Is it viable to modify the remuneration system in Spain so that employees receive the gross salary and are themselves responsible for paying their contributions to the State and for the management now carried out by the company? Beyond the debate on the increase in labor costs, which inspires the proposal of the president of the Spanish Confederation of Employers’ Organizations (CEOE), Antonio Garamendi, experts see many difficulties and risks in the application of an idea which, as proposed, would not mean any advantage for businesses, quite the contrary. Furthermore, this would increase fraud, cause labor disputes and open the door to a generalization of the figure of “false self-employed”.
The idea presented several times by the business leader has provoked all kinds of reactions, from direct reproaches from the Minister of Labor, Yolanda Díaz, and the unions to the applause of many small entrepreneurs and self-employed workers who share the idea that this would produce visibility on the real expenses of companies involved in the creation and maintenance of jobs. But this debate does not delve into what the application would mean a proposition of this importance in its literality.
We must take into account the context in which these words are spoken. Employers have suffered for several years from a poor reputation when it comes to labor costs, particularly when it comes to social security contributions. The employers’ organization has demonstrated its willingness to agree on issues such as labor reform, pension reform and, a few days ago, partial retirement.
But he noted that this same government agreed bilaterally with the unions to impose a path to increase the labor bill via contributions, the inter-professional minimum wage, all without sparing criticism from employers. Something that is also about to be repeated with the reduction of working hours.
The CEOE is aware that the almost caricatured approach with which the Executive distributes commercial complaints It takes advantage of the lack of transparency on labor costs, which means that the majority of employees do not have a clear idea of what it really costs their employer to create and maintain a job.
No less costs nor more net salary
The experts consulted by elEconomista.es They agree that this transparency would be beneficial, in particular because it would clarify the part corresponding to company contributions, which is not included in the payroll, which only includes what the worker must pay (even if the deduction is made by the employer who pays the net salary). But it is precisely the complexity of clearly transmitting this information to employees that makes us doubt whether things will be simplified. what Garamendi’s words imply.
As current legislation clearly establishes, the employer is the person responsible for “paying or complying with the obligation to contribute”, which must be paid in full. both “own contributions” and those of their workers. But these are clearly differentiated amounts.
For this reason, Marcel Jansenof Fedea, emphasizes that a measure along the lines expressed by Garamendi would in no way mean a reduction in labor costs for employers or an improvement in the net salary of workers. “The proposal therefore seems to correspond to the desire to reduce the total wage cost or the transfer of risks from the company to the workers.” warns this expert.
As the CEOE puts it, employers would continue to be obliged to pay the worker the same gross salary, from which the contributions corresponding to the worker would be deducted, what is called the “work quota”. But at the same time, it would also be necessary to pay employer or company costswhich is not deducted from the worker’s gross salary and therefore does not appear on the pay slip. This information is unknown to the vast majority of employees but which would continue to be so even if they received the gross salary. A total remuneration which would remain lower than the total cost of their employment for the company.
But could this amount be added to the gross salary and it would be the employee who would process it? This would be even more difficult with the current regulations, which clearly state that “Any individual or collective agreement will be void. whereby one of the subjects required to contribute assumes the obligation to pay in whole or in part the royalty or part of the royalty owed by the other.”
Unless a radically different scenario opens up, in which the remuneration of employees would function like that of self-employed workers. An option which, according to Jansen. In practice, this would transform millions of salaried workers into “false self-employed”. Thus, they would remain subject to the same conditions of hours, work organization and salaries imposed by companies, which would be freed from their “risk management” obligations that they assume when hiring. And with that, the employer’s fees.
Even if the legislation changed to protect this new system, it would be a hard blow for public coffers and social security, since workers would be able to choose their coverage and social protection as the self-employed do. It is also worth wondering what would happen to unemployment benefits. why employees contribute in a very different way than self-employed workersnot to mention the cover of Fogasa.
Unknown management costs
The additional problem is that the vast majority of employees do not have sufficient knowledge to carry out these procedures, let alone to guarantee adequate social protection or even to avoid errors and cases of fraud. This is what he emphasizes Omar Molinadirector of the labor sector of Augusta Abogados and also a graduate in social sciences.
From this double condition, he warns that this plan “could generate an increase in payment delays, sanctions and complicate the sustainability of the Social Security system (which in this context is not recommended).” In this scenario, there would be a transfer of expenses between the employer and the employee, because assuming this management would entail additional expense for the latter, both in time and in social and tax advice. a cost that the company currently bears.
But as long as workers continue to be considered employees, companies cannot ignore these issues. a serious problem for adapting the measure, which would result in “extraordinary costs” when modifying a payroll management system. ANDAdded to this is the possible loss of employment bonuses (which would remain pending in a system in which the worker assumes his own administrative formalities), adds an obvious risk of dissuading hiring.
As if that were not enough, the employees ““they could misinterpret the cash they would receive” initially by receiving the gross salary, which opens the door to countless conflicts in personnel management. .
Molina agrees with Jansen that it would be “more reasonable” to educate workers about the real cost of their jobs, including what managing their payroll entails. Transparency in the distribution of company and worker contributions, “would help employees better value their net salary“.
