as anticipated Gabriel Ubieto weeks ago to the subscribers of EL PERIODICO, the Government has raised the Minimum Interprofessional Wage (SMI) to 1,080 euros. This is one of the three levers that the Executive has to intervene in the labor market. The other two, civil servants’ salaries and pensions, have also increased at the rate of soaring inflation. The SMI directly affects a relatively small number of workers, but it is the reference in collective bargaining and in some indexed agreements. Sanchez enthusiastic applause is secured from unions in an election year, which is legitimate. The CEOE he got out of the agreement for a very simple reason. This type of increase in wages is acceptable for its associates who are accumulating benefits but inadmissible for those who are compressed due to the impossibility of transferring the increase in costs to prices, be it for reasons of competitiveness or even regulation.
Unintentionally and without paying easy criticism, the SMI is going to become an inflationary agent. So, somehow, the Government shoots itself in the other foot, that of fighting against rising prices. When inflation passes to the third round and penetrates wages, it ceases to be temporary to be structural and can only be reversed with traumatic operations such as the internal devaluation that we experienced after the 2008 crisis.
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Pedro Sanchez justified the measure with an incontestable argument: Can a company stop raising wages when it has profits of 600 million euros? Obviously, even Antonio Garamendi would answer no. But a doctor in economics like the president does not miss three things. If that is the logic, what happens when a company loses 600 million euros? What capital did you have to raise to accumulate those benefits? It is not the same to accumulate benefits of such size with an investment of 2 million euros than 20,000 million. And the last one, how many companies earned 600 million euros in the year 2022 in Spain? Because the rule applies to everyone.
Spain has a collective bargaining framework that does not fully correspond to the European acquis. The Franco regime denied all rights to workers in exchange for shielding the layoffs with a paternalistic spirit. Democracy, how could it be otherwise, granted workers all their rights but did not introduce criteria in force throughout Europe such as the link between wages and productivity or between wages and benefits. The climate of social pact during the pandemic could have made it possible to move along that line. But the CEOE could not stand the pressure from the PP-affiliated press and vice-president Díaz succumbed to the Trotskyism of her Podemos partners. Remains pending.