Salaries eat into profits and knock down Yolanda Díaz's story against the margins

Cristina Alonso Madrid

Madrid

Updated Monday, January 29, 2024-02:34

Fact kills story. The second vice president of the Government and leader of Sumar,

Yolanda Díaz

, insists on accusing companies of taking advantage of the inflationary crisis to increase their profit margins and on the need for businessmen to raise the salaries of their workers to recover the lost purchasing power. . However, the records of the National Institute of Statistics (INE) show the opposite conclusion:

salaries are eating into business margins

in the total weight of national wealth and already exceed the historical average level, while profits continue to suffer.

Companies are raising salaries and contributing to economic growth, while they still have not recovered the pre-pandemic margin and profits are still well below the historical average. This is revealed by a report by Arcano Economic Research, to which EL MUNDO has had access, which analyzes the evolution of the weight of salaries and business margins in gross national income and concludes that the former have not only recovered the level pre-pandemic but

are above the average weight recorded between 1999 and 2023

, while the latter are still far from both references at this time.

Specifically, data collected by economists Leopoldo Torralba and Ignacio de la Torre show a

decrease in business margins from 27% in 2019 to 25.3% currently

. Initially, profits fell sharply in 2021, to a minimum of 21.7%, and subsequently recovered, although they are still almost two points below the level prior to the Covid crisis and very far from 27.8% recorded on average in the last two decades.

In the same period, the weight of salaries on the economy, which is the main catalyst for movements in business margins, has risen from 46.5% to 48.3%, even reaching 50%. 5% in 2021, coinciding with the collapse of company profits. In this way, salaries, which have been maintaining their purchasing power in the last two years thanks to the links of the increases to the CPI and the generalization of safeguard clauses, now reach a

weight in national wealth above the average historic 48%.

These data contrast with the story of the second vice president and Minister of Labor, who is pointing to business margins as the origin of the problem since the inflation crisis broke out as a consequence of the war in Ukraine and which she has even raised with the Treasury, through Sumar, the application of

a tax to the margins of the food production and distribution chain

in the event that profits are above the level recorded in 2019. The tax would reach up to 1.2% of the figure of business and seeks to penalize what the training led by Yolanda Díaz qualifies as "abusive and anti-competitive behavior."

Margins Observatory

Although the data from the

Business Margins Observatory

prepared jointly by the Ministry of Economy, the Bank of Spain and the Tax Agency show a generalized recovery, the evolution is heterogeneous by sector and, specifically, with respect to the agri-food industry, they reflect that, Although it is moving towards normalization,

it is still below pre-pandemic levels

. In addition, sales margins in the food trade have seen two quarters of decline and have not yet been able to reverse the contractions experienced during the energy crisis.

The methodology of the Margins Observatory, in any case, is different. Arcano's report is based on aggregate macroeconomic information from all companies and all business generated in Spain, and experts calculate the margin on a theoretical gross margin, not on sales. In addition, they focus on a quasi-final benefit, including interest payments. The Observatory, for its part, mixes many indicators and sources, but, in Torralba's opinion, some present

"notable gaps such as not incorporating all the companies in the country, not including financial expenses or incorporating flows generated by subsidiaries abroad

. "

"Our method seems to us to be the most complete to evaluate the final margin, with profit before taxes, generated by all companies in Spain," says the senior economist at Arcano Partners.

All in all, the Arcano report concludes that business margins in our country "should improve in the coming years", in the context of a "reasonably positive" economic cycle, but not at the expense of salaries, which are already at its historical average, but of variations in the weighting of factors such as investment or production taxes on the gross national income.