Spain: Latest developments in working life Q2 2019

Record numbers of workers making social security contributions, rising average income levels, persistent inequality in the labour market and non-compliance with the new minimum wage are the main topics of interest in this article. This country update reports on the latest developments in working life in Spain in the second quarter of 2019.

Number of workers covered by social security reaches record high

In June, the number of social security contributors rose by 75,584 (bringing the total to 19,517,697) according to the Ministry of Employment. This was a record high, surpassing the previous maximum number that was achieved in July 2007 before the onset of the financial crisis.

The Spanish labour market continues to show positive developments despite the current political instability and the lack of structural reforms. Employment levels in the public sector increased significantly over the last year, making an important contribution to overall employment creation. The sectors that registered the highest increases were those related to tourism and social services and healthcare. However, these positive labour market figures conceal several problems: first, the unemployment level remains above three million; second, the rate of job creation slowed down in the second quarter; third, the number of temporary contracts remains much higher than the number of permanent ones.

Average income levels improve but inequalities remain

The Spanish Statistical Office (INE) published the results of its living conditions survey at the end of June.^[1] According to the data, the average nominal income per person rose by 3.1% in 2017, up to €11,412. This figure exceeds that of 2008 for the first time (i.e. the year in which the economic crisis started), but as the cost of living has increased by 11.4% since 2008, the real average income remains below the pre-crisis level.

The survey also shows that, despite a reduction in 2018, Spanish society still has greater levels of income inequality than it did before the crisis (6.0 in comparison to 5.9 in 2008). This is reflected in the survey in the S80/S20 ratio, which compares the income of the richest 20% of the population with that of the poorest 20%.

Trade unions highlight non-compliance with minimum wage in some sectors

In June 2019, the Trade Union Confederation of Workers' Commissions (CCOO) published a report on the statutory minimum wage in Spain.^[2] The report was critical of resistance from some companies in terms of applying the new minimum wage of €900 per month. Even though the report did not quantify the non-compliance, it identified some sectors where this issue seemed to be more widespread. The main sector was agriculture, while the report also highlighted high levels of non-compliance in the private security sector and outsourced services for the public administration sector.

According to the report, employers were trying to avoid implementing the new minimum wage in several different ways. One way was outright refusal, which can be detected by the Labour Inspectorate through social security records. Other ways included increasing remuneration while decreasing contracted working hours, but maintaining the original working hours in reality (implying a decline in hourly pay), and including wage supplements and bonuses within the minimum wage (which the CCOO believes should not be counted). The CCOO plans to launch an information campaign in order to fight against these practices.

Commentary

The recent dissolution of the parliament and the call for new elections on 28 April has prevented there from being any major policy developments in relation to working life. This situation is likely to continue until at least August 2019, as the Spanish Socialist Workers’ Party (PSOE) is struggling to form a stable government coalition and has delayed the appointment of a new executive until the end of July.

While the Spanish economy continues to grow and the labour market is showing positive developments, there is growing concern among social partners and other socioeconomic actors about the lack of structural and labour market reforms. They fear that this may have a negative impact on future growth.