The Spanish government is offering tax breaks to companies affected by the minimum wage increase.

BarcelonaThe Ministry of Labor has offered social partners compensation for companies most affected by the minimum wage increase, but this is conditional on an increase in the lowest wages and maintaining current staffing levels. The ministry, headed by Yolanda Díaz, proposes a 3.1% increase in the minimum wage in 2021, to €1,221 per month (paid in fourteen installments), exempt from income tax. This was announced by the Secretary of State for Labor, Joaquín Pérez Rey, in a press conference following a nearly three-hour meeting with social partners. The Deputy Minister of Labor clarified that this compensation is not "a gift." urbi et orbi"To all companies, even those that are not affected by the minimum wage. Pérez Rey has not gone into detail about what this compensation would consist of "with respect" to the work that the Treasury is doing, since its design is still being defined, but he has admitted that one of the possibilities is to introduce a tax deduction in the corporate tax.

In any case, he indicated that they will be working in the coming days on a formula that allows companies with more employees earning the minimum wage some form of compensation, and that the negotiating table will meet again on Thursday. "I would like to be very clear on this: the compensation formula we are working on is one that must also be an incentive for companies in our country to raise wages," he said. "It's not about companies having their employees at the minimum wage, but rather, on the contrary, it's about encouraging them to stop having employees at such a low level," he added. "Therefore, yes to compensation, but it must be combined, coordinated, with an incentive that is not negative, that does not prevent companies from raising their wage scales," said Pérez Rey, who added that the Ministry of Labor has been working all weekend with the Ministry of Finance to find ways for employers to raise wages.

"We still need to finalize how this incentive-disincentive will work, but obviously what we will do is make the minimum wage compensation contingent, in some way, on these companies reducing their overall exposure to the minimum wage in subsequent years, which there are many ways to do," he commented. Pérez Rey insisted that high salaries "should not be the exclusive domain of a select group of workers," but should also be available to people "who work hard all day in the fields, or help others, or clean."

Progress in the negotiations

The Secretary of State indicated that the Government has taken "three major steps" today. Firstly, it has informed those receiving the minimum wage that they will receive an additional 37 euros retroactively from January 1st of this year and that they will not pay additional taxes on receiving the minimum wage. "And it tells the Spanish productive sector that it will seek a formula to incentivize wage increases in all sectors, starting with those that have the highest proportion of minimum wage earners," he emphasized. The social partners and the Spanish government will continue negotiations this coming Thursday. If an agreement is reached that day, the Spanish government will implement it "immediately," according to Pérez Rey.