The salary increase negotiated by unions and employers: between contention and the fear of falling short | Economy

From left to right, the general secretaries of the UGT, Pepe Álvarez;  and from CCOO, Unai Sordo;  together with the president of the CEOE, Antonio Garamendi, in a meeting on March 7.
From left to right, the general secretaries of the UGT, Pepe Álvarez; and from CCOO, Unai Sordo; together with the president of the CEOE, Antonio Garamendi, in a meeting on March 7.Emilio Naranjo (EFE)

When the inflation caused by the coronavirus had caused the elasticity of wages to reach its limit, the chill of the world economy due to Russia’s invasion of Ukraine has dynamited an always complex balance. The abrupt stoppage of activity caused by the pandemic and the consequent destruction of employment ―there is no income without work―, has been followed by a war of still unknown resolution and scope, which, however, has forced the Government and social agents face a review of salaries due to the exorbitant increase in energy prices ―which threatens to cause a new paralysis―, through two different routes, but which share the same destiny. On the one hand, the Income Agreement promoted by the Executive with unions and employers, which will meet again this Monday, is being settled; and on the other, the definition of the new Agreement for Employment and Collective Bargaining (AENC), which representatives of workers and employers deal with in parallel. Both routes, however, face the same challenges, since what was agreed upon in one will have repercussions in the other.

While in the AENC negotiations, work is being done, mainly, on defining a framework that projects the increase in wages taking inflation as a reference, and where finding the exact measure in which to do so is the crux of the matter; the Income Agreement has a larger dimension and could include (the total deployment of the measures on which the Government is working is still undefined) other measures with which to suture the upward hemorrhage, such as capping the price of electricity, providing aid such as energy bonds, create support for the industry, use the new ERTE for affected sectors and even moderate increases in housing rents. However, the essence of the pact is concentrated in the collective bargaining agreement signed for the coming years by unions and employers.

The rope between unions and employers has been tightened in recent meetings. And that both parties – including the Government and even the Bank of Spain, which urges an income pact in which workers and companies share the cost of inflation – share the ideal that a mismatch between prices and wages guarantees social conflict. “We ask for moderation in the increases, because we must not ignore the scenario in which we find ourselves, with a war in between”, acknowledge sources from the Spanish Confederation of Business Organizations (CEOE). “The war is affecting the economy in many aspects, in energy, raw materials, fertilizers… we have to see how it evolves,” said its president, Antonio Garamendi, on Friday.

“It is clear that it has to be moderate, because the situation is what it is. But we must not ignore the fact that an evident loss of purchasing power is taking place and that, if a somewhat more modest increase is agreed for this year, it will have to be compensated in the following ones, ”says a union source familiar with the negotiations. That is where the main problem is concentrated: in the establishment of a path of increases that allows progressively recovering what was lost. “Wages rose 1.5% in 2021, while inflation has reached 7.6% in February. We would have to ask for more than 6% to match it then, but we know we can’t do it”, he continues. Other sources consulted confirm that they are working on an increase in salaries that may be around 3% by 2022. And all of them point out that establishing a path in which that percentage gradually grows is the most plausible.

Social peace

Despite the fact that the AENC is not binding, since it only makes recommendations when carrying out collective bargaining, it enjoys sufficient recognition so that labor talks are governed by what its content marks. “Experience shows that the sectoral agreements are adjusted to it, since it removes tension and gives a certain social peace,” acknowledges a union source. However, the fear of the centrals, UGT and CC OO, is that in the agreements that are currently being established below the sectoral agreements (for example, the territorial ones) a series of increases will be marked that will act as a ceiling. “If we are the ones who agree on those percentages, then how are we going to ask for other, much higher ones?” This same source asks.

He knows in depth all the sides of the coin.


This Monday, the meeting of the Income Agreement will take place at the Ministry of Economy, it will be in the afternoon and it is expected that both representatives of the Government (the three vice presidents and the Minister of Finance will attend) as well as union and business leaders will make statements once the match is over. “It is essential that we reach an agreement now. Either we do it in March or it doesn’t. We have the needs now”, indicates this union source. “It is necessary to activate the measures now, because it is very important that there be tranquility in the country,” Garamendi seconded.

The meeting will take place two days before the mobilizations that the unions and the organizations of the self-employed, consumers and neighborhood communities have called for Wednesday; and three regarding the two sessions scheduled by the European Council, where the various community leaders will discuss solutions to contain energy prices.

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