The Bank of Spain warns that the SMI rise will harm the most vulnerable workers

The Governor of the Bank of Spain, Pablo Hernández de Cos, has stated that at the conjunctural moment that the Spanish economy lives, with a "heterogeneous rec

The Bank of Spain warns that the SMI rise will harm the most vulnerable workers

The Governor of the Bank of Spain, Pablo Hernández de Cos, has stated that at the conjunctural moment that the Spanish economy lives, with a "heterogeneous recovery" of the activity, a rise in the interprofessional minimum wage (SMI) is counterproductive for the sectors in those that the most delayed recovery.

In a session with professors and students of IESE Business School in Barcelona, Hernández de Cos has pointed out that in developed economies the SMI can help reduce some social inequalities, but, at the same time, it also has "side effects" on the most people Vulnerable, like young people or unemployed over 45 years. That is why he considers that SMI's increases should be paired from a "training effort" with affected workers.

He has insisted that, although Spanish recovery is solid, he is not affecting all sectors and workers from the activities that are more delayed, such as commerce or tourism, will be those who suffer from the rise of SMI.

In this sense, it has pointed out that small and medium-sized enterprises will also be more affected by the rise, because they will think about it at the time of making a new contract.

Therefore, the governor has asked "prudence" in the increases in SMI and recalled the importance of dealing with one of the structural problems of the Spanish economy, which is that of productivity.

The Bank of Spain published last June a document that concluded that the increase of SMI by 22% that the Government decreed in 2019 caused a total negative impact on employment of up to 174,000 posts.

"The estimation of the impact of the IMF increase in employment for the episode analyzed in Spain would be consistent with a net employment loss of workers directly affected between 6 and 11 pp, which would be equivalent in this case to an impact on employment Total salaried of between 0.6 and 1.1 pp, "explained the organism. And this figure, when faced with the affiliation data offered by Social Security for the year 2018, the result is that negative impact of between 92,000 and 174,000 jobs in 2019.

COS Hernández has also been referred to in its intervention at IESE to the high public indebtedness of Spain that makes the economy "very vulnerable", in two senses. First, for the "perception in the Sustainability Markets" of that debt - if Spain may or may not fulfill its commitments - and then, because "leaves little fiscal margin" the government to face new crises.

Updated Date: 20 September 2021, 22:12

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