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Have you ever heard the word ‘thouseuro’?

No, it’s not some kind of mythical creature.

Chances are, you never heard it before, because…I made it up. Well, kind of.

It’s a translation from the Spanish word ‘mileurista’. Mileurista is a slang word combining two separate words: mil (a thousand) and eurista, from the currency, the euro.

It refers to someone who works full-time to make around €1,000 per month, as a salary.

And, let me tell you, until a few years ago, no one in Spain wanted to be a ‘mileurista’.


Well, mileuristas were overqualified and underpaid. A €1,000 a month salary back then was a modest income.

Let me explain.

You see, in Spain during the 2000s, being a mileurista had negative connotations.


Well, things were good back then, and there were great chances of making LOTS more money.

Construction was booming and there were cranes all over the skyline. Kids were leaving school early to work in soaring related industries like construction, real estate, you name it. It was where the money was.

There was a lot of cash around, and people were spending freely.

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In fact, I know many people in hospitality that were making a fortune on tips. Many worked the bars for a few years to then buy property in their countries of origin with their earnings, where it was cheaper.

Many ended up with one, two, even three properties…and no mortgage. Jackpot!

But, this negative view of the mileurista soon changed.

You see, 2008 hit, but that was only the beginning of it. Not many people really predicted what would come next.

Unemployment went on to increase to over 25% by 2013.

With so many people out of work, there was a lot of competition out there for the few jobs available…and as this happened, salaries started going down. Law of supply and demand, right?

All of a sudden, the perspective of being a thouseuro didn’t seem that bad. In fact, as salaries plummeted, many people wished they had a salary close to €1,000…or even a job!

Unemployment has decreased since but is still high in Spain, which means that salaries haven’t seen much of an increase in recent years.

Meanwhile, costs of living have been increasing. I mean, I see this every year I visit. Every year I find things are more expensive. It’s not only that the exchange rate is worsening, prices are actually increasing.

So, Spain decided to try out something to boost salary growth.

In 2019, Spain increased their minimum wage from €736 (around AUD 1,170) to €900 (around AUD 1,430). This is a 22% sudden salary jump.

The increase is bringing them closer to other European countries’ minimum wage, as you can see below:

Money Morning

Source: Bloomberg
[Click to open new window]

But, the measure is creating a hot debate.

Will the increase in spur spending then increase hiring and reduce unemployment…or will it create inflation and higher unemployment?

While it will bring some much-needed economic benefit to workers on minimum wage, my guess is that it could increase underemployment, and make the problem worse.

While official figures put the unemployment rate at 16%, my contention is that the real unemployment figure is a lot higher, because of underemployment. That is, when workers are not getting as many working hours as they would like.

Spain isn’t the only country struggling

And, it’s not a Spain only problem. It isn’t the only country struggling to create salary growth…or increasing the minimum wage to spark higher salaries.

From Bloomberg:

Madrid joins other governments around the world, including France, Greece, a Canadian province and some U.S. states, that have recently lifted minimum-wage rates to jump start broader salary growth, which has remained sluggish despite the economic recovery. […]

At the European Central Bank, officials may be watching as they monitor labor-market developments and underlying price pressures across the region. Its efforts to lift inflation have had limited success: Core inflation is 1.1 percent in the euro area, and even lower in Spain.[…]

The problem is, though, that global growth is now slowing. If we haven’t been able to recover from the 2008 crisis and create employment and salary growth, then it’s unlikely we will now.

Australia has seen booming times in recent years.

Now there are worries that growth is slowing too. The Reserve Bank of Australia (RBA) recently cut their growth forecast for this year. Mainly because of lower consumption and a decreasing property market.

Employment could be starting to slow…and salary growth is nowhere to be seen.

Here is Bloomberg again:

Signs are emerging that a two-year hiring burst that cut Australian unemployment by almost a percentage point is starting to cool.

Labor market resilience has been central to the Reserve Bank optimism, but the prospect of slower hiring and a jobless rate drifting higher would make it tougher to maintain its “glass half full” approach. Such a turn would erode the likelihood of faster wage growth and inflation heading back toward the midpoint of the RBA’s 2-3 percent target.[…]

Even as unemployment declined, under-employment has remained elevated, signaling that workers are unable to secure as many hours as they would like. This supports the view that the market isn’t as tight as a 5 percent jobless rate might have suggested in the past. Furthermore, in the major east coast states of New South Wales and Victoria, the rate is closer to 4 percent and there still isn’t much evidence of wages strengthening.

[…] the gap between unemployment and under-employment is now the widest in decades. Moreover, the initial widening — as the former fell and the latter rose — coincided with a slowdown in wage growth, showing just how influential under-employment has been.

I have been hammering about this for a long time, that employment figures are not what they seem. That they aren’t showing the real truth, and that while employment figures are low, high underemployment is one of the main reasons why wages aren’t rising.

Around the world employment is tight…but we are not seeing any wage growth.

My point is, we haven’t seen wage growth while things have been good, with global synchronised growth and a booming property market. Chances are we may not see one for a while if things worsen.


Selva Freigedo,
Editor, Global Investor

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Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up close many of the economic phenomena that worry Fat Tail Investment Research readers, like hyperinflation, bank bail-ins and governments burdened with so much debt it cannot possibly be repaid.

Every week, she goes through each article, research note and recommendation produced by our experts around the world to give you information on how to build and protect your wealth. Selva packages the week’s best ideas into one easy to read report: Port Phillip Insider Extra.

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