If there are two sectors in which the increase in the minimum wage can affect more strongly, those are the domestic and rural employees. Both depend closely on this indicator and already show increases of almost one 30% in two years. Young people and over 45s are also among those affected.
The hike first, and the Covid later, have wreaked havoc among domestic workers who contribute to Social Security, which today are still at their lowest level since 2012. This year these workers became part of the system’s wage-earning regime; before they had their own regime, similar to that of the self-employed. To face the rise in the SMI
up to 950 euros, in 2020 some families, who either could not or did not want to assume the increase, chose, in the best of cases, to modify the contract and cut the working hours of the employee to pay the same. In the worst case scenario, they fired. The latter is the path chosen by many other families during the pandemic due to the fear of contagion. Thinking about a new rise is a headache for many families and for pensioners who have hired caregivers.
According to the Social Security affiliation data, this scheme had in August 386,489 affiliates, the lowest figure since 2012. Some sources point to the possibility that some of the employees have gone to the side of the black economy. A theory that can gain strength if the data provided by the EPA on the group is analyzed. According to statistics, in the home services sector there are more than half a million employed women, compared to those reflected by Social Security. “A new rise is going to be impossible to assume in some cases, among pensioners for example, and it can cause high workers to go to the underground economy,” say the sources consulted by ABC.
Many of these workers, in addition, suffered chaos and delays or non-payment of the SEPE in the payment of subsidies, one of them approved by the Government for this group in the pandemic. Some were busy in the street and without any safety net. The department directed by Yolanda Díaz is very aware of the precariousness they suffer and for this reason the Inspection has turned part of its objectives into regularizing the wages and contributions of these employees whose remuneration is below the minimum interprofessional salary. The Inspectorate sent letters to employers informing them of the obligation to regularize and update salary and contribution conditions. In addition, officials have begun to pursue the irregular economy in this area, especially based on the complaints filed and the communications sent to the Inspectorate’s mailbox.
And if there is another group that will be affected by the rise in the minimum wage, that is that of farm workers, and it will do so at a time when employment in the sector is not going through its best moment. The rise of up to 19 euros will come after a fall in employment of almost 4,600 jobs in one year and 15,406 in August, according to the latest data from Social Security. Industry sources report to this newspaper that the new increases proposed are going to harm the countryside much more, especially permanent crops such as olive groves or fruit and vegetable crops that generate thousands of jobs. They explain that what this situation can cause is an abandonment of crops or a change towards crops that require less labor, although in this case with less or negative profitability.
The situation facing the agricultural sector is fragile, hit in some cases by the low prices they receive for their products. With profitability at the limit in many farms, the last two increases in the minimum wage promoted by Pedro Sánchez in 2019 and 2020 were the last straw. And a new blow is already at the doors.
Less youth employment
To know the impact that the new increases planned by the Government will have on employment, we will have to wait, but what has already been quantified is what were the effects of the 22% increase applied in 2019. The Bank of Spain carried out a study in which he calculated that the increase, approved without agreement with the social agents, could cost the Spanish economy between 83,000 and 180,000 jobs. The entity headed by Pablo Hernández de Cos highlighted in his study how the employment of young people and the work of those over 45 who have the minimum wage as a reference was negatively affected. And all at a time when the economy destroys jobs.
George is Digismak’s reported cum editor with 13 years of experience in Journalism