Income agreement: wages grew by 5.5% in April in large companies, at the fastest rate since 2008

Salaries grew by 5.5% on average in April in large companies in Spain, compared to the same month in 2021, the fastest pace since 2008. The increase was 1.4 percentage points compared to March, and up to 4, 5 integers compared to November last year, when the economy began to suffer the first consequences of the rise in oil or gas prices, according to the "Sales, wages and jobs in large companies" statistics from the Tax Agency.

Inflation definitely ran out of control since February, coinciding with the start of the Russian invasion of Ukraine. And since that same month, the average gross income of the workers of the 30,000 companies with the largest business —close to 40% of the total number of Social Security affiliates in the private sector— has increased above underlying inflation, whose calculation excludes energy and unprocessed food (the most uncontrolled elements of the shopping basket due to the disturbance caused by the war) and which increased by 3.4% in March, 4.4% in April and 4.9% in in May, according to the CPI (Consumer Price Index) advanced in the latter case.

This growth in wages in large companies would be evidencing a certain implicit income agreement in these companies whose "volume of operations must exceed the figure of 6.01 million euros", according to the classification of the Tax Agency.

These large companies have 4 out of 10 employees outside the public sector on their payroll (15.8 million in total) and obtain 60% of the combined turnover of the private sector in Spain, although they only account for "1% of the declarations by VAT", according to the institution.

According to the same statistics from the Tax Agency, which also includes a positive rate of job creationthese 6.7 million workers would have managed, on average, to compensate part of the damage of inflation on purchasing poweralthough the general CPI reached 9.8% in March, the peak so far of this crisis due to the escalation of the electricity bill, of fuels or food, and fell to 8.3% in April to rebound to 8.7% in May.

This salary increase (3.6% on average in 2022, compared to 1% in 2021) has occurred outside the negotiations between employers and unions, which ran aground weeks ago, on the income pact. This mechanism should serve, "theoretically", to distribute the blow of inflation between companies and workers, achieving "explicit and verifiable commitments to moderate business margins [capacidad de obtener beneficios de las ventas]" —as recently requested by the Bank of Spain— and salary increases over several years to compensate for the "significant" loss of real income.

Until the publication of this data, this Wednesday, the main references indicated that the companies were passing on most of the increase in costs (due to the rise in energy or raw materials and other intermediate resources) at sales prices , thus protecting its margins, without transferring it in the same proportion (or rather much less) to wages.

This outlook improves for workers, but the Tax Agency's own statistics show a growth in sales of large companies of 10.8% in April, a rate that doubles that of salaries, and that on average is 7.5% in 2022, compared to 3.6% in which the gross income of employees remains.

In addition, the total statistics on average hide the concrete realities, and also the large companies in certain sectors in which wages are falling, as is the case in the extractive industry, in real estate activities or in social, cultural or recreational services.

On the other hand, sectors are emerging in which wages are increasing along with general inflation, as was seen in the hotel and restaurant industry in April, although in this case they are bearing the brunt of the COVID pandemic, as in industry textile, clothing and footwear, or in different branches of commerce.

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