As I have already mentioned on previous occasions, the Spanish economy has a big structural problem at the base: a significant absence of total factor productivity and, therefore, competitiveness, since we are less efficient, costs are higher and we obtain a lower production value in relation to the cost of the factors used.
This makes our economy more sensitive to variations in the business cycle, so that it leads in job creation during periods of growth and is the economy that destroys the most jobs during periods of economic decline .
Well, Spanish companies are suffering enormous costs due to numerous interventionist decisions by the government, such as the increase in the interprofessional minimum wage, which, by increasing the minimum social security contribution base, increases all costs. Thus, the minimum wage increased by 47.03% between 2019 and 2023, which directly increases business costs in the same proportion and in two ways: on the one hand, the increase in wages. On the other hand, the Social Security contributions that the company pays on behalf of the worker.
This until 2023, which has an impact on the Annual Labor Cost Survey that the INE has just published for that year. It is verified that the reform of social security contributions imposed by Escriva increases this cost even more for businesses. Thus, while the gross cost increases by 5.38% over one year and salaries by 4.74%, social security contributions increase by 7.26%, 53% more than salaries, so that the government makes the structure of businesses more expensive, harming their viability and artificially straining prices due to increased costs.
This absurdity of the minimum wage and the reform of contributions, which increases them, mean that the obligatory contributions accumulated to social security have increased by 20.21% since Sánchez has governed.
In other words, since Sánchez has been in power, contributions have increased by 31% more than salaries, and last year, contributions increased by 53% more than salaries. Therefore, not only is Sánchez’s entire policy of increasing costs (minimum wage, taxes and contributions) an absurdity, but also that, with the reform of contributions, of the impact of the cost of contributions on the total cost of businesses.
And this only until 2023, because the reform of contributions continues to increase the cost. Remember that the increase in the additional contribution started last year 2023, going from an additional 0.6% (0.5% payable by the company and 0.1% payable by the worker) to 1.2 % in 2029 (1% of the employer and 0.2% of the worker), a measure which will be maintained until 2050, will represent a barrier to employment, making the hiring of workers more expensive and reducing their disposable income , which can lead to lower hiring and revenue, harming the sustainability of the system.
On the other hand, the imposition of an additional quota on workers with a maximum base, which in 2025 will be one additional point, with progressive increases of 0.25 points, until reaching 6 additional points in 2045, but without increasing maximum pensions, constitutes a step towards transforming the system into a social rather than a contributory system, thus undermining confidence in it. This can mean a flight of top professional talent to other countries, with a loss of added value and income.
All this will continue to increase costs, as we have already seen in the IITR-2024 Quarterly Labor Cost Survey, where up 4.1% over one yearafter a growth of 3.9% during ITR-2024. In fact, these data are more worrying if we analyze the cost of labor per effective hour, since, in this case, the increase is 2% over one year, after an increase of 7.4% during the ITR-2024.
All this has a negative impact in the medium and long term on economic activity and employment, which will lead to a loss of productivity and competitiveness, markets and jobs.
Companies are being stifled by increasing costs, by the increase in absenteeism that we have seen recently, at the highest level of the series and by the taxes that they have to face and which represent a reduction in their competitiveness, generator of activity and creator of jobs. work, as well as legal insecurity. As a result, businesses are finding it increasingly difficult to continue, sometimes destroying themselves noticeably, like this month, because of the government’s poor economic policy. We must work more and better, that is to say, produce more in two ways: more work and more productivity, this is what will increase economic activity and employment, i.e. prosperity.
