The minimum wage will increase by 5.5% in 2020. The government now wants to “unravel” the latest labor reform.

Employers and unions initialed, Thursday, January 30, the first major social measure of the new left government in power in Spain. After a record increase of 22.3% in 2019, the coalition formed by the PSOE (socialist) and Podemos (radical left) will increase the minimum wage (SMI) by 5.5% in 2020, to reach 950 euros monthly (on fourteen months, or 13,300 euros gross annually). The measure will be paid by the Cabinet on February 4 and applied retroactively from 1 st of January. It is expected to affect more than 2 million people.

“This is an impetus to improve the living conditions of the people who have suffered the most from the crisis,” said the secretary general of the workers’ commissions, Unai Sordo. The unions, which demanded 1,000 euros monthly, also reminded the government of its commitment to increase the SMI up to 60% of average wages in 2023, or about 1,200 euros.

“It is a reasonable agreement for which everyone had to give in,” commented the president of the Spanish Confederation of Entrepreneurial Organizations (CEOE), Antonio Garamendi. Unlike 2019, this increase did not provoke an outcry within the employers, presumably because the alarmist scenarios, which predicted massive layoffs following the jump in the SMI last year, did not materialize.

The speed with which the negotiation was sealed was no less surprising. The more so as the economic world in general, and the CEOE in particular, had initially expressed its fears vis-a-vis the entry of Podemos to the government, demanding by press release “budgetary rigor and economic orthodoxy”, as well as “moderation and stability”.

To reassure them, the head of the socialist government, Pedro Sanchez, raised to the rank of vice-president of the executive the Minister of the economy Nadia Calviño, former director general of the European budget. Pledge of seriousness, his appointment was perceived as a way to neutralize the leader of Podemos, Pablo Iglesias, who was appointed vice-president responsible for social rights.

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“Job insecurity”

The latter, eager to establish his movement as a government party, tempered his speech and met on several occasions with the boss of the bosses. Pragmatic, the employers decided to constructively approach the legislature which is finally beginning, after ten months of political paralysis. Knowing that the minimum wage is not the most complex question that awaits them.