The International Monetary Fund (IMF) has said that it would be beneficial for Spain to agree a social contract whereby employers commit to hire more staff in exchange for a 10% reduction in wages.
The IMF says these measures should be accompanied by an increase in VAT, but only after two years of the wage cuts, and reduced Social Security payments for corporations. The idea is that the Spanish government would make up the shortfall in Social Security revenue by the increased revenue arising from more people being employed.