Doctrinaire liberals are reluctant to minimum salary and, even more, to its rises. They argue that it makes many companies unviable and hinders the entry into the labor market of people (and young people) who would like to work for less pay. It is better, they say, more employment with lower wages than high and permanent unemployment.
But this is not the consensus in most European countries. Not in the United States. Pragmatic liberals and social democrats agree that the minimum wage is a weapon against inequality and that it helps increase the consumption of disadvantaged workers. and that so contributes not only to social justice, but also to progress and economic growth. But, they admit, the balance is forced because going too far in the increases in the minimum reduces dynamism and can damage employment.
The Government has just raised the minimum wage by 8%, from 1,000 to 1,080 euros, thus leaving it at 60% of the average wage, which is recommended by the European Social Charter and what was in its program. Is the climb balanced and convenient? With inflation of 8.4% and the increase in inequality caused by the crisis, a smaller increase for workers who earn less would be debatable and criticized. And by maintaining the purchasing power of some 2.5 million citizens -those who will benefit directly or indirectly- family consumption and GDP will increase. Besides, After raising pensions by 8.4%, it would seem even more incongruous not to do so with the minimum wage.
The European consensus says that the minimum wage is a weapon against inequality and by increasing consumption stimulates economic growth
On the other hand, contrary to what is feared and so much touted, the increases in recent years have not triggered unemployment. In 2015, with a minimum wage of 648 euros, unemployment was 23.7%. In 2019, with 900 euros, it fell to 14.7%, and last year with 1,000 the average unemployment was 13.3%. To say that it is the merit of the Government would be propaganda, but the truth is that the increases in the minimum wage have not triggered unemployment, quite the contrary. Would more employment have been created with smaller increases? There is no certainty. And the labor market reform, agreed with the CEOE, has created more permanent than temporary employment.
But there is also Reasons to advocate greater caution. This year the European economies will grow less than the previous year and Spain will go from 5.5% to 1% according to the IMF. Lower growth will punish employment and Spain is the country with the highest unemployment in the EU. And in those under 25 it is 29%, almost double the European average of 15%. In 24 provinces of emptied Spain, the minimum wage will already be 70% of the average, which does not help investment and employment. And in 4 of them unemployment has already risen in the last quarter of 2022.
The CEOE also argues that it will hinder progress, in a year of slowdown -and perhaps recession- of many SMEs and sectors such as agriculture and small businesses. In addition, he believes that a rise of 47% in the last four years puts us in a danger zone. Should they have reached a more midpoint between the 4% of the CEOE and the 8.4% that the unions demanded?
Where is the balance? It is the Government that decides the rise in the minimum. It assumes risks, but with social arguments and what happened in recent years tends to endorse it. In addition, the Government does not want to appear stingy with the poor when banks and large companies (not SMEs) show a spectacular increase in profits.
Related news
But there are reasonable arguments to demand more prudence and each one must be consistent with its function. The Government must decide based on the real possibilities of the country and its program. and assumes risks -perhaps excessive- when seeking the applause of the citizens in an election year. And the CEOE must take into account the interests and fears of its affiliated companies, which are the ones that pay for it and choose their leadership. And it cannot and should not be an appendage of the Government.
In mixed market economies, which are the ones that best satisfy social needs, unanimity is not required. Democracies must not slip into political tension (as happens in Spain), nor excessive social tensions, but they must know how to coexist and progress despite disagreements and disagreements. Here we are now on the matter of the minimum wage.