The employer recommends "salary moderation" and that salaries are not raised according to prices

A number was expected as a salary increase proposal and no. The CEOE recommends that companies "make a wage moderation effort" this year, according to the employer's statement to which elDiario.es has had access. In addition, it is expressly stated that it is "recommended to avoid linking salary increases to concepts as volatile as inflation" and also retroactive salary updates, as requested by the unions according to prices. In other words, a strong message of wage restraint in a context of high inflation, of the 8.4% year-on-year in April and that the Government expects it to slow down to an average of 6% at the end of the year.

Unions and employers break without agreement the negotiation of the salary increase for 2022

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The Executive Committee of the CEOE met this Tuesday at 12:30 p.m. to define salary recommendations for companies, after the salary negotiation with the unions was broken last week, without an agreement. Although the business leadership was expected to give some reference figure for the increase, even between 3% and 3.5% as came to raise the unions During the bipartisan negotiations, the bosses' leaders have finally opted for a long document that argues that "significant increases" in wages be avoided.

The employers' association proposes taking into account "the specific circumstances" of each negotiation and, instead of prices, calls for linking salary increases to "quantifiable and measurable economic variables", such as productivity, employment, the behavior of GDP and benefits before taxes for companies, among other indicators.

The current context is one of uncertainty due to the war in Ukraine and strong inflation, 8.4% year-on-year in April, which the Government expects to slow down to an average of 6% in the year.

Antonio Garamendi, president of the employers' association, had anticipated first thing in the morning that the internal message would be governed by "prudence" to prevent a rise in salaries from resulting in a "second-round effect" of inflation, the business leader told his arrival at the Forum on Business and Executive Leadership 'Madrid Leaders Forum'.

Salary “moderation”, loss of purchasing power

The high inflation, record for decades, has been through the salary debate this year. High prices are affecting the economies of workers, whose wages are growing much less. According to the collective agreements until April, companies and sectors are agreeing to increases of 2.4% until Aprila figure that has stagnated after higher gains in previous months.

In the case of millions of people, the most precarious, high inflation is a serious problem given its limited room for maneuver, reason why the unions have insisted on guaranteeing the purchasing power of the templates. To do this, they demanded as the main proposals the wage review clauses by which the wage increases now agreed upon could be updated later on based on the final evolution of prices.

The rise in inflation also affects companies, warn the employers, who stress that they have not transferred all the increase in their costs to the final prices of their businesses. Yes in part, as shown by how core inflation (which excludes energy and unprocessed food) has skyrocketed, standing at 4.4% in April.

Avoid an “inflationary spiral”

With energy prices soaring for months, which have increased general inflation, economists warned of the danger of "inflationary loops" through which these increases would spread to other elements of the economy.

Employers cling to this warning to call for "moderation" of wages. "It should be borne in mind that a significant rise in wages would entail," says the CEOE statement, "an increase in labor costs that may also constitute a barrier to entry into the labor market for unemployed people" and the “promotion of the inflationary spiral”.

CCOO and UGT insist that wages are not generating the price spiral and that there is a risk of impoverishing workers and weakening domestic consumption. In addition, they warn that companies have already raised prices and “will not lower them” when energy prices fall, thus increasing their margins and profits.

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