources. It highlights the need for a new source like the Wage Indicator Survey and offers suggestions for improving wage measurement methods.

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Challenges in Measuring Wages in Spain: Insights and Recommendations

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  1. The measure of wages in SpainEnrique Fernández Macías, Rafael Muñoz de Bustillo and Pablo Pedraza GarcíaUniversity of SalamancaJanuary 2005

  2. Outline • Peculiarities of the Spanish Labour Market that may affect the measure of wages • Main existing sources • Conclusion: the need of a new source, and some suggestions from Spain

  3. I.1. The importance of the irregular sector of the Economy • Black economy: 10-20% of GDP. Informal Labour Market: 15-20% of the total. • This sector is hidden to institutions and invisible to the statistical system. • Even in the regular sector, irregular practices: part of the wage in black, irregular overtime… • All this affect the measure of wages, specially in Official and Company surveys

  4. I.2. The prevalence of small firms • 90% of all firms employ less than 10 people. Almost 30% of all employees work in these small firms. • These companies do not appear in Company surveys like the Wage Structure Survey. • This problem adds up with the first one (small companies + irregular practices), implying that the information is flawed

  5. I.3. Temporary employment • One third of the Spanish workers have temporary contracts. Most contracts are shorter than 6 months. • Not a problem for studying labour costs, but a terrible problem for studying earnings (complex earnings trajectories). • Probably, it would be much better to study temporary and permanent employees with different methods.

  6. I.4. Other problems • Less diligent respondents than in the Netherlands or Germany. • Administrative obscurity. • Problems that affect all countries: • Sensitivity of information • Increasing complexity and variability of wage systems

  7. II. Main existing sources • Wage Strucuture Survey. • Labour Cost Surveys. • Household Panel and Budget Surveys. • Other sources

  8. III. Conclusions and Suggestions • Existing sources are scarce and problematic. The Wage Indicator Survey is a promising new source that can fill the holes of existing sources. • Two suggestions: • Specific routing and questions for irregular labour market (paid in cash, inmigrants). • Refine and add questions for tracing the earnings trajectory of last year of temporary workers, and other sources of income. • A tool not only for researchers

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