Social Pact And Income Pact

The Bank of SpainPablo Hernández de Cos, Bank of Spain's governor

Fernando González Urbaneja | Over the last decade, since 2010, trade unions and employers have reached four multiannual and indicative wage agreements under the name of the State Agreement for Collective Bargaining. These have always been under the complacent gaze of the PP and PSOE governments, which provided a reasonable guarantee of social peace. Agreements that responded to a practice of consensus that has been characteristic and habitual throughout the history of democracy, with roots in the Moncloa Pacts of 1977 that underpinned the Transition. The history of labour relations over the last 44 years is a story of consensus, of successive agreements of varying scope that have generated stability.

When spokespersons for the current government, led by the Minister of Labour, claim that the agreement on labour reform is historic, very cool, and other superlative adjectives, they give the credit to that adanism which seduces people who have little knowledge of the recent past. Deepening this spirit with an income pact, even an indicative one, for the coming years would contribute to stability and recovery. At a critical time in terms of inflation expectations and their impact on wage bargaining, an indication or recommendation from the social partners would facilitate the recovery of a reasonable degree of normality in collective bargaining, which has been stuck in a rut for the last two years.

The Bank of Spain governor has made an appeal to this effect, but neither the government, nor the opposition, nor the employers’ and trade union leaders have heeded it. And in these circumstances, affected by the pandemic and a faltering recovery, a clear signal on wage developments would bring serenity and confidence.

The four AENC agreements, without normative force, provide valuable experience of social stability and wage guarantees that avoid an uncontrolled and conflictive race to achieve purchasing power for those who are able to do so. Realistic agreements between the parties, underpinned by lower ceilings on wages (SMI) and control of abusive subcontracting agreements, would underpin the recovery without loss of competitiveness.

Unions and employers have plenty of negotiating experience. And the government can help by encouraging such an income agreement through a national indication or recommendation for the path of wage adjustments in collective agreements. Wage adjustments should take into account purchasing power and also the volume of employment.

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.