The government has finalized the increase in the interprofessional minimum wage (SMI) for 2023. Experts appointed by the Executive presented their recommendations and suggested that this salary base be increased by a minimum of 4.6% and a maximum of 8.2% from the current €1,000. gross (in 14 payments). Traditionally, governments first approve the final figure of the SMI at the final Council of Ministers of the year, where they consult with employers and unions. To take effect from 1 January and for companies that are on the payroll that month to update the amounts. The Ministry of Labor still needs to talk to the social institutions and take the revaluation to the next Cabinet. The final figure is what vice-president Yolanda Díaz plans to do this Wednesday and whether there will be an additional mid-year revaluation if inflation rises again.
How many workers and which sectors are used?
The minimum wage, by definition, is the salary earned by the fewest earners. It is a mandatory indicator designed to combat working poverty. That is, a person does not have enough money to maintain a minimum standard of living despite having a job. However, as is widely accepted in the relevant literature, the main explanation for working poverty is not wages but lack of working time. In other words, there are more poor people because they work fewer hours and want to work more because their wages are low.
Robot portrait of minimum wage earners Bank of Spainpass through unions or foundation isak, a young woman with a migrant background who works in the service industry or in a small rural company. About 10% of the working population earns the minimum wage, ie about two million people across Spain.
Will raising the minimum wage destroy employment?
The Nobel Prize Academy awarded the highest award in Economics. David CardThis showed that raising the inter-occupational minimum wage was not necessarily linked to job loss, as the published bibliography on the subject had up until then. Card analyzed how occupancy rates in fast food chains are. New JerseyWhere and from where SMI rises Pennsylvanianot where, and in this case, he determined that raising the minimum wage not only destroys employment but creates in some activities.
Card’s main contribution was that whether or not to raise the minimum wage would depend on the situation and its effects should be analyzed specifically. That is, they start earning zero instead of comparing whether it’s worth it to those who keep working, against the risk of losing someone else’s job, and earning a little more.
In the case of Spain, there are few published studies of recent revaluations of the minimum wage. It is the most common opinion that increases negatively affect employment, but this is limited.. On the contrary, it ceases to create employment and does not destroy it much. The Bank of Spain determined that SMI’s rise from 735 euros to 900 euros in 2019 halted the creation of between 94,000 and 173,000 jobs; compared to the 1.5 million workers who saw their payrolls increase.
The Iseak Foundation, in its report commissioned by the Ministry of Labor itself, determined that “this measure had no effect on employment in the periods immediately following the hike (up to 5 months after the increase)”. However, “from then on there is a gradual adverse effect”, through Loss of job of the minimum wage earners. In absolute terms, that is, in the economy as a whole, minimum wage increases have not depressed the labor market overall, and there are now 20.2 million active workers, the highest number in the statistics.
A measure that promotes equality?
In this balance between Equality and employment, one of the conclusions agreed upon by different analyzes of recent increases is that the Government has succeeded in reducing employment. inequality Salary In recent years, the gap between those who earn the least and those who earn the most has narrowed. And part of that is explained by the fact that more minimum wages are not translated into a cutback by the company for the hours of the day.
“Empirical evidence International In their reports, government experts conclude that overall increases in the minimum wage increase the income of families in the lower tail of the distribution and reduce wage inequality and, to a lesser extent, inequality and poverty. analysis of income inequality, it can be concluded that the increase in SMI fulfills one of its greatest goals: reducing wage inequality”, concurs from the Iseak foundation.
Does the entire government agree on the minimum wage?
The report, released this Monday by experts appointed by the executive itself, makes it clear that it is not. Collectively signed results show an increase of 4.6% to 8.2%. That is, from 1,000 euros gross per month (in 14 payments), to a figure between 1.046 Euros and 1.082 Euros. However Ministry of Economy It was commissioned to include only a separate memo explicitly signed by the Ministry of Economy stating that the minimum wage should be increased by 3%, up to EUR 1,030. If the split between Calviño and Díaz gets in front of the cameras or stays behind the scenes, we’ll find out in the coming days.