Wages are finally taking off. And like never. You have to go back to 2008 to see a bigger rise. Workers are beginning to gain purchasing power, but still clearly insufficient to recover what has been lost since the price crisis broke out. The strong increase of more than 3.3% experienced by the payrolls of the more than 9.2 million employees covered by a collective agreement does not compensate for the strong devaluation they have suffered in the last three years, according to data published up to August this Friday by the Ministry of Labor.
Yes, so far in 2023, workers have gained almost one point of purchasing power. Their remunerations have risen 3.38%, the largest increase in the last 15 years, while inflation stands at 2.6%. But only last year the rise in the CPI made such a dent in the pockets of the Spaniards that it suddenly took away almost 5.5 points of purchasing power. And we must also add the slightly more than a point and a half lost in 2021. That is to say, that today and despite this historic rise, workers who are covered by an agreement suffer a loss of purchasing power of more than 6 points. And for those who are not lucky enough to be protected under this umbrella, the cut will presumably be greater.
The agreement signed last May by the unions and employers (AENC) is to a large extent behind this rise in wages. What’s more, since then the signing of agreements has skyrocketed – practically as many have been signed in these eight months as in all of 2022: almost 3,000 – and even the 700 that have been signed this year, which are a minority, have achieved increases of 4 .25%, even higher than the level recommended by the social agents.
Specifically, this agreement urges companies to make salary increases of 4% in 2023 and 3% for both 2024 and 2025, with a salary review clause that, in the event of a deviation from inflation, could imply additional increases of up to 1% for each of the years of the agreement (2023-2025).
Workers who have some type of shielding their wages against price fluctuations are also taking off. Thus, the agreements that include a review clause affect 2.18 million workers of the slightly more than 9.28 million protected by the agreements registered until August, the equivalent of 23.5% of the total, an amount well above of the 1.7 million covered by this fine print a year ago.
Labor costs rise
However, the majority of wage earners (almost three out of four) do not have these clauses in their agreements to avoid losses in purchasing power, a level far removed from those three quarters who were protected against inflation in 2008.
But this rise in wages, in addition to the AENC, is due to the 8% rise in the minimum wage this year, which also drives up the rest of the wages, as well as the sharp rise in social contributions. For this reason, the cost per hour worked increased by 6.5% in the second quarter compared to the same period in 2022, its highest rise in three years, according to data published this Friday by the INE. And companies have already been enduring strong job increases for seven consecutive quarters.
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