Young people, women and people with less education or who live in rent have opted more to increase working hours
MADRID, 8 Mar. (EUROPA PRESS) –
Spanish households have resorted, to a greater extent than in the EU, to credit and increases in their labor supply – looking for a second job or working more hours – as ways to cushion the impact of rising prices on consumption, especially in the case of families with reduced liquidity buffers.
The Bank of Spain article entitled ‘The reaction of households to the rise in prices in Spain and in the EMU’ reflects that, in the face of the recent inflationary episode, families have used different strategies to adapt their consumption, savings and labor supply to the rebound in prices.
The strategies most used to deal with the rise in prices were the search for better purchasing alternatives (for example, offers), and the reduction of savings and spending levels, both in Spain and in the Economic and Monetary Union of the European Union (EMU).
In the case of Spain, households have resorted, more than other euro zone countries, to taking out loans and working more, either by looking for a second job or working overtime, especially in the case of households with reduced liquidity.
In particular, the proportion of individuals who indicate that they have resorted to loans to cope with price developments is 2.3 percentage points higher in Spain than in the EMU, up to a total of 11% of Spanish families, in line with the most dynamic evolution of consumer credit that has recently been observed in the country.
Likewise, the study points out that the percentage of those who indicate that they have increased the labor supply to adapt to the evolution of prices is also somewhat higher in Spain (1.2 points) than in the eurozone, reaching 16% of those. Spanish homes.
In line with these results, Eurostat data suggests that the proportion of people in a situation of multiple employment in Spain increased by 6.8% between September 2022 and September 2023, compared to the 1% increase observed in the case of EU.
On the other hand, the percentage of households that indicate having relied on a salary increase to cope with the increase in prices is similar in both economies.
Twelve months ahead, and compared to what was observed in the last year, between August and October 2023, Spanish households anticipated a greater increase in their labor supply to absorb the evolution of prices than in the recent past.
Specifically, in that period, the percentage of individuals who expected adjustments in this aspect was 8 points higher than those who indicated that they had increased their work hours in the previous twelve months.
According to the report, young people, women and people with a lower educational level or who live in rent have chosen, more frequently than the rest, to increase the number of hours worked to cope with inflation.
Likewise, the proportion of households that, in order to adjust to the evolution of prices, planned to delay the purchase of durable goods and reduce their level of spending increased by 3.6 points and 5.2 points, respectively, compared to with what was observed in the previous twelve months. 32% of Spanish families claim to have reduced their spending and 9% have cut back on the purchase of durable goods.
In contrast, the percentage of households that expected to resort to loans to deal with the evolution of prices in the following twelve months was 1.8 points lower than those that indicated having requested them for this purpose in the previous twelve months. The actions used to adapt to the evolution of prices have also varied between homes with different characteristics. Specifically, 11% of Spanish families have resorted to credit to face rising prices.
One of the most relevant to explain this heterogeneity is the availability of a cushion of liquid assets of a certain amount. Among households with a reduced or non-existent volume of liquid assets, the percentage that indicates having increased their labor supply (working more hours in their usual job or looking for a second job), having resorted to credit to cope with the evolution of prices or having reduced their spending levels as a result of inflation is higher than among other families.
In contrast, the proportion of households that have benefited from a salary increase, either by maintaining their job or changing to another, is higher in the group that has a comfortable liquidity cushion, which probably reflects bargaining power. “relatively stronger” in this population group, in which workers with jobs that require more specific knowledge are concentrated.
