August 5, 2021

The IMF recommends Spain to be "careful" with the increase in the minimum wage

The IMF recommends Spain to be "careful" with the increase in the minimum wage

Nusa Dua (Indonesia)Updated:

The International Monetary Fund (IMF) today urged the Spanish government to be "careful" when implementing the proposal to raise the minimum wage, while regretting that the strong recovery to build fiscal space has not been used.

«You have to be careful with minimum wages, on the one hand so as not to exclude people from the labor market. But, on the other hand, there is also justification for social issues, "explained Poul Thomsen, director of the IMF's European Department at a press conference at the annual meeting in Indonesia.

"One has to balance both" elements, the official added.

Thomsen commented thus the agreement signed on Thursday between the president of the Spanish Government, Pedro Sánchez, and the general secretary of Podemos, Pablo Iglesias, facing the Budgets of 2019 that includes a historical rise in the minimum interprofessional salary (SMI) of 22.3%, up to 900 gross euros per month.

The official also paid attention to the limited fiscal consolidation carried out by Spain in recent years given its high debt, which is around 95% of gross domestic product (GDP).

"Unfortunately, since 2015, when growth has been significantly above potential, and we have had a steady fall in unemployment, Spain has not rebuilt its fiscal space," he warned.

Therefore, he insisted that "fiscal policy should be more countercyclical", that is, take advantage of periods of economic expansion to save and reduce spending.

The Fund placed the estimated growth of Spain for 2018 at 2.7%, one tenth less than that advanced three months ago, and at 2.2% for 2019, still at the head of the large economies of the euro zone but already in a slowdown trend.


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