ompared to an average inflation rate of 6.5%. However, during the 1991-1992 economic deceleration period, production grew by 1.75% in real terms while employment decreased by an average of 0.85%. Wages increased by an average of 8.5%, which displays a decline in job creation that corresponds with the increasing expense of the work factor and its substitution by capital. A fixed production factor was labeled to the high wage claims in 1990 which failed to have an immediate impact in the reduction of employment. This continued through 1991 and 1992, where high wage demands continued among the labor force, which forced companies to reduce the size of their staff. The development of wage increases is important to the Spanish government, and in an attempt to keep up with the European Community wages, a wage increase of 2% was set for public sector employees in 1993. The rate of unemployment remains high, as it has been for most of this century. At 21.3%, the unemployment rate is considerably higher than the average unemployment rate of the European Community, which is just above 10%. While governmental spending had dramatically increased between 1986-1990 to facilitate the slightly expansionist growth, spending slowed down in 1991 in order to balance the spending out when the growth was neutral, rather than expansionist or restrictive. In 1985, non-financial state spending was 21.6% of GDP while rising to 23.2% of GDP in 1989, and remaining at more or less the same level up to 1991 when it was 23.7% of GDP. In 1986, the Spanish public administrations spending was roughly 3.5% of GDP, gradually increasing to about 5% of GDP in 1989. In the past decade, the figure has remained constant. Also, ever since 1986, public investment spending in the European Community has been maintained at around 3% of GDP. To set Spain on the right expansionist track as far as the budget goes compared to the rest of the EU, a fiscal policy coordination accord was c...
