This is how the minimum interprofessional salary remains in Spain in 2021: How many people does it affect?

The minimum interprofessional salary is an indicator that marks the wage floor, that is, below it a company cannot pay a worker. Not even if both parties agree to it. The will, on paper, is to ensure a minimum income so that the worker can make ends meet. As of its approval in the Official State Gazette (BOE), it will be set at 1,000 euros gross per month and 14 payments, taking into account an ordinary working day of 40 hours per week. Or what would be equivalent to 14,000 euros gross per year. Until now it was 965 euros gross per month. The minimum wage, as a salary, is received by employees and does not govern the labor relations of other workers, such as the self-employed.

There is no official and unique registry that encrypts exactly how many workers earn the minimum wage. Yes, there are estimates from different houses, from the Ministry of Labor itself, to the Bank of Spain, unions such as CCOO or foundations such as Fedea, which coincide in a range of between 10% and 12% of wage earners in Spain. Which in absolute numbers would translate to around 1.8 million peoplein the current amounts of the SMI.

Not all occupations or sectors have the same minimum wage. In certain unions, such as the agricultural, is the predominant tonic in figures such as the pawn or popularly known as temporary. It is also quite widespread among dealers wage earners or among female workers homethe cleaning staff or the Security guards. Also in the hostelry there are cases. In some companies, known as multiservices, which are governed by their own agreement, the vast majority of categories are anchored in the SMI. By profiles, women, migrants and young people are the ones who most commonly receive the SMI, according to a recent study by the Bank of Spain.

The minimum wage has its origin in Francoist Spain and appears for the first time in the Official State Gazette in the 1963. Its amount at that time amounted to 60 pesetas per day or 1,800 pesetas per month for all workers over 18 years of age. Its amount and concept has been changing, since initially it contemplated differences according to the sector or the age of the beneficiary.

The government has the exclusive competition to annually review the minimum interprofessional salary. Although the law recognizes the most representative employers’ associations and unions a right to “consultation”, this is not binding and in the end the will of the Executive prevails. What does not remain that it can seek a solution agreed with these organizations, for the sake of consensus and a more efficient application of the same.

The government is the one who determines annually and by means of a royal decree the amount for that exercise of the interprofessional minimum wage. This does not prevent the Executive from deciding to review it every six months, if it deems it appropriate. The Council of Ministers can decide to raise the SMI or freeze it, as happened during the mandate of Mariano Rajoy and as has recently happened this 2021 under the command of Pedro Sanchez.

No, despite the fact that having a minimum interprofessional salary is a recommendation of the International Labor Organization (ILO), not all countries have one. Germanyfor example, did not incorporate this land into its labor market until 2015. Other countries, such as DenmarkThey do not directly have a minimum wage and all remuneration is determined in collective bargaining between employers and unions. Then there are other states, like Holland, which have a differentiated minimum wage: one for young people and another for the rest of the working population. And at latitudes like U.S it is the cities and states that determine the minimum wage, according to the reality and the specific cost of living in each place.

The minimum wage contemplates only remuneration in money. That is, companies cannot pay part of that minimum wage in kind, such as restaurant vouchers, or services. In any case, you can pay the minimum wage and then add other bonuses. The recent rises in the minimum wage generated a legal debate on whether salary supplements are absorbable to reach the SMI. And here the courts ruled with different criteria. Some endorsed that the company absorbed part of the increase in the case of supplements such as productivity, but not in the case of others such as transportation or night shifts.

The effects of increases in the minimum wage on the employment creation have been controversial and there is no single criterion. There is a certain consensus that increasing this floor can generate a disincentive to hiring and that this can affect groups with less employability more intensely, see young people, unemployed seniors, women or migrants. The intensity and dimension of this affectation is where the controversy resides.

The Bank of Spain encrypted in a recent report that the intense rise of 22%, up to 900 euros, made in 2019 weighed down hiring and they stopped creating (not to lose) between 80,000 and 160,000 jobs. From the current address Ministry of Labor maintain that the latest increases have not been harmful to the occupation and from other ministries, such as the Economyhave supported the thesis that increases in the current times of uncertainty can weigh down the recovery of employment.

The pact that gave rise to the coalition government has to its credit a clear commitment to progressively raise the minimum wage until it reaches the 60% of the equivalent to average wage. And it pretends to have achieved it before the end of the legislature. This amount comes from the recommendations of the International Labor Organization (ILO), which considers that 60% of the average salary guarantees sufficient living standards and prevents working poverty; provided that the worker has a full day. For this, the advisory commission of the Government itself recommends that it undertake increases that place the SMI between 1,011 and 1,049 euros in 2023, depending on how the rest of wages and inflation evolve.