Administrations turn their backs to the rise in the minimum wage

The rise of Minimum Interprofessional Salary (SMI) It happens to be one of the star agreements of the Government pact signed by the PSOE and Podemos. The objective of both parties is to raise it progressively until reaching 60% of the average salary in Spain, which, predictably, would raise it to 1,200 euros in 14 payments at the end of the legislature. Entrepreneurs have already warned that another sharp rise in SMI without prior agreement with the companies would have dire consequences for employment. Therefore, the employer (CEOE) and the self-employed have asked the Government to negotiate with those who really pay the salaries and, in addition, close the shoulder. Because, as they say, Public administrations are the first to have profiled in the face of the great rise of the SMI of 2019.

At the beginning of last year, the minimum wage registered the largest increase in its history, 22.3%, to 900 euros in 14 payments. A increase that companies that have contracts with public administrations have had to assume in full without considering the serious repercussions for your business. "The public sector has not corrected upwards the increase in labor costs," say employers. As they explain, the companies that attend public tenders submit offers according to certain more or less predictable labor costs. In general, the profit margins they calculate tend to be very tight, and more so if they are small companies or freelancers who also contract with small municipalities. Therefore, a sharp increase in unscheduled costs impacts, and much, on those margins. This is what, according to businessmen, happened last year before the vertiginous increase in the minimum wage and the immobility of administrations. The collective regrets the lack of public will to renegotiate contract conditions and adapt them to the new salary reality of the companies. To many of these companies, this rigidity of the administrations, which simply refer to the signed contracts, has condemned them to have losses in these jobs since, legally, they are trapped. "You can not stop providing the service because, if not, you incur in breach of the contract and end up denounced," lament business sources. The worst part, they add, has been taken by those who in 2018 signed long-term contracts and will have to bear in their accounts the hole caused by the significant increase in the SMI.

At the moment, the intention of the social-communist government to unilaterally increase the minimum wage seems to be parked. Sanchez seems to want to take it easier now. However, in the press conference after the Council of Ministers last Tuesday, the President of the Government reaffirmed that his intention is to raise the Minimum Interprofessional Salary up to 60% of the Spanish net average salary, as established by the European Social Charter. "The horizon is very clear: 60% of the average salary at the end of the Legislature and will have to be done within the framework of social dialogue, with businessmen and unions," he reiterated.


The increase in 2019 broke the tendency of recent years to increase the minimum wage gradually but more moderately. In 2018, for example, it rose 3.9%, to 735 euros. Although institutions such as the Bank of Spain warned that such a sharp increase would affect employment, the Socialist Government defended that there was no empirical evidence that it was so. However, in November the Ministry of Labor had to recognize «problems» in some sectors such as domestic employment or agriculture, where the real wage increase is between 11% and 15%, far from the 22.3% established by decree almost a year ago, due to the increase in irregular workers and overtime not paid due to the inability to assume the rise of the SMI. The BBVA study service has estimated this week about 45,000 jobs that have been created due to the increase in the minimum wage last year.

In a recent public appearance, the president of the National Autonomous Federation (ATA), Lorenzo Amor, warned that another sharp rise in the SMI would lead to more submerged economy and problems for pensioners and families. A minimum salary of 1,200 euros would become a cost of 1,700 euros per month including social contributions. "With these costs, what family can keep an employee for eight hours at home?" Amor wondered.


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