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Rajoy will propose to raise the minimum wage by 4% in 2018

Government President seeks agreement with trade unions and businessman to reach 2020

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Rajoy will propose to raise the minimum wage by 4% in 2018

The government has already listed its proposal to raise minimum wage (SMI) in 2018. It raises 4%, up to 10,400 euros per year or 736.01 euros per month, computed in 14 pay. In addition, executive wants to negotiate with unions, entrepreneurs and PSOE increase of following years, specifically in 2019 and 2020.

This proposal is part of commitment to which Minister of Employment, Fatima Báñez, had arrived with social agents at end of September. This consisted in agreeing on a path to increase SMI before end of year.

"At moment, we have calculated a 4% rise for 2018, which would reach about 10,400 euros per year. We will also propose significant increases for 2019 and 2020. It would have to be compatible with continuing to grow and creating at least 450,000 jobs, "announced president of government Mariano Rajoy, in an interview published on Monday in 20 minutes.

The increase is insufficient for Unai Sordo, Secretary general of CC OO. "If SMI of 2017 complied with European Social Charter, it would have to be located at 886 euros in 14 pay, and this is scenario for which CC OO will bet." Sordo has also pointed out that legal minimum wage in Spain is lowest quarter of European Union if level of productivity is considered.

For its part, UGT Secretary General, Pepe Álvarez, has demanded that government open a negotiating process, not only on SMI, but also on recovery of purchasing power of officials.

The Institute for Economic Studies has also criticized rise of minimum wage, but not insufficient, as unions say. For CEOE think tank, this increase can generate more temporality and part time in boom times, and more job destruction in times of recession, reports Antonio Maqueda.

In opinion of its president, José Luis Feito, this increase "may have unwanted effects". "Of course everyone wants salaries to be higher. Nobody discusses that. But we have to look at what consequences of measure are. A rise in minimum wage implies that company will have to pay above productivity of worker and that, refore, that salary exceeds budget that company has to pay that job. And that makes at a favorable juncture employer hires, but to do so with doubts and opt for a temporary contract or part-time, "says Feito.

The SMI rose significantly earlier this year after a pact between government and PSOE that was also conditional on approval of expenditure ceiling for budgets of 2017. This meant an increase of 8%, up to 707.7 euros per month from 655.2 euros of 2016. This was largest one-time increment since 1986.

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