Monday , October 18 2021

MINIMUM VALUE – The new SMI will cost 28% of those over the age of 45 with low pay – Economy



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One out of every four workers over the age of 45, who was less than € 900 by December 31, will lose their jobs this year due to the impact on the payer's cost department. a 22% increase in the minimum wage approved by the government after the budget pact with Unidos Podemos.

At least this is an assessment by the Bank of Spain's analysts, who just published a small report – an irregular document under its terminology – with its estimates of the impact of the government's 'star measure' on the labor market. His conclusions are not encouraging: an increase in the minimum wage about 125,000 jobs will be collected in the coming months, which means it will cost 13% of the workers for whom it was intended to improve their situation, it will be particularly targeted at groups with special employment opportunities, such as women and older than 45, and this is hardly the case. will have an impact on the Spanish economy's total wage, which is one of the government's arguments to explain the increase in income tax and social contributions that it has planned this year.

The company relies on labor movement observed after the minimum wage increase in 2017 (8%) to predict the expected impact of this year's employment growth. Then analysts concluded that the increase in the minimum legal compensation significantly increased the likelihood of loss of employmentespecially for people whose pay was closer to the legal minimum wage before regulatory change (see graph). In other words, the probability of losing the job after the increase of the SMI was higher, the lower the pre-pay of the affected worker.

The extrapolation of these conclusions to the unprecedented growth up to this year marks a worrying picture in which 12.7% of employees with wages below 900 euros By January 1, they will lose their jobs thanks to changes in government salary rules: 125,000 jobs.

The impact will also be stronger in one of the most sensitive labor market segments, namely workers over 45 years of age. According to the financial system regulator analysts' forecasts, Your probability of losing your job will increase from 14% to 41%, and in fact it is likely that 28% of SMI recipients in this age group will lose about 20,000 employees according to INE data.

However, this will affect employment in all sections. For example, young people between the ages of 16 and 24 – 25% of them – have lower wages than the new SMI and are therefore in the group of recipients – about 2% of the labor market may remain outside the labor market. this event.

Low incidence at wage level

The Bank of Spain also doubts that they will achieve the wage targets set by the government at the event. Regulators analysts understand this A 22% increase in the minimum wage will be insignificant when it comes to wage increases In Spain, and its real impact on the "payees" average wage will depend on the loss of work.

data

The Bank of Spain estimates that an increase of 22% in the SMI will only increase the average wage of beneficiaries by 0.8%.

Report of the Bank of Spain

In this way, his calculations show that, yes, the measure will have a significant impact on the younger segment of those with lower pay, contributing to an average salary increase of 3% from 16 to 24 years.

However this impact on wage improvement will be mitigated in other age groups. The impact on low-wage workers aged 25-32 will only be 0.9%, from 0.6% of those aged 33 to 44, and 0.8% of those over 45. Well, 72% of workers over the age of 45 will keep their jobs. The average increase for all beneficiaries will be 0.8%.

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