Can wage increases be linked to the housing crisis?

BarcelonaWhen unions and companies negotiate wage increases within a collective bargaining agreement, there is never a single, automatic formula. This back-and-forth combines different criteria and can contribute, for example, to the fact that the company in question has increased its profits, that its sector is experiencing growth, or that the workforce is exerting pressure through protests and strikes.

Even so, one of the most common references is the consumer price index (CPI, the indicator that measures the cost of living), which is used as a starting point to ensure that workers do not lose purchasing power. For example, collective bargaining agreements often include salary review clauses that allow salaries to be adjusted each year if inflation is higher than expected.

In the midst of the housing crisis, however, unions have revived a long-standing demand: the CPI does not take into account the purchase price of apartments, at a time when this continues to soar and In Catalonia, the real estate bubble has already surpassed its historical maximum.. Therefore, they ask, does it make sense to update wages based on an indicator that doesn't fully reflect the reality of the real estate market?

The coordinator of the CCOO confederal economic cabinet, Luis Zarapuz, points out that the CPI understands housing as an investment good, not a consumer good, so it doesn't include expenses related to buying a flat or financing it. "Our indicator of how the cost of living is evolving is partial. It's not that we're doing it wrong, but the picture is uncertain. Housing should have much more weight if we look at all the money that goes out of households to pay the mortgage or rent," he asserts.

Rents do form part of the CPI basket, but the unionist also expresses some doubts about how they are included in the calculation. Zarapuz argues that the National Statistics Institute (INE) captures the evolution of rentals within a single contract, but does not reflect the price jumps between an old and a new one: "That's why the increases it shows are always very aligned with the CPI itself," he adds. To decouple rents from inflation and as provided for in the state housing law, this January the Spanish government launched a new benchmark index to update its prices annually.

For Fernando Luján, deputy general secretary of union policy at the UGT (General Union of Workers' Unions), housing also doesn't have enough weight in the CPI calculation and is an element that should be incorporated into collective bargaining framework agreements. In this regard, he points out that the last spike in inflation in Spain was 2.7 percent in August, while housing prices grew by 12 percent. "If this increase and the interest rate hikes were reflected in the CPI, it would have been much higher, and the unions would have asked for much more in the wage increase negotiations," he argues.

Negotiations in sight

Luján also calls for housing prices to be an indicator taken into account when setting the minimum interprofessional wage (SMI), which they will now attempt to agree on with the Spanish government for 2026. Furthermore, the real estate crisis will be one of the elements that unions will try to incorporate into the negotiation of the new Employment and Collective Bargaining Agreement (collectives). For CCOO and UGT, it will be equally important that the new wage increases reflect the evolution of business margins so they can share these benefits with their workforces.

Jordi Garcia, professor of labor law at the University of Barcelona (UB), believes it will be complicated to use housing prices as a reference for salary increases, since increases vary greatly between regions, which would make it difficult to reach a consensus on the calculation. The academic admits that the CPI is not always reliable nor does it accurately reflect price trends, but warns that including housing in salary negotiations would make employers dependent on a factor they cannot control. "It's a social problem that we must solve, but simple solutions don't work," he points out.

According to sources consulted by ARA, no other countries generally and automatically link wage increases to housing prices. The usual practice is to index wages to the CPI or agree on increases in collective agreements following other criteria. However, there are some examples of mechanisms for the labor world to contribute to improving the chances of accessing housing. For example, in France, companies with more than 50 employees are required to pay a fee through payrolls that is then used to finance affordable housing for employees.

"The real estate problem is spreading to the entire productive sector because it isn't being fixed. We are asking for our fair share as workers. If our wages aren't enough, we must ask for more wage increases," warns Zarapuz, of the CCOO (Working Council of Workers' Commissions). Luján, from the UGT, adds another reminder to employers: "We must tell companies that they too must contribute to solving a problem that affects their workers [because they are unwilling to relocate to areas where housing prices are strained] and the citizens who consume in their businesses."