PSOE-Sumar pact: less work and more taxes to create more jobs?


Fernando González Urbaneja| The outgoing government has rubber-stamped a pact for the incoming government, signed with solemnity to convey an idea of hard bargaining within the cabinet. At least on the part of the cabinet, since the Podemos faction has been left out of the negotiation led by Yolanda Díaz under the SUMAR brand. The Podemos faction has been left with the option of throwing a hissyfit and little else, as they are being reduced to a reserve with no influence in the coalition.

The difficulty of the agreements lies (at least that is what they say) in reducing the working week from 40 hours to 37.5, which will be implemented over the next two years. This reduction is equivalent to 6.25% of the time without any reduction in pay. So it can be interpreted that the wage bill will increase by that percentage by decree.

The message for the employer is clear: it makes work more expensive and encourages a reduction in dependence on the employment factor, since the measure is a preamble to another that will reduce the working day to 35 hours in the future and even to 30 hours, which is the final objective.

The second message is that taxes on corporate profits must be increased, in principle on the odious large companies in the financial, energy and multinational sectors, but which is intended as an excuse and a warning to other sectors with profits. Moreover, it is clear – in the light of the recent pension reform – that any increase in spending on benefits will be at the cost of increased contributions. To make the message clearer, they have added another novelty: more expensive dismissals. That will show those unscrupulous and exploitative employers!

In short, the message to employers, to all of them, large, small and medium-sized, is clear: more costs to the labour factor; more bureaucracy, more control, more reports, more inspections. And this in a country with the highest unemployment rate, or rather the lowest employment rate, in the OECD, and in a society in which, according to all surveys, employment is what most worries the Spanish. Whatever it takes for the most progressive social policy on the planet, to everybody’s astonishment!

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.