Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.
Over 95 p.c of companies in Spain are small and medium-size corporations, a lot of which function with skinny margins, in keeping with Celia Ferrero, the vice chairman of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” mentioned Ms. Ferrero, whose group represents many smaller companies. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the landlord of General Events, which makes cubicles and backdrops for corporations exhibiting wares at large conventions, employs 8 employees at the outskirts of Madrid. He can pay every €1,400 a month.
The upper minimal salary and greater social safety fees will put upward drive on his exertions invoice and already skinny margins, he mentioned. It is a value that he can unwell have the funds for.
“I would need to think twice about hiring more people,” mentioned Mr. Montero, strolling round his tiny, sawdust-covered manufacturing facility flooring. And if a brand new undertaking is available in requiring extra employees, “rather than hiring someone with extra costs, I would prefer to subcontract to another company,” he mentioned.
Government officers say the coverage isn’t supposed to harm folks like Mr. Montero. The primary goal is larger firms that may have the funds for to pay extra, after years of compacting wages.
“We’ve had a widespread devaluation of salaries and working conditions in Spain,” Magdalena Valerio, Spain’s exertions minister, mentioned in an interview. “If people didn’t lose their jobs, they came home at the end of the month with worse wages, worse types of contracts and more precariousness.”