Unions call for wage hikes in the face of rising inflation

MADRID"We have runaway inflation. Wages have to go up." Secretary general of Union UGT, Pepe Álvarez, has started the new year with a demand that he already tabled weeks before the Christmas campaign. This Tuesday, the union leader has once again demanded that in the face of rising inflation –the advanced year-on-year CPI for the month of December stood at 6.7%– and, in order not to lose purchasing power, it is necessary for workers to see their salaries increase much more. The visible face of the other major union (CCOO), Unai Sordo, has spoke along the same lines: "Spain cannot afford to lose purchasing power".

The two unions have called on employers to negotiate a new Agreement for Employment and Collective Bargaining (AENC), the reference framework for negotiations of agreements between companies and workers, which expired in 2020. In 2018, when the agreement was renewed, the AENC included a 2% wage increase, as well as an additional voluntary point linked to productivity, absenteeism and business performance.

But what figure is this increase to be translated into now? Both the UGT and CCOO have avoided specifying a percentage, although they reject an average increase in wages agreed through collective bargaining agreements such as that of December 2021, which stands at 1.47% (in fact, it is the lowest increase in the last four years and represents a sharp loss of purchasing power when compared to current inflation), as shown by the Ministry of Labour's collective bargaining statistics. However, the unions are also looking at year-on-year price increases of 6.7%. According to most supervisory bodies, this is a "persistent" but "transitory" increase in inflation, mainly due to the volatility of energy prices. For this reason, organisations such as the Bank of Spain and the Spanish government itself have asked that this not be passed on to wages, in order to avoid "second round effects", i.e. an inflationary spiral.

The other data on the table is the average CPI rate for the whole of 2021, which, unlike the year-on-year rate, stands at 3.1%. Unlike the year-over-year rate for the month of December (the CPI figure is compared to the same month in 2020, when inflation was negative), the average inflation rate takes into account what happened each month of 2021. For example, in January last year, the CPI was 0.5%.

"The renewal of the agreements can become a focus of social conflict, as has happened in Cadiz," the unions warn. That is why they are calling for biannual or triennial wage agreements (on average, the duration of an agreement is 3.2 years) and the possibility of recovering wage guarantee clauses, which over the years have disappeared (at present, only 17% of the agreements contain them). These clauses used to allow salary revisions in the event of a high increase in inflation, without having to be explicitly indexed, but are rejected by employers. They argue that the fact that they do not exist also allows salaries to be maintained in the event of negative inflation, as happened in 2020.

In addition, the unions demand an increase in minimum interprofessional wage to €14,000 per annum (it now stands at €13,510 per annum). "It must be immediate and retroactive," said Álvarez. In fact, UGT has called for a negotiating table with the government, unions and employers to be convened.

Pending labor reform

On the processing of the labour reform, both UGT and CCOO have asked the different political forces to validate the agreement and, in any case, leave for later other "legitimate" claims. "It is a very good agreement and this does not prevent the groups from making changes later," said Sordo. However, the leader of UGT did acknowledge the possibility that amendments may be introduced and, therefore, that the text may be modified, although he asked that this be done taking unions and employers into account.

One of these modifications could be the introduction of the prevalence of regional labour agreement over state agreements, a sine qua non condition for parties such as the Basque Nationalist Party. The Minister of Labour, Yolanda Díaz, referred to the issue this Wednesday: "[The parties] have to play their role; I dialogue and I do not corner anyone", said Díaz, who has downplayed the possibility of reaching an agreement thanks to the support of Ciudadanos.