Why are wages lagging behind despite the strong economy?
In an 'Economic Note', the Government proposes a comprehensive policy to interconnect the welfare state
BarcelonaCatalonia is growing, but not for everyone. This is the main conclusion of issue 109 of the magazine. Economics NoteThe report, titled 'Towards a Model of Shared Prosperity', was presented this Monday by the Minister of Economy and Finance, Alícia Romero. The volume contains twelve articles that paint an uncomfortable picture: one in three Catalan children is at risk of poverty, while wealth is concentrated in the hands of the richest 1%. Why is this happening?
Olga Cantó, Professor of Economics at the University of Alcalá, points out that between 2005 and 2022, net wealth in Spain grew by 20%, but this growth was concentrated in the hands of the richest 1%, who doubled their wealth, while the poorest 50% saw theirs halved. The study also quantifies a public perception: inflation has risen faster than wages. Between 2014 and 2023, the cost of living increased by 26.8%, exceeding the wage increase of 25.3%.
All of this has been exacerbated by the fact that, during the same period, younger generations have been unable to accumulate wealth due to difficulties accessing housing. Therefore, according to the study, this loss of purchasing power is largely explained by housing. In fact, homeownership among those under 35 has plummeted, falling from 66% in 2002 to a mere 31.8% today, according to the study.
Shared prosperity, the solution
Faced with this scenario, the Government proposes placing the fight against inequality at the center of the agenda. Among the experts' proposals are the reform of the guaranteed minimum income (GMI)—which currently only reaches half of households living in severe poverty—and a tax system that reconnects productivity with real wages. The department's thesis is clear: a "comprehensive economic project" is needed that connects the welfare state—labor, housing, taxation, social protection, health, and business organization—to place equality of opportunity at the heart of government action. In fact, Branko Milanovic, a world-renowned expert on inequality, warns that while inequality between different countries is decreasing, it is growing dangerously within wealthy economies, fueling populism.
