Businesses at odds with government over minimum wage

Businesses in Spain say increasing the minimum wage will hinder job creation.

Proposals to increase the minimum wage will slow economic growth and discourage businesses from hiring new staff, business leaders have warned.

The minimum wage is currently €950 per month, even a symbolic rise of €25 extra per month could harm businesses  as they attempt to recover from the impact of the Covid-19 pandemic, business representatives told Spanish daily ABC reported.

In May, the Advisory Commission for the Analysis of the Minimum Wage suggested a 10 per cent hike to the minimum wage.

If approved, the increase could see the minimum wage in Spain rise from €950 per month to €1,045 per month.

The Bank of Spain said the last minimum wage hike may have backfired and cost the country 180,000 jobs, an argument now being used against another raise.

Labour Minister Yolanda Diaz however has dismissed linking the two as an “enormous mistake” and “pure ideology”.

The Bank estimated that the 22 per cent rise in the minimum interprofessional wage launched by the current government caused the labour market to slow down.

“Following the increase, the employment of low-wage workers grew more slowly,” the bank said on June 8.

“There was a larger adverse impact on the job losses of older workers and a sharper reduction in hours worked and in job creation for younger workers,” it added.

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