ECB bargain for Spain salary cuts

 

The ECB has formally requested that the Spanish government seeks wage cuts and the creation of "mini-jobs" to combat escalating youth unemployment in exchange for buying Spanish government bonds, Mariano Rajoy told union leaders in a meeting last week.

Spain´s incoming Prime Minister was informed of the content of the letter, which was received in August, by outgoing PSOE Ministers shortly after being elected into government.

The "mini-jobs" would pay salaries below the minimum wage, which is just 541 euros a month, in exchange for giving young unemployed Spaniards valuable work experience and the opportunity to get on the employment ladder.

The letter from the ECB was taken into account in a subsequent agreement reached between the PSOE and the PP to enshrine the binding principle of fiscal discipline in the Constitution.

Earlier this week Rajoy told the press that once his government is iin place, one of his first moves will be to present a draft organic law to accompany the constitutional amendment. The law will impose a budget deficit ceiling on the government of 0.4% of GDP by 2020.

The Prime Minister elect also told union leaders that he would use the letter from the ECB as a road map for policies aimed at ensuring that Spain remains in the vanguard of the euro zone.