Spanish Central Bank Governor has said today that adjusting prices and wages to reflect productivity is the only way to recover competitiveness. He is right, and he is thinking about salary cuts, for those who didn't understand. In Portugal, and from what we have seen prior to 2011, that cut would probably need to be between 20 and 25% (or even 30%, gulp...). Without that, our economy will face real issues in going back to growth, adjusting in things like unemployment...
Now, I don't like salary cuts - I also depend on one, and I think there are millions of workers in Portugal that earn a lot less than I do, many of them going through very hard times. But I think it is important to look again at this problem - we need productivity to be competitive and get back to growth. We need to increase our productivity so that our competitiveness isn't coming from salary cuts. And we need to go after that productivity in any imaginable way. So, please, let's all start talking on how to kick-start it!
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