One in three companies in Spain (32%) say that this year’s minimum wage increase of 1.6%, 15 euros per month, will result in layoffs of part of the workforce. In a survey conducted by Infojobs after learning of this agreement between the government and unions, 19% of companies predicted layoffs in response to an increase in the minimum wage prior to the pandemic, thirteen points less than what actually happened.
In addition, the survey reflects the reluctance of companies to approve the new increase: almost half of companies with fewer than 50 employees refuse to accept it, while 44% believe it will result in less hiring; in addition, 50% believe the increase will affect salary reviews.
At the time, the CEOE president, Antonio Garamendi, said that the decision to raise the SMI as of September 1 “had already been made” and that the Government “had only been able to turn it around on its own.”. Moreover, he maintains that it is a political decision, and not a serious one.
” At other times, we have raised the SMI, but it has risen 30% since last year. With the one that is falling, the pandemic, it is a very delicate moment,” he said.
The governor of the Bank of Spain, Pablo Hernández de Cos, calls for “prudence” ahead of the increase of 15 euros agreed between the government and the unions on September 1. “We know that moderate increases in the SMI can negatively affect employment albeit more so for groups that have a low productivity level, young adults, or those older than 45 years of age,” he said. The economist however warns of a rise in the current moment, in which the “recovery is firm, but heterogeneous”, as it is being slow precisely in sectors “where the incidence of the SMI is high, such as services or SMEs”.
A ‘minor’ increase
Yolanda Diaz, the second vice-president of the Government and Minister for Labor and Social Economy, remarked her “satisfaction” with an agreement signed with the unions, while also mentioning pending reforms. Diaz called on the Spanish employers’ association to “get resolute” because “sometimes, by not negotiating, we lose”.
” I am not sure if I have said it clearly, but not negotiating is losing. You know that the Minister of Labor was willing to agree to a lower amount than what we have today. Sometimes you lose by not agreeing,” the minister explained.