The new increase in the minimum wage to 965 euros It arrives in the middle of the pandemic, with the economy still on the runway and employment without recovering pre-pandemic levels. And it arrives wrapped in controversy. It has been the result of a pact between Yolanda Díaz and the unions from which the businessmen and, forcibly, the first vice president, Nadia Calviño, got out of their own accord, who has seen how the head of Labor won the president and imposed their criteria against yours.
The decision is already made. The indicator will rise according to the criteria of Díaz, 15 euros and retroactively from September 1. How will it affect workers? Around 1.5
millions of employed currently receives the minimum wage, and most of it is concentrated in the service sector, one of the most affected by the pandemic, and is received, above all, by low-skilled workers. They are mostly SMEs and self-employed those who pay their employees using the SMI as a reference, which also serves as a reference for the field and is the one applied by families in their contracts to caregivers and household employees.
For the self-employed, the rise in the SMI is accompanied by an increase in the minimum contribution bases of between three and twelve euros, an increase planned for this 2021 that was to be rotated last February but which was postponed until the minimum wage was raised after an agreement between the ministry led by José Luis Escrivá and the three self-employed organizations (ATA , UPTA and Uatae). A new cost is added, therefore, for the group at a critical time, in which they face skyrocketing electricity bills, 25% higher fuels and practically banned access to direct aid.
“It is a shame that the SMI is raised against the opinion of those who have to pay it,” denounces Lorenzo Amor, president of ATA.
New risks for domestic workers
Household employees will also see their salary increase after the Government’s decision, although the group, like the self-employed, is fearful that the increase in the cost of their work could turn against them. The hike first, and the Covid later, have put the group on the ropes and has made it more difficult for families in many cases to face the bills. As ABC has already reported, domestic workers who contribute to Social Security are still at their lowest level since 2012. This year these employees became part of the system’s wage-earning regime; before they had their own regime, similar to that of the self-employed. To cope with the increase in the SMI to 950 euros, in 2020 some families, who either could not or did not want to assume the increase, opted, in the best of cases, to modify the contract and cut the working hours of the employee to pay the same. In the worst case scenario, they fired. The latter is the path chosen by many other families during the pandemic due to the fear of contagion. Thinking of a new rise is a headache for many of them and for pensioners who have hired caregivers.
Hit for the field
And if there is another group directly affected by the SMI and its evolution, it is farmers. The rise comes after a drop in employment of almost 4,600 jobs in one year and 15,406 in August, according to Social Security data.
The president of Asaja, Pedro Barato, he assured today that he “Deals another hard blow” to the agricultural sector. Remember that the increase, added to the previous ones, will mean an increase of about 40% of the minimum wage cost, something that is “inadmissible”. “This is the straw that has broken the camel back in this year of strong increases in the cost of electricity, fuel, fertilizers, fertilizers and feed, especially if we take into account that the new CAP will cut the aid received by professionals in agriculture.” Cheap reminds that there will also be a growth in compensation which is “Absolutely unaffordable”, as it comes at a time of serious profitability crisis due to low prices at origin and rising production costs.
The Governor of the Bank of Spain, Pablo Hernandez de Cos, has joined business critics who fear damage to jobs. It highlights that the moment the economy is experiencing, with a “heterogeneous recovery” in activity, a rise in the SMI is counterproductive for the sectors in which the recovery is lagging the most. In his opinion, in developed economies the minimum wage can help reduce some social inequalities, but which, at the same time, also has “secondary effects” on the most vulnerable people, such as the young or the unemployed over 45 years of age.
The risk of the black economy
From the employer’s association its president Antonio Garamendi, has categorically rejected the increase agreed between Díaz and the unions and has warned that it will promote the underground economy and the destruction of employment. “Our position is that at the moment not. On other occasions we have said yes to raising the SMI, but it has grown by 30% in the last three years. With which it is falling is very delicate, “he defended. In the same way Lorenzo Love believes that “unfortunately the rise can bring back the shadow economy and harm employment.”
To know the impact that the new increases planned by the Government will have on employment, we will have to wait, but what is already quantified is what the effects of the 22% rise applied in 2019. The Bank of Spain carried out a study in which it calculated that the increase, approved without agreement with the social agents, could cost the Spanish economy between 83,000 and 180,000 jobs. The entity directed by Pablo Hernández de Cos highlighted in his study how the employment of young people and the work of young people were negatively affected. over 45 years old that have as a reference the minimum wage. And all at a time when the economy destroys jobs.