Employers and unions will sign the fifth contract for employment and collective bargaining this week in Spain. This consensus of agreements serves as a roadmap for negotiations in the wage sector. It is a document without formal legal obligation that the parties pledge to follow, yet it is not legally binding. The lack of compulsory force is reflected in the statistics: in a year when a salary agreement existed within the past 18 years, payrolls rose only within the thresholds agreed by employers and unions.
In Spain, bilateral negotiation has built on two decades of state agreements. The idea is that the agreements act as an umbrella for partners, a metaphor negotiators use to describe how they represent their respective groups under which they operate. Yet the distinctive traits of each sector and the autonomy of the agents in the field have produced many more renewed contracts than those aligned with standard salary contracts, often bypassing proposed terms.
The first agreement between the Confederation leadership of CEOE, along with CCOO and UGT, dates back to 1997. At that time the economy faced the hangovers of a regional crisis. The social partners sought stability through an initial minimum framework for collective bargaining. It was not until 2002 that employers and unions shared a common framework for wage increases.
Since then, until the real estate bubble burst in 2008, social partners worked to raise salaries to levels approaching those of civil servants. Inflation was monitored by the government, though the rise in prices was often underestimated, leading unions to push for higher wage gains so purchasing power would not erode. The result was increases in deals that surpassed the previously agreed thresholds by a wide margin.
The upheavals of the 2000s, including the financial crisis and the real estate crash, compelled the social partners to adjust their process in 2008. After a pause in 2009, employers and unions could not agree on some transfer proposals, and from 2010 wage contracts were valid for three-year cycles rather than annually. They also moved away from directly tying wages to inflation and began proposing increases at set rates.
The bargaining logic of collective agreements tends to lag behind the economic cycle. As the Spanish economy entered a recovery phase, wages rose in step with a strengthening economy. Yet even as social actors pressed for wage moderation to support job creation, the unemployment rate exceeded 20 percent, and on average, salary increases across deals stood at about 2.3 percent.
Companies keep up with salaries
If the first decade after a shift in wage agreements saw significant breaches in favor of workers, the second decade brought a tendency for employers to resist larger increases. By 2012, aligning with the second consensus of agreements, increases in wages under new contracts consistently fell short of the commitments made by employers.
During the subsequent period of economic contraction, employment gradually recovered from pre-crisis levels, and wage gains remained modest, often staying below 1 percent in several years. The first clear consensus between social agents in 2019 pointed to modest annual increases. The typical range discussed by partners hovered around 2 to 3 percent, with the average renewal rate around 2.2 percent.
This cautious approach to salary growth extended to other commitments embedded in wage agreements. In the previous consensus, employers and unions agreed that no new salary adjustments would be made before 2020 beyond a baseline level. The target was a monthly gross figure or its annual equivalent, and surveys reported that about four out of ten deals still fell short of that target. Only after the recent increases in the government’s inter-professional minimum wage did many firms update their tables to reflect this change.