The OECD recommends raising the minimum wage to deal with inflation

At the moment when the dialogue table for the increase of the Professional Minimum Wage (SMI) for next year is about to be convened in Spain, a generic recommendation comes from the OECD to increase this salary as a formula to help the most vulnerable before the excessive rise in prices.

Thomas Osborne
Thomas Osborne
09 December 2022 Friday 08:42
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The OECD recommends raising the minimum wage to deal with inflation

At the moment when the dialogue table for the increase of the Professional Minimum Wage (SMI) for next year is about to be convened in Spain, a generic recommendation comes from the OECD to increase this salary as a formula to help the most vulnerable before the excessive rise in prices.

“While heightened uncertainty and a significant slowdown in economic growth may suggest caution in raising minimum wages, several countries have scope to go beyond current minimum wage levels and protect, at least partially, the most vulnerable casualty workers. the increase in prices”, indicates the report that the OECD has published this morning.

The report does not indicate which countries have this margin, but it does give clues to identify them. One is the comparison of the SMI with the median wage, which shows that if in the OECD the minimum wage represents 55% of the median, when going country by country, the figure varies considerably. Spain is below the average, with 48%, and it is also lower than that of the other large European countries, such as Germany, the United Kingdom or France.

The report also finds that the majority of OECD member countries have increased their minimum wages between January 2021 and September 2022, but that they are increases well below registered inflation, which has led to a clear loss of purchasing power. . Specifically, in the Spanish case, the real SMI has lost more than 5% of purchasing power, despite the agreed increase.

As a conclusion, it is also recommended that increases in the SMI be complemented by a broader strategy, with a package of fiscal measures that ensures that increases in the minimum wage translate into greater purchasing power for workers while limiting the labor costs for companies.

The report has been published the same day that the UGT has claimed an increase in the SMI of at least 10%. Pending the report of the committee of experts that raises its fork for the increase in the minimum wage for 2023, Fernando Luján, general deputy secretary of Union Policy of UGT, has affirmed that the increase in the minimum wage "cannot be less than the 10%”. In this way, it would stand at 1,100 euros, which is the demand of the unions in this negotiation.

Both CC.OO. as UGT argue that in many European countries the minimum wage has risen more sharply in Spain, and cite the cases of Germany, with 15%, the Netherlands, with 10% or Belgium with 13%. In contrast, on the other hand, from the CEOE it is recalled that in recent years the SMI has risen more than 30%. They are the previous positions before sitting at the negotiating table, which will be opened with the report of the experts who are finalizing their proposal.