keys to the rise in the minimum interprofessional wage

The Minimum Interprofessional Salary (SMI) will be this year at 1,000 euros per month (in 14 payments), after the increase of 3.6%, 35 euros, agreed between the Government and the unions and from which the employers have dropped.

What is the Interprofessional Minimum Wage?

The SMI sets the minimum salary amount that the worker will receive referring to the legal working day of 40 hours per week, without distinction of sex or age of the workers.

When it was created?

It was created by decree in 1963although after being included in the Workers’ Statute, its annual review was regulated taking into account various factors from the evolution of the CPI, to the average national productivity, the increase in the participation of labor in the national income or the general economic situation .

How much has the SMI grown?

The minimum interprofessional wage experienced the highest annual rise in its history in 2019, when it went from 735.9 to 900 euros per month. An increase of 22.3% that tried to reduce some inequalities, but that, according to the Bank of Spain, stopped the creation of up to 140,000 jobs in that year.

In 2021, the SMI grew by 7.2% and stood at 965 euros. In this exercise, it rises 3.6% and this new increase of 35 euros places it at 1,000 euros. For its part, job creation continues at record figures and permanent contracts improve.

When does it come into force?

The increase in the minimum wage is approved by a royal decree in the Council of Ministers -it does not need to be validated by Congress- and enters into force on January 1 of the year to which it refers. Normally it is agreed for the following year, but in recent years the negotiation has been delayed, so the 2021 hike was agreed in September with retroactive effects and this year’s hike has already been agreed in February.

What part of the salary does the increase affect?

It affects remuneration in money, of which the value of the salary in kind cannot be subtracted. In the case of the daily salary, the proportional part of Sundays and holidays could not be included. If a shorter day is carried out, it will be received pro rata.

How many people does it benefit?

According to the Ministry of Labor, the increase in the SMI affects around 1.5 million employees, mostly linked to the agricultural sector and services. However, the general secretary of the UGT, Pepe Álvarez, maintains in the 24 hour channel that can reach 3 million workers that they will see the increase applied due to the lack of negotiation of their collective agreements.

UGT sees “incoherent” the rejection of the CEOE to raise the SMI to 1,000 euros

What are the drawbacks of raising the SMI?

A high SMI harms small businesses, which see their salary costs rise in the midst of the pandemic. Low competitiveness and employment is relocated to countries with the cheapest labor. The increase in spending does not automatically translate into GDP growth, a lot of money can end up in foreign companies. In addition, the underground economy can grow, with businesses that cannot assume the rise and workers who have to accept black money. The rise may also leave out the young and old, as companies will select top performers.

How is the minimum wage in other countries?

Within the European Union, Eurostat data shows Spain’s minimum wage as the seventh highest of the countries that apply it, behind Luxembourg, Ireland, the Netherlands, Belgium, Germany and France. In relative terms, it maintains the same position as before the increase agreed bilaterally in September.

How does it affect the Social Security contribution bases?

The minimum contribution base Social Security goes from 1,050 euros per month to €1,167but the CEOE calculates that the total cost per employee would exceed 1,500 euros in general terms, as detailed in a statement.

Will the SMI rise again in 2023?

The minimum wage will have to experience a new rise in 2023 for the Government to comply with its commitment to end the legislature with the SMI at 60% of the average salary. The current increase of 35 euros is in the middle band recommended by experts, between 24 and 40 euros, which leaves the largest amount for next year.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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