The intense increases in the Minimum Interprofessional Wage decided by the President Sanchez throughout the legislature – around 20% since he arrived at La Moncloa – they are causing havoc among young people. The unemployment rate of those under 25 years of age exceeded 29% in 2022, which is the highest level in the European Union -in front of Greece, which was in power up to the date of this unfortunate record-, and exceeded 31% in the last three months. According to the latest data from the Active Population Survey, unemployment among this layer of citizens grew last year by 15,900 people – which is 2.5% more than in 2021 – so that the total number of unemployed between 16 and 24 years old stood at 464,100. Although this figure is lower than that of the end of 2019, before the pandemic, pushed the youth unemployment rate up to 29.26%. This level is slightly lower than in 2021, but this effect is due to the increase in the active population registered during the past year.
According to various experts consulted by OKDIARIO, in addition to the increase in SMIthe labor counter-reform driven by the Vice President Yolanda Diaz it is causing a series of consequences that will be especially painful for the group of young people. The prohibition to carry out temporary contract and its substitution by the legal modality of the discontinuous fixed it goes against the insertion of these layers of the population in the ordinary labor market. Additionally, the impossibility for companies to get out of the collective agreements -after the resurrection of the call ultraactivity– and the strengthening of the negotiating power of the unions increase wage pressure on companies and results in an increase in dismissal costsdetrimental and dissuasive effects for the hiring of young people.
The Economist Jose Luis Donemember of the CEOE Board of Directorsalso warns about the appearance of this new phenomenon in the labor market: the hiring for fewer hours, so that any growth of the job it is clouded by this fact and does not accurately reflect what is happening in the real economy. “Some increases in the minimum wage such as those that have occurred have direct consequences for young people, for people with no experience and for those with little qualification: either they do not hire you or they do it for fewer hours,” explains Feito.
It is true that this raises the labor factor productivity, but also that this consequence is much less positive than it might seem. “It would be great news with an economy at full employment, but not in our case, with a unemployment rate close to 13%”. And all these pernicious effects of the labor counter-reform are going to be more noticeable in the medium term, with an economy in full slowdown – which will go from growth of 5.5% in 2022 to growth of just over 1% this year -, points Lorenzo Bernaldo de Quirospresident of the consultancy Freemarket.
Despite warnings from economists and experts, the Minister of Labor, Yolanda Diazbegins to take steps to approve the rise of the SMI by 2023 due to the lack of consensus among the social agents that is blocking the agreement. From the Governmentthe rise figure is increasingly clear, opting for a rise in the 8,2%which is almost double the increase made by other European countries such as France o Portugal. The committee of experts which has analyzed the increase in the interprofessional minimum wage, proposes in its report an increase for 2023 of between 4.6% and 8.2%, which would place this remuneration at a maximum of 1,082 euros gross per month in 14 payments compared to the 1,000 euros in force.
«After hearing the report of the committee (which has decided at its own risk and expense the Ministry of Labor with like-minded people) , I am in favor of looking towards the high section. Of course, we are going to raise the SMI without a doubt (…) It is the best measure, and the most effective to improve job insecurity, “said the head of the Department. In this way, when raising the SMI in the higher range than that proposed by the experts of Díaz, the increase for 2023 would be 82 euros per month, compared to 24 euros for France and the 55 euros of Portugal, which, according to the opinions of the experts, would result in the disincentive already present for hiring the most disadvantaged layers of the population.
