July 26, 2021

Sánchez's reforms already undermine the capacity of the GDP to create jobs

Sánchez's reforms already undermine the capacity of the GDP to create jobs


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The rise of minimum salary up to 900 euros and the increase of taxes on employment are barriers that have made hiring more expensive and that will translate this year in which the economy will require a greater growth of activity in order to create jobs, unlike what had been happening in recent years. years. This seems to contemplate the Executive, who in his macroeconomic table estimates that the occupation will rebound by 1.8% compared to 2.2% that GDP will grow. It's four tenths, the greatest distance since 2014 between what GDP rebounds and what employment increases, in terms of national accounting. This means that the economy requires more activity to create jobs than before, which increases the rigidity of the labor market and reduces competitiveness, according to experts consulted.

If last year the Executive assumes that it grew by 2.6%, almost everything translated into employment generation, since employment increased by 2.5% according to his estimates. If in 2017 it grew by 3.1%, employment rose by 2.8% while in 2016 it generated 3% more jobs with a GDP advance of 3.3%, which was 3.4 % in 2015. In that year, the increase in employment was 3.2%. Almost all the growth was translated until now in employment generation.

In return for GDP growth in employment, productivity grew marginally one tenth in 2019, and three tenths in 2017 and 2016. The government estimate seems to pick up a greater increase in this variable than, in the words of the chief economist of Spain of BBVA Research, Miguel Cardoso, is not justified. "We estimate that productivity remains stagnant while there are no reforms», Describes.

In constant jobs and sonantes, the same Pedro Sanchez calculated in something more than 330,000 the number of jobs that from the Government estimate create Spain this year. The truth is that the figure, in the absence of knowing the final data of the EPA for the fourth quarter, is more than 120,000 jobs less than those that the Executive estimates have been created in 2018. A difference of a magnitude from one year to another that does not seem to be justified by a growth cut of "only" four tenths -from 2.6% to 2.2 %- .

An unprecedented change

Interestingly, the data provided by Pedro Sánchez of jobs created in 2019 breaks the tradition that the Government estimates the number of jobs created in EPA terms in the fourth quarter of each year that has always been taken as a reference by all Executives, from Rodríguez Zapatero to Rajoy. Instead, these 330,000 obey jobs created in terms of annual national accounting, a change that is unprecedented. As it is, it is the lowest job creation since 2014, which corresponds to the lowest activity growth since that year.

The experts consulted point out the increase in the minimum wage (SMI) as the main reason for this greater mismatch between GDP and employment in 2019. Cardoso notes that an increase of 22.3% of the minimum wage will have "negative consequences for employment in net terms" and calculates a loss of jobs in the range of Banco de España and Fiscal Authority (from 150,000 to 40,000 fewer jobs), which explains the Government's forecasts.

«The great impact of the increase in the minimum wage will be produced in the southern communities», Resolves, before the greater number of workers who charge less than 900 euros per month in these regions, to add that, beyond the SMI, for higher salaries« the jobs that are created this year maybe they will not have salaries as high as in previous years»

The increase in the minimum wage will, therefore, have more implications in the labor market than those explained by the Government and Podemos. Those who earn less than 900 euros a month are in luck because their payroll should already reflect this amount, unless the employer or self-employed who has been hired has been forced to dispense with his position because he can not afford to raise his salary from 22.3%, the same percentage in which the cost paid by their employers to Social Security has increased.

This increase in taxation for lower salaries has been joined by the 7% increase in the maximum contribution bases, which corresponds to the highest salaries (52,250 euros per year). It will increase taxation for businesses, but it will also reduce the net salary of work. The danger in this case is that these workers, the most qualified, seek new professional horizons outside of Spain. It could also happen that the rise in costs can not be assumed by the company and that it has to dispense with one of its workers. They will lose those that are cheaper and less qualified.

This rise in barriers to employment has occurred at a time when the costs of Spanish companies are 6.6 percentage points higher than the European average and 13 points higher than in countries such as the United Kingdom or Ireland. Increasing the burden is a risk from which the employment can be damaged. "Its effect is immediate" in the hiring, assure the consulted sources.

Part-time contracts

These same sources assure that there is an impact on full-time contracts which, in some sectors, are being replaced by part-time ones. These are modifications that respond to the increase in the hiring of low-skilled jobs and it is the families that are changing the hiring due to the increase in taxes. It would be domestic workers, caregivers and would also affect low-skilled hotel workers.

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