Dispute between unions and Government over national minimum wage
The adjustment of Spain's national minimum wage in line with the projected rate of inflation for 1998 is considered insufficient by the trade unions. A dispute has arisen owing to the loss of the minimum wage's purchasing power, repeated failures to increase it and its wide differential with the average national wage, at a time when the Spanish economy is progressing favourably.
For 1998, the Government has adjusted the national minimum wage (salario mínimo interprofesional, SMI) - as it does on an annual basis - with an increase of 2.1%, which corresponds to the increase in the retail prices index (RPI). Spanish legislation requires the Government to consult the social partners before fixing the rate, though negotiation is not mandatory. These meetings tend merely to deal with the percentage of adjustment, leaving aside more qualitative aspects that could improve its operation.
In the course of this consultation, the CC.OO and UGT trade union confederations presented a proposal for an 8% increase for 1998 and the establishment of a plan for revaluing the SMI over several years. The unions wish to obtain an SMI that ensures a reasonable minimum wage for the least favoured workers, raising their income progressively to 68% of the Spanish average national wage, in line with the aspirations of the committee of independent experts for the implementation of the Council of Europe's European Social Charter, and the criteria established in Spanish labour regulations, which have so far been repeatedly ignored.
The statutory minimum wage in Spain is one of the lowest in Europe. It is only 36.7% of the average national wage in Spain, that is, more than 30 percentage points less than that which the Council of Europe's committee of independent experts considers to be reasonable. This situation is partly explained by the fact that the increases in the SMI over recent years have been lower than the increases in other incomes, and even in many cases lower than the increase in the RPI. Two figures are significant: in the last decade, the SMI has risen 9.7 percentage points less than agreed wages and 16 percentage points less than national income per capita. The unions consider that this loss of purchasing power is unacceptable because it has no economic justification and is socially unjust.
Furthermore, the unions accuse the Government of transforming the establishment of the SMI rate into an instrument for containing public expenditure (it is the reference point for other public allowances, such as pensions, unemployment benefits, grants and subsidised housing), thus defeating the concept of the SMI as a guarantee for workers and a minimum obligation for employers (as is shown in the nature of the factors used to calculate it).
The unions also condemn the non-compliance with the criteria for adjusting the SMI laid down in Spanish labour legislation, which states that it should take into account not only the RPI but also average national productivity, the increase in labour income as a proportion of national income and the general economic situation. The law also provides for a biannual revision, should the need arise. In their document presented to the general secretary of employment, CC.OO and UGT use these four elements to quantify the proposed increase (8%). Thus, in addition to the official forecasts for the average year-on-year rate of increase in the RPI for 1998 (2.2%), they include the increase in national productivity (0.5%) and the growth of GDP (3.4%). They also add the need to correct the unbalanced functional distribution of national income resulting from the decline in the proportion of the national product corresponding to labour income.
Despite the unions' efforts to present a rational justification for their demands, the Government's proposal was finally adopted. The unions are dissatisfied at what they claim is a repeated failure to fulfil the regulations, and the SMI does not even guarantee the maintenance of purchasing power at a time when business profits are higher than ever before - net profit is currently running at 20.8% of gross added value.