SHARE
COPY LINK

EMPLOYMENT

Why the Bank of Spain believes raising the minimum wage will hurt job creation

The Bank of Spain has warned of the "collateral damage" the country's job market suffered the last time the minimum wage was raised, amid reports the Spanish government is considering revising this figure again and giving more rights to temporary workers.

Why the Bank of Spain believes raising the minimum wage will hurt job creation
Strawberry pickers in Spain: Photo: SAMUEL ARANDA / AFP

In its report published on Tuesday, the Bank of Spain wrote that after the increase in Spain’s Minimum Interprofessional Salary (SMI) in 2019, there was less growth in employment among those who earned the lowest wages. 

The last time the Spanish government increased the minimum wage to €900 in 2019, it caused the loss of between 98,000 and 180,000 jobs, El Banco de España wrote.  

The central bank of Spain explained that if this were to happen again, these negative consequences could be especially tough “on the employment of older people and will cause a reduction in hours worked and job creation for young people”. 

Spain’s top banking entity also indicated that after the rise in the mininum wage in January 2019, there was “a sharp drop in contracts with base wages less than or equal to €1,050”.

The report comes just after the Spanish government announced it was considering raising the minimum wage in 2021 by an amount which is yet to be confirmed, but which is expected to be between €50 and €250 more per month than the current base salary.

Spain’s current minimum wage is set at €1,108.3 gross per month. In reality, this equates to €950 a month, payable in 14 instalments to allow for the double monthly salary in July and December. 

This analysis by the Bank of Spain comes after the Organisation for Economic Co-operation and Development (OECD) criticised Pedro Sánchez’s government on May 27th after not having applied increases to the minimum wage “gradually” and for not having analysed the repercussions this has had on its employment.

“The process of setting the minimum wage could be modified with the creation of a permanent independent commission, in charge of evaluating its possible effects and preparing recommendations that allow a gradual modification of the minimum wage in line with the evolution of the conditions of the labor market and the productivity”, the OECD explained in its report to Spain.

The Bank of Spain’s report also indicated that the rise in the minimum wage would affect all age groups who are employed to a greater or lesser extent.

For those under 33 years of age there is “an important and significant increase in the probability of going from full time to part-time”. Among young people between 16 and 24 years old, the report stated that “the probability of being employed full time is reduced”. And with regards to the elderly, in most cases, they become unemployed.

According to the Bank of Spain, it’s the young people who will be the most negatively affected by this rise when it comes to finding work.

Unlike what happens with job loss, which affects older people, the most damaging effects are on those trying to find a job in the first place, especially those under 24 years of age.

The report estimated that there will be a reduction in job creation of 1.9 percent for those between 16 and 24 years old and of 1.2 percent for those between 16 and 64 years old.

The young are also the group most affected by unemployment. According to the latest government figures, this stands at around 39.9 percent and is the worst in the EU. 

The Spanish government is also currently trying to address the precariousness of the country’s job market by shortening the maximum length of temporary work contracts to six months so that temporary employees can access fixed positions sooner.

READ ALSO:

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

JOBS

The best websites to look for jobs in Spain

If you’re looking for your next career challenge in Spain or indeed are new to the country and are looking for employment, here are some of the best websites to look for jobs.

The best websites to look for jobs in Spain

Unless you’re retired or moving to Spain to retire, one of the most important things you’ll need to do when you first arrive, or even before you arrive, is to look for a job. It can be a little daunting knowing where to look when you’re in a new country, but we’ve got you covered with some of the best job websites in Spain.

Or perhaps you’ve lived here for several years and are looking to take on new career responsibilities and improve your prospects. If you always get stuck looking at the same job sites, you may want to take look below and broaden your options. 

READ ALSO: Not just English teaching: The jobs you can do in Spain without speaking Spanish

The Local Jobs

Did you know that at The Local we also have our own job site? You can find it under the jobs tab under the logo on the homepage and choose from careers in Spain including education & teaching, software engineering, sales and customer service. Most of the job descriptions are written in English too, so it’s one of the best places to look if your Spanish is not quite up to scratch yet.  

InfoJobs

InfoJobs continues to be the leading job search portal in Spain, ever since it was launched in 1988. It’s the best place to start when searching for a job here, with listings of thousands of vacancies across the country and across various industries too. Large corporations such as Telefónica, Clece and Sacyr publish hundreds of job offers daily. It also allows you to set various filters when searching, including work-from-home and hybrid positions.

Infoempleo

Infoempleo enables users to register for free and upload their CVs to the site. If you can understand Spanish, the blog section is particularly helpful with several articles with tips and news related to employment in Spain. They also have a section on courses and study centres throughout the country, in case you need to brush up on your skills first.

LinkedIn

One of the most comprehensive jobs sites out there, LinkedIn is of course one of the best places to search for jobs worldwide, not just in Spain. You can select the search terms for the jobs you want, as well as preferred locations. As many of you are probably already aware, LinkedIn is not only great for searching for jobs, but of course for making professional connections online and putting your CV online, so that potential recruiters can search you out too.

Laboris

One of the most important online employment agencies in Spain, the site allows companies to sign up and publish their first two job offers for free. It also has a geolocation service that allows candidates to know which jobs are closest to their homes.

Indeed

Indeed, allows you to search through thousands of jobs online to find your next career move and has several tools to help you such as improving your CV.  One of the best aspects of it is it has thousands of opinions from users and candidates who have already had the experience of working for the same company or have already been through the interview process.

Trabajamos

Trabajamos is a social employment site that is ideal for those who are self-employed, with more than 60,000 users and 13,000 job ads published. Under the section ‘Demands and services’ professionals from all fields have the opportunity to upload a professional description about themselves, a photo and details on what they charge per hour for certain services.

El País / Monster

The joint initiative of the newspaper El País and the American employment portal, Monster is another great option. As well as searching, the page allows you to save the jobs you’re most interested in so you can look at them any time and don’t have to search again. It also enables you to upload your CV and see which companies are interested or have been looking at it.

Adecco

The Adecco website covers both employment and career guidance and is specialised in Human Resources. As well as being a job site, it also has 280 offices throughout Spain. The company focuses on certain sectors in particular and is best for jobs in hospitality, audio-visual, logistics, motoring and transport.  

Milanuncios

Milanuncios is not solely a job website, it’s also a place to look for second-hand items for sale, search for professional services or even find apartments for rent. It does have a section on employment, however, which allows candidates and companies to get in contact with each other directly. Be aware though, that there can be some job scams posted on the site, so look out for any positions that sound too good to be true or ask you to pay any money in order to apply.  

Noticiastrabajo

Noticiastrabajo specialises in employment, labour rights, economy, benefits and admin. Job boards are published daily with offers from large multinationals such as Mercadona, Leroy Merlin, Bricomart, Decathlon and Primark, among many other leading companies looking to recruit. One of the best parts about it is that it clearly states accurate salaries, the number of hours and how to send your CV. It even gives you tips on how to pass the job interview.

SHOW COMMENTS