Minimum Wage: A Debate For The Gallery

Employment November

Fernando González Urbaneja | Prime Minister Sánchez made another celebrity appearance for what they call the opening of the political year (yet more posturing nonsense) with economic content centred on the SMI (Minimum Interprofessional Wage). One of the news items of the event was the absence of the CEOE (Spanish Confederation of Business Organisations) from the session, which highlights how trivial and insignficant the session was. What difference does the presence of the CEOE president make! Perhaps he is simply trying to keep an apparent distance to accredit himself amongst his most critical rank and file. In any case, whether he attended or not is irrelevant.

The news was that the Prime Minister has decided to immediately raise the SMI by 15 €, to 975×14 payments per year for the remainder of 2021. Over the next few years, he will decree increases of €31 per month to end the legislature at €1,027×14. This is close to the ILO (International Labour Organisation) thesis that the SMI should not be less than 60% of the average wage. It is a very reasonable thesis, especially at a time of economic policies’ concerns over inequality, as the president of the Federal Reserve stressed a few days ago.

The internal debate in the government over the minimum wage has been yet another example of the desire to mark differences between the two coalition parties on issues which are more about show than substance. Spain has several chronic problems, the first being unemployment, the second precariousness and the third low, minimum and average wages. Faced with these acute problems, there is only one solution: more productivity, but that is too complicated, both to explain and to confront.

The CEOE is not going to oppose (amongst other reasons because it would be useless), although it will show concern; and the unions maintain that the SMI increase falls short. All predictable. The government has done the easy thing, trying not to upset everyone too much, a sort of mediocre average. What it does not do is take responsibility for the fact that the minimum wage hike affects many public service contracts with companies, many of them in the third sector. Raising their costs without being able to pass it on to revenue is abusive and inconsiderate. Acting responsibly means accepting the consequences of decisions, but that does not go with posturing.

In the debate on the minimum wage there is too much posturing. Proposing increases seems very progressive, left-wing and resisting seems right-wing. What is truly progressive is to create well-paid and productive employment. But that requires vision and decisiveness, which are in short supply.

About the Author

Fernando Gonzalez Urbaneja
Over 30 years working in economic journalism. Fernando was founder and chief-editor at El País, general editor at the business daily Cinco Días, and now teaches at Universidad Carlos III. He's been president of the Madrid Press Association and the Spanish Federation of Press Associations. He's also member of the Spanish press complaints commission.