Negotiations begin on increasing national minimum wage
Published: 31 March 2008
On 9 October 2007, the General Workers’ Confederation (Unión General de Trabajadores, UGT [1]) and the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CC.OO [2]) presented their proposal for renegotiating the national minimum wage [3] (/salario mínimo interprofesional/, SMI). The recommendations were addressed to the Spanish Confederation of Employers’ Organisations (Confederación Española de Organizaciones Empresariales, CEOE [4]) and the Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME [5]), as well as the Ministry of Labour and Social Affairs (Ministerio de Trabajo y Asuntos Sociales, MTAS [6]).[1] http://www.ugt.es[2] http://www.ccoo.es[3] www.eurofound.europa.eu/ef/efemiredictionary/national-minimum-wage[4] http://www.ceoe.es[5] http://www.cepyme.es[6] http://www.mtas.es/
The two main trade union confederations in Spain have presented a joint proposal for progressively increasing the national minimum wage to 60% of the average wage by 2016. The newly re-elected Socialist Party is in favour of the plan. However, the Spanish Confederation of Employers’ Organisations and the main government opposition party have rejected the trade union recommendations, due to concerns over the possible effects on the slowing economy.
On 9 October 2007, the General Workers’ Confederation (Unión General de Trabajadores, UGT) and the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CC.OO) presented their proposal for renegotiating the national minimum wage (salario mínimo interprofesional, SMI). The recommendations were addressed to the Spanish Confederation of Employers’ Organisations (Confederación Española de Organizaciones Empresariales, CEOE) and the Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME), as well as the Ministry of Labour and Social Affairs (Ministerio de Trabajo y Asuntos Sociales, MTAS).
Background and content of proposal
The process of social dialogue that started in 2004 included an electoral commitment by the new socialist government to progressively increase the national minimum wage (ES0406204N). As a result, the social partners reached an agreement – later transformed into a law – with the aim of reinstating the SMI’s function as a fair minimum wage guarantee for workers and replacing it as a reference indicator for some social benefits. The agreement stipulated that the criteria for revising the SMI and avoiding future losses in purchasing power should be defined by collective bargaining between the social partners.
In December 2004, an agreement on the reform of the Workers’ Statute included a clause on guaranteeing the SMI (ES0502203N). However, although it was approved by the government, this modification did not come into effect. The SMI has increased by 30% in the last three years, but the trade union confederations consider that conditions are now favourable for continued negotiations to move towards the target set in the ‘theses for a European Minimum Wage Policy’ in order to effectively implement the right to ‘decent pay’ enshrined in the Council of Europe’s European Social Charter (DE0505203N, ES9801240N). The trade unions call for an 8% annual increase in the SMI during the period 2009–2016, to reach 60% of the average wage or €1,213.90 net a month, according to their calculations.
The trade union proposal is based on figures relating to pay development in the last few years (see table). If the national average wage (salario medio empleo, SME) increases at the same rate as in the period 2000–2006 – that is, 3.6% a year – this would mean that the SMI could reach 50.8% of the average wage at the end of the newly re-elected government’s legislature in 2012.
| . | Net SMI monthly (€) | Net SME monthly (€) | SMI/SME (%) |
|---|---|---|---|
| 2000 | 464.10 | 1,150.40 | 40.3 |
| 2001 | 473.60 | 1,186.40 | 39.9 |
| 2002 | 483.10 | 1,233.30 | 39.2 |
| 2003 | 493.00 | 1,285.50 | 38.3 |
| 2004 | 519.70 | 1,325.90 | 39.2 |
| 2005 | 560.50 | 1,369.10 | 40.9 |
| 2006 | 591.00 | 1,420.50 | 41.6 |
| 2007 (F) | 623.40 | 1,471.70 | 42.4 |
| 2008 (F) | 655.60 | 1,524.70 | 43.0 |
| 2009 (F) | 708.00 | 1,579.50 | 44.8 |
| 2010 (F) | 764.70 | 1,636.40 | 46.7 |
| 2011 (F) | 826.00 | 1,695.30 | 48.7 |
| 2012 (F) | 892.10 | 1,756.30 | 50.8 |
Note: (F) = Forecast. A growth rate of the average wage of 3.6% annually is assumed.
Source: CC.OO and UGT ‘Proposal for renegotiating the national minimum wage’.
Opinions of social partners
There is every reason to suppose that the ruling Spanish Socialist Workers’ Party (Partido Socialista Obrero Español, PSOE) will include the trade union proposal in its programme for government, following its recent victory in the general elections on 9 March 2008. According to MTAS, the cost of increasing the SMI is affordable, as it will only affect a relatively small proportion (12%) of full-time workers who are earning the SMI or are very close to it.
However, CEOE and the main opposition party have rejected the trade union proposal. The employers are less concerned about the direct effects of the measure than by the possibility that the increase in the SMI will lead to an increment in the basic pay laid down in collective agreements (ES0707049I). Although the trade unions claim that the revision of the SMI in the last three years has been compatible with wage moderation, economic growth and job creation, the employers consider that the current slowdown in the economy could be exacerbated if the SMI is further increased.
Juan Arasanz Díaz, QUIT, University Autònoma of Barcelona (UAB)
Eurofound recommends citing this publication in the following way.
Eurofound (2008), Negotiations begin on increasing national minimum wage, article.
