Business 19/06/2021

Experts advise to raise minimum monthly wage this year by between €12 and €19

The goal is that by the next elections minimum monthly wages will be between €1,011 and €1,049

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01. Yolanda Diaz and Antonio Garamendi yesterday at the conference of the Circle. 02. Pablo Casado during his lecture.

BarcelonaThe discrepancies at the beginning of the year between the Minister of Labour, Yolanda Díaz, and the Ministers of Economy and Social Security, Nadia Calviño and José Luís Escrivá, on minimum wage have ended up being resolved by a commission of experts. The central government asked a commission formed by academics to settle the debate on whether minimum wage should be raised in 2021 in the midst of the crisis of the covid crisis or delay the rise.

Díaz defended increasing it now, while Calviño and Escrivá preferred to wait. What the three ministers did agree on is to meet the target set by the government for median wage to be at 60% of the median wage when this government's term in office ends in 2023. In other words, that it reaches €1,011, in the case of the lowest range, and €1,049 in the highest, spread over fourteen payments (employees in Spain usually get paid double in June and December). This represents an increase of between €61 and €99, respectively, in relation to the current minimum, which is €950.

This Friday the commission of experts has finally made its conclusion public. It advises to raise minimum wage this year between €12 and €19 euros. The main bulk of the increase would be left for 2022 and 2023. The reference that experts have taken as the net median wage for a full-time worker was taken from the National Institute of Statistics Wage Structure Survey of 2018, the last year it was published. Even so, they have made their evolution projections taking into account three scenarios.

The first is that SMI grows by €99 from this year until 2023. The schedule they put on the table is an increase of 1.8% (€19) in 2021, a percentage of growth similar to that experienced in sectors where there have been agreements with unions. The increase would be €40 in both 2022 and 2023.

The second scenario would be to raise the minimum wage by €77. To do this they propose an increase of 0.9% (€15) this year, the same as salaries of civil servants and pensions, and €31 in 2022 and 2023. Finally, the last option is that the increase is €61 by 2023. In this case the distribution would be to apply a rise of €12 in 2021, €24 next year and €25in 2023.

The commission of experts, who have reached a unanimous agreement, has already delivered its opinion - which is obviously not binding - to the Minister of Labour. The president of the commission, Immaculada Cebrián, has made it clear that it will be up to the Spanish government to decide, within the framework of social dialogue with employers and the main trade unions, which is the most appropriate way forward.

Minister Díaz has announced that she will meet President Pedro Sánchez with "speed and discretion" to address the issue. "I have a pending meeting with the president of the government," she insisted. Diaz has also advanced that she will contact business associations and unions to establish a roadmap for the remainder of the government's term.

Response from the Bank of Spain

The minister has already called for the creation of jobs not to be "set against" the increase in minimum wage. In this sense she has highlighted the importance of the minimum wage to combat inequality and boost consumption, which has been badly affected due to the covid crisis. On the other hand, Diaz has pledged to ensure continuity of this advisory committee throughout the government's term.

The commission's conclusions come a week after the Bank of Spain assured that the increase in minimum wage to 900 euros in 2019 - a historic increase of 22% - led to a cut in job creation of between 0.6% and 1.1%. The study argued that fewer jobs were created than expected, especially in sectors with lower wages, with a particular impact on young people and people over 45. In addition, it pointed out that employment indicators slowed down at a higher rate than the evolution of GDP.

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