Monday, June 3, 2013

Minimum wage update: The Spanish version

I have posted numerous times on the folly of minimum wage laws and how they result in higher unemployment for young workers.  Mark Perry has a collection of links and charts on this topic at his Carpe Diem blog; but of specific interest here at OLS is a link to an article reporting that economists at the Bank of Spain recommend suspending the country's destructive minimum wage laws. From the article:
The governor of the Bank of Spain, Luis María Linde, on Friday called for even more flexibility in the labor market than afforded by the reforms approved in February of last year to tackle rampant unemployment, suggesting that new formulas could be found beyond the reach of collective bargaining agreements and, in some circumstances, leaving the statutory minimum wage in abeyance.
There are a lot of conditions and ambiguity attached to the recommendation, and it's my guess that neither Spain nor the EU will actually do anything about the minimum wage.  Nevertheless, just seeing the issue being discussed is an interesting and moderately hopeful development.