• SMI Between 1,112 and 1,200 euros of Minimum Wage: Díaz will seek an agreement for the 2024 increase this Thursday

The Second Vice-President and Minister of Labour, Yolanda Díaz, has set herself the objective of achieving a tripartite agreement at all costs - with employers and unions - to raise the Minimum Interprofessional Wage (SMI) for 2024, something she considers feasible given the starting positions of both interlocutors. However, his success in this purpose will not depend on his Ministry, or even on the social partners themselves, but it is the Treasury that holds the key to the agreement.

CCOO has proposed a minimum increase of 5%, which is expected to be viewed favourably by UGT, a union that went so far as to ask for it to be raised from 1,080 to 1,200 euros in fourteen payments, but which has recently moderated its demands.

CEOE and Cepyme, however, have asked for the increase to be limited to 3% but set two conditions to be able to support it. First, that the De-indexation Law be amended so that contracts signed with the Administration can be updated if there is a sudden increase in costs, such as the one that would result from an increase in the SMI; and, secondly, that a reduction in social contributions be approved for companies in the agricultural sector, among those most affected by the increase.

This means that even if the Ministry of Labour were in favour of both, it would also need to have the support of other ministries such as the Ministry of Finance or the Ministry of Social Security.

Yolanda Díaz's department has not made a public statement on the matter, but given that there is consensus among all the social agents - the unions are also in favour - everything seems to indicate that Labour would see it well. Sources present at last Thursday's negotiations confirmed to EL MUNDO that the Ministry showed "sensitivity" towards these requests.

However, counting on their support would be of no use if the Ministry of Finance headed by María Jesús Montero does not also agree. A repeal or reform of the De-indexation Law so that it does not affect contracts would have a direct impact on public spending by the State, hence the approval of the Treasury is necessary.

In practice, what the employers are asking for with the support of the unions is that any company that has a contract with the Administration (for example, a gardening or cleaning company that has been awarded a tender to offer this service to a municipality for a period of three years in exchange for an annual price) can raise that price in exchange for which it offers the service if the Government approves a regulation that translates into a direct increase in its costs. Given that in this type of company, 90% of the costs come from the salaries of their employees and since they often receive the SMI, in order to maintain their profit margin these companies need to be able to increase their prices if costs rise, just as a company in the private sector would do. For example, if a bar pays the SMI to its employees and, since January, instead of paying them €1,080 per month in fourteen payments it has to pay them €1,120, it may choose to raise its rates to cushion this increase in costs, an alternative that companies with public contracts do not currently have.

The employers' association has asked for the same thing in recent years, every time the minimum wage has been increased, but the government has never responded to this request. The main reason is that opening the door to updating the price of contracts will mean an increase in public spending by all administrations, in a context that will also lead to a return to fiscal rules from 2024.

Montero, and the socialist wing of the government, hold the key for Díaz to achieve the tripartite agreement. The employers' association knows that it will be difficult for him to give in and even some of its members want the Treasury not to agree, which would prevent Antonio Garamendi, president of the CEOE, from being forced to sign the agreement with the government, after having been critical of the investiture agreements and, especially, of the amnesty.

Sources from the employers' association admit that there is a part of the company that would even prefer that the government go ahead with the increase only with the unions - even if it is higher - that they finally agree to the updating of the contracts and the reduction of contributions and force the employers to sign.

The Ministry headed by Elma Saiz will also have to make a statement on the discount in Social Security contributions, since this in turn will have an impact on the income used by the system for the payment of pensions.

There will be no expert report

Although in recent years the increase in the minimum wage has been preceded by the publication of a report prepared by the Committee of Experts formed by the Ministry, on this occasion Labour sources confirm that there will be no mandatory report. Díaz's department explains that this group has already done its work to determine to what level the SMI should rise to reach 60% of the average net salary, something that already happened with the 2023 increase.

Now that the SMI already complies with this equivalence, if the Government approves an increase similar to that experienced by salaries on average - which could be defined by the average increase for 2023 recorded in the collective agreements - it would be enough to continue complying with this equivalence. This would place the increase at around 3.46%, according to the Statistics on Collective Agreements, a level that would act as a minimum increase.

In order for the SMI not to lose purchasing power, it should have a similar increase, since average annual inflation (from January to December) is expected to close at around 3.6%. However, if the increase in the minimum wage is finally 4% and it becomes equivalent to more than 60% of the average wage, the Ministry of Labour has already made it clear that it would not be a problem, especially if it serves to reach an agreement.

Next Monday, December 11, the parties will meet again to make progress in the search for an agreement.

  • Social security
  • María Jesús Montero
  • Minimum Wage
  • Employment