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Inflation tests the social shield | Economy

The general secretaries of the CC OO, Unai Sordo (left), and of the UGT, Pepe Álvarez, on March 23 at a demonstration in Madrid.
The general secretaries of the CC OO, Unai Sordo (left), and of the UGT, Pepe Álvarez, on March 23 at a demonstration in Madrid.Ricardo Rubio (Europe Press)

The coronavirus returned Spain to times of the Civil War. The economy contracted 11% in 2020, something unprecedented since 1936, and the Government, in tune with the expansionary thrust of European policies, deployed a social shield —in which the temporary employment regulation files (ERTE) shone especially —, with whom he faced a critical situation. Today, two years later, with the pandemic becoming endemic thanks to the efficacy of vaccines, the exorbitant increase in prices that has increased Russia’s invasion of Ukraine strains the knots of a network that bears much of the weight of recovery .

The images of the empty supermarket shelves, the calls for help from companies and workers (particularly those in the fields and carriers) in the face of the increase in energy costs that compromised their activity are reminiscent of some situations experienced during the worst moments of the pandemic. .

“Luckily, measures were taken then, because that allows the current situation to not be so bad. That yes, with this crisis we must act the same so that we do not pay the same as always, ”acknowledges María José Landaburu, general secretary of the Union of Associations of Self-Employed Workers and Entrepreneurs (Uatae), who this Wednesday manifested jointly with the unions UGT and CC OO, and representatives of other self-employed and consumer organizations through the streets of Madrid demanding a shock plan from the Government against rising prices.

“Once the effects of the pandemic, inflation, and the risk of it turning into stagflation—when the economy stagnates and prices stay up—have been further controlled, it is a torpedo on the waterline. of the recovery in which Spain was immersed”, warns José Manuel Corrales, professor of Economics and Business at the European University. According to the academic, this sudden imbalance in costs could cause “a reduction in the effects that the labor reform had been manifesting since the beginning of the year, both in terms of hiring and in the fight against temporary employment.”

Sources from the Ministry of Labor, however, consider that inflation will not destabilize in March the good registration data, as well as hiring, which had been taking place since the beginning of the year. Nor do they predict a negative impact on the Easter campaign. “The greatest risk of this crisis is that, unlike what happened with the covid, which directly affected employment, it now causes the loss of purchasing power of wages, and, therefore, affects the well-being of families. . That is why we must avoid this loss of purchasing power”, they point out.

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Previous experience

This week, the Vice President of the Government and Minister of Labour, Yolanda Díaz, has acknowledged that her department is considering the possibility of incorporating within the National Response Plan to the impact of the war that it will be approved in the Council of Ministers tomorrow, to prohibit objective dismissals motivated by inflation, just as they were prevented during the pandemic for health reasons; and that it is also studying ways to restrict wage cuts. “I think that would be the way forward, based on the good experience we have had with the pandemic. The same as resorting to ERTEs, now that we already have the RED Mechanism prepared, ”says Carlos Martín, director of the CC OO Economic Cabinet.

Beyond the protection of the ERTE or the effects of the labor reform, the most social vectors of the anti-crisis shield designed by the Government were aimed at deploying the Minimum Vital Income (IMV), and progressively adjusting the minimum interprofessional salary (SMI), now at 1,000 euros per month spread over 14 payments, until in 2023 it represents 60% of the average salary. While the IMV has been readapting after complications in its processing and continues to try to expand, the SMI runs the risk of losing that representativeness in the face of the new price board. “With the minimum wage there should be a rise in line with that of the other wages, because otherwise we could find ourselves in 2023 (by when that 60% rhythm is projected) with which we have returned a few years ago, now that we were beginning to normalize it ”, adds Martin.

Within the package of measures to combat inflation that the Government will agree on Tuesday, the renewal of the Agreement for the Defense of Employment and Collective Bargaining (AENC) that unions and employers negotiate bilaterally will have special weight. “It is necessary that both moderate their salary expectations so that the inflationary dynamics in which we find ourselves are not fueled in a clearly negative way,” suggests Professor Corrales. According to sources present at the negotiation, the roadmap on which they are working projects a moderate rise for 2022, and the recovery in the next two years of the lost purchasing power through the incorporation of review clauses.

The uncertainty about when and with what effects the Russian invasion of Ukraine will end makes businessmen, workers and families bristle even more, and increases the pressure on the government. “Fortunately, Spain still has some European funds that it can draw on”, concludes Professor Corrales.

Pensions, insured despite the boom

The Minister of Social Security, José Luis Escrivá, for his part, has guaranteed the viability of pensions, regardless of the evolution of prices at the end of the year. “Pensioners have their purchasing power assured indefinitely with the law in force since January 1. We are not going to be reevaluating it every three months, it makes no sense, “he said in an interview on La 1.

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