Average wage is less than 1´100 euros

PALMA
SIXTY per cent of Balearic workers earn less than 13'400 euros gross a year - less than 1'100 euros a month, according to a report from the tax agency Gestha, released yesterday.

The report said that around 11 million workers in Spain earn 1'100 euros a month or less.
The poorest region is Extremadura, where 70 per cent of the wage earners are in this situation.
Next are Murcia, with 67 per cent, and Andalucia with 64 per cent .
They are followed by the Canary Islands, where 65 per cent of the work force earns less than 1'100 euros a month, Castilla-La Mancha and Galicia (60.06 per cent), Valencia (60.3 per cent) and the Balearics.

Other regions where more than 50 per cent of the workers are paid less than 1'100 euros a month are Castilla y Leon (54 per cent), Cantabria (52 per cent), La Rioja (51 per cent), Asturias (50.8 per cent) and Catalonia (50.1 per cent).

But while pay is relatively low, families are having to pay more and more in mortgages.
Gestha says that the Euribor, the chief reference point for most of the mortgages with variable interest rates granted in Spain, rose by 4.725 per cent in September, the highest level since the year 2000 and the 24th consecutive monthly increase.

The report, compiled from an analysis of the mortgage statistics of the National Institute of Statistics for July and the Euribor in September, said that the rise in the Euribor index led to an increase in mortgage payments “well above” the average wage increase.

This, coupled with overpriced (24 to 35 per cent) housing, meant a loss in purchasing power which hit domestic economies.
Gestha said that an average mortgage of 149'974 euros, contracted over 27 years, has risen from 616 euros a month in 2005 to 820 euros in 2007.
This represents nearly 2'500 euros a year more for owners who bought their property two years ago, when the Euribor index was at 2.2 per cent (September 2005).

At the same time, inflation was 3.5 per cent last year, so that Spanish workers barely retained their purchasing power.
As a consequence, Gestha has called on the central government to forge a pact with the regional and local authorities as well as banks to palliate what it describes as “the banking, social and fiscal risks” derived from the tensions in the Spanish real estate market.

The report compiled by Gestha said that the market is characterised by “overpriced” housing, as well as the upward trend of interest rates, the “historical level of debt” of Spanish families and the increase in credit risks caused by an excessive extension of mortgage repayments.