Updated on Friday, September 17, 2021 – 11:55
The governor of the Bank of Spain, Pablo Hernndez de Cos, has affirmed that a rise in the SMI at a time when a crisis such as the current one comes out will be harmful to the economic sectors that are lagging behind in the recovery, such as tourism or commerce. , and that small and medium-sized companies will notice it more.
The Governor of the Bank of Spain, Pablo Hernndez de Cos, this Friday at IESE.David ZorrakinoEuropa Press
The Governor of the Bank of Spain, Pablo Hernndez de Cos, has stated that at the current juncture that the Spanish economy is experiencing, with a “heterogeneous recovery” of activity, a rise in the Minimum Interprofessional Salary (SMI) is counterproductive for sectors where recovery is delayed the most.
In a session with professors and students from the IESE Business School in Barcelona, Hernández de Cos pointed out that in developed economies the SMI can help reduce some inequalities social, but which, at the same time, also has “side effects” on the most vulnerable people, such as the young or the unemployed over 45 years of age. For this reason, he considers that increases in the SMI should be accompanied by a “training effort” with affected workers.
He has insisted that, although the Spanish recovery is solid, it is not affecting all sectors equally and workers in activities that lag further behind, such as the commerce or tourism will be the ones that will suffer the most from the rise in the SMI.
In this sense, it has pointed out that small and medium-sized companies will also be more affected for the rise, because they will think more about it when making a new hire.
For this reason, the governor has asked “prudence” in SMI increases and he recalled the importance of tackling one of the structural problems of the Spanish economy, which is productivity.
The Bank of Spain published last June a document that concludes that the 22% increase in the SMI that the Government decreed in 2019 caused a negative impact total employment of up to 174,000 jobs.
“The estimate of the impact of the increase in the SMI on employment for the episode analyzed in Spain would be consistent with a net loss of employment of the workers directly affected of between 6 and 11 pp, which in this case would be equivalent to an impact on employment total wage earner between 0.6 and 1.1 pp “, explained the agency. And this figure, when faced with the affiliation data offered by Social Security for the year 2018, the result is that negative impact of between 92,000 and 174,000 jobs in 2019.
Hernndez de Cos has also referred in his speech at IESE to the high public debt of Spain that makes the economy “very vulnerable“, in two senses. First, because of the” perception in the markets of the sustainability “of this debt -whether Spain will be able to fulfill its commitments or not- and then, because “leaves little fiscal margin“to the Government to face new crises.
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