The Council of Ministers plans to extend the negotiation of the minimum wage

The two forces of the coalition government – PSOE and United We Can – are measured again this Tuesday in the last Council of Ministers of the year and, this time, on account of the minimum interprofessional wage (smi). On the table a double option: either freeze the smi of 950 euros that has been in force in 2020, extending it to 2021; Or, the option of giving an extension to social dialogue so that it can continue once 2021 has started, with the aim that employers and unions can seal an agreement as soon as possible, with retroactive effects from January 1. Meanwhile, the current SMI of 950 euros would remain in force.

This last option is the one that, according to government sources, seems the most likely, although the final decision will be adopted during the meeting of the Council of Ministers.

The extension of the negotiation between employers and unions seems like the middle way between the position represented by the economic vice president, Nadia Calvin (in favor of delaying any increase in the SMI until the economic recovery is “lined up”, in 2021) and the first vice president, Carmen Calvo compared to that expressed by the Minister of Labor. Yolanda Diaz is in favor of an increase of at least 0.9%, such as the one adopted for pensions and public salaries, which would imply adding 8.5 euros to the current Smi, up to 958.5 euros per month.

In December 2019, with a government still to be constituted, the Council of Ministers in office already opted for the formula of giving an extension to social dialogue. Thus, well into 2020, employers and unions agreed to raise the Smi from 900 to 950 euros (an increase of 5.5%). The government decree, dated February 5, 2020, had retroactive effect from January 1.

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This is the path that the ‘purple’ sector of the Council of Ministers trusts, with the Minister of Labor, Yolanda Diaz, up front, to buy time. At the social dialogue meetings on the SMI held in December, it was not possible to reach an agreement between the employers and the unions. The meeting scheduled for this Monday, December 28, has not been finally called, given the null expectation of reaching an agreement. During these weeks, in addition, the opposing positions within the Government have been aired. In the Council of Ministers on December 22, the Minister Spokesperson, Maria Jesus MonterOr, he pointed in the direction of delaying the decision to the second half of 2021, once there is information on whether the economy has channeled its recovery, he said. “The determination is to continue improving it, but it will not be valued until May,” Calviño later added to RTVE. From the point of view of Minister Díaz, however, the extension of the negotiation should be resolved in January, as it already happened this year.

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It is unknown if the possible decision to extend the negotiation could be extended for several months, knowing that the result would have to take effect from January 1. In principle, the validity of a minimum wage is annual, from January 1 to December 31 of each year, although everything is subject to being agreed.

Precisely, the loss of validity of the 2020 smi, of 950 euros, as of December 31 is what imposes the need for the Council of Ministers to move this Tuesday in one direction or another. Otherwise, a situation of legal uncertainty would open up for employers and workers.

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