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Escrivá reminds employers that labor costs in Spain are still “well below” the eurozone

The “most frontal opposition” of businessmen to the pension reform proposed by the government already has an answer from Minister Jose Luis Escriva. Employers have slammed the government as a “collection crunch” over increases in social security contributions focused on now-freed higher wages. The social security chief reminded companies that hourly labor costs and contributions in Spain are, and will remain, post-reform, “well below” the eurozone.

José Luis Escriva thus dismissed the reaction of employers, led by CEOE president Antonio Garamendi, to the norm of reducing competitiveness in Spain, which they say threatens job creation. The minister confirmed that when the progressive increases in contributions are “fully deployed in 2050”, they will mean “less than 40 cents an hour”. Specifically 37 cents an hour. “Prices will be much lower than the Eurozone average,” warns the person in charge of social security.

As for hourly labor costs, this 37 cent/hour increase “keeps Spain’s price well below that of our neighbors: 6 euros below Italy and around 15 below Germany and France,” the minister said. “There is no loss of competitiveness and more social protection,” answers José Luis Escriva.

We are talking about small and medium businesses, but we are talking about higher salaries

Businessmen are focusing their attack against the pension reform on the message that PP, Vox and Ciudadanos have been repeating in recent days: that it is an increase in costs for all companies, and that it primarily hurts themselves. Employees and small and medium enterprises (SMEs).

However, the increase in social contributions from the reform is focused on the highest salaries, the current maximum base – 4,500 euros gross per month, 54,000 euros per year – which is usually not paid by small companies. The increase in contributions will also be applied very slowly, the executive stressed, with transition periods, sometimes up to 2050, to allow companies to adapt gradually.

The Minister of Social Security also emphasized that in the last decade, companies in Spain, where wages are lower than in other EU countries, have not seen their costs rise as much as in countries around the euro. “It has been verified that between 2010 and 2022 labor costs in Spain increased by 11 percentage points less than in the euro area as a whole,” Escrivá figures.

In the executive branch, they insist that companies, especially the largest companies that are affected by the higher wages that they contribute more to, should have room to make these increases in contributions. In general, for all workers, only the intergenerational equity mechanism (MEI), which is a small tax that all workers and their employers pay into the pension pot, increases. It is now 0.6% and will gradually increase to 1.2% in 2029.

By this time, the employers have already started threatening in response: to raise wages less. In Spain, the recent crisis has seen a wage devaluation that in many cases has not recovered, and the inflationary crisis has once again hit workers, restoring corporate profits and holding down workforce wages. Balance sheet: This benefit has increased seven times more than the return, according to the Bank of Spain.

The leaders of the union, Unai Sordo (CCOO) and Pepe Alvarez (UGT), agreed on Monday that companies have the opportunity to adapt to this growth, which would bring Spain closer to other European countries, as it is currently one of the EU countries. Where the lowest salaries are listed. “It’s not from today to tomorrow,” Alvarez stressed.

Source: El Diario





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