"What cannot be cannot be and, furthermore, it is impossible". This phrase, by the bullfighter Rafael Ortega, el Gallo, (1892-1960) perfectly defines the failure of the income pact that the President of the Government, Pedro Sánchez, wanted. A new edition of the Moncloa pacts that would allow the loss of wealth caused by the war in Ukraine to be distributed. This failure is fundamentally due to the fact that no one seems to be willing to assume their share. We are poorer, but instead of protecting the weakest, every man for himself has been imposed.
The leader of the opposition, Alberto Núñez Feijóo, after listening to Vice President Nadia Calviño about “Spain is doing well”, did not want to know anything about tightening his belt. And the same thing has happened with Podemos and the investiture pact parties. What they all agree on is the forward pitch. Let future generations pay for the irresponsibility and lack of solidarity of today's Spain.
Thus it was possible to visualize when it was decided to lower gasoline taxes or artificially lower the electricity bill. Decisions in which everyone without exception agreed. Except for the Bank of Spain and Airef, which have warned the Executive about the risk it incurs if it continues without making a plan to start paying what is owed.
Income agreements can be proposed at the beginning of a legislature, but never at the end, and even less so coinciding with an electoral cycle. Without an income agreement and without a plan to amortize the public debt, the Government has been left without economic instruments to face the tsunami that hangs over Spain in the medium term.
Employers and unions have not wanted to assume the sacrifices either. The most they have come to has been to agree on disagreement, in such a way as to avoid social confrontation as much as possible. In other words, companies transfer the increase in labor costs to prices. The employer's president, Antonio Garamendi, could not commit to introducing wage review clauses. The employers have elections in the coming months, and accepting this new government imposition would be like doing harakiri. The general secretaries of the CC.OO., Unai Sordo, and of the UGT, Pepe Álvarez, cannot sign an agreement without revision clauses either. Their affiliates would eat them alive.
The clauses were introduced for the first time in the Moncloa pacts to break the sliding salary scale that was applied at the time. The workers agreed to negotiate their salary in accordance with the expected inflation as long as they were guaranteed that it would be met and that it would not be used as a ruse to lower costs for companies.
Faced with this impasse, the only alternative left to the social agents was to play shell game. Break the global agreement and let each company and each sector make their cape a tunic. Entrepreneurs who are not subject to foreign competition and who are doing well will buy social peace by raising wages and with some formula that guarantees their workers that they do not lose purchasing power.
This is what construction has begun to do, which will transfer the increase in costs to the price of housing. Better this than a series of strikes that jeopardizes recovery. The hotel industry will do the same, as will commerce and most services. An increase in wages that will translate into an increase in prices. Therefore, it is not easy for inflation to reach 6% this year and 2% in 2023, as Vice President Nadia Calviño predicts.
Those who will pay for the broken dishes are the weakest sectors, such as the unemployed and the young, who do not have the capacity to exert pressure. Companies that are subject to foreign competition and cannot transfer the wage increase to prices will also have a hard time. That would make them have less competitive prices and in the long run it would mean their closure. They are doomed to social conflict or downsizing.
Officials will also be forced to lose purchasing power, since salary increases will be limited to 2% for this year, which is what the general state budgets foresee. If average inflation stands at 7.5%, as anticipated by the Bank of Spain, the loss of purchasing power will be no less than 5.5%, which will further degrade public services.
In the end, the law of the market has been imposed once again. Those who have the capacity to exert pressure, such as pensioners, who are ten million votes, are the ones who win. Just like in the previous crisis.
4
