Government, unions and employers got up at 9 o’clock this Monday night from the negotiating table without being able to specify the measures of the National Plan to respond to the impact of the war in Ukraine, beyond the previous announcement about the bonus of professional diesel 500 million euros for the road transport sector. The details will have to wait for the framework to be established in the European Council on March 24 and 25, as insisted by the Vice President of the Executive and Minister of Economic Affairs, Nadia Calviño, and the package will finally be approved in the Council of Ministers of the March 29.
The Government is committed to approving a professional diesel bonus of 500 million for transport
Government, on the one hand, and CCOO and UGT, the majority unions, on the other, agree that the priority in the face of the current inflationary shock is to reduce the cost of electricity and fuel. But the workers’ representatives also introduced, in the press conference after the meeting; the need to protect the most vulnerable families, with the proposal to establish a control of rent increases in price revisions linked to the CPI, and denied that the solution lies in lowering taxes. Neither CEOE nor Cepyme, the representatives of the businessmen who were present at the negotiating table, offered statements.
The social protection package mentioned by both Calviño and Unai Sordo, general secretary of the CCOO, and Pepe Álvarez, his counterpart at the UGT, is the compensation demanded by the unions in the collective bargaining process, called an income pact, which proposes spread the damage from the increase in prices and costs due to the war in Ukraine, after the invasion of Russia, together with the change in the marginal system of electricity pricing, for which the most expensive MWh is paid at any given time that is produced, in this case that of a shot gas.
“We have to talk about the price of housing and social bonds to alleviate the rise in the price of energy, and specifically of electricity,” Pepe Álvarez stressed. “I don’t even want to think about the blow that tenants who have to renew their rent linked to the CPI are receiving,” added Sordo. In February, the general CPI increased by 7.6%, compared to the same month of the previous year, which implied an increase in the price of rent of 76 euros for a renter who renewed that month a supposed contract of 1,000 euros per month according to the current law. Since October, the interannual CPI has not fallen below 5%.
The workers’ representatives assume that in the rent pact the wage increases agreed upon to compensate for the loss of purchasing power due to the peak of inflation, which could be extended depending on the duration of the war and the international sanctions against Russia until reaching provoke a recession in the worst case scenario, they will have to settle on a “two or three year” cycle.
CCOO: “The tax cut is a trap that will end in austerity”
“There are products that are becoming more expensive without objective reasons, due to speculation processes, and the Government must have instruments to intervene,” denounced Pepe Álvarez. “The escalation of energy is irregular and speculative,” he continued. “Spain cannot remunerate the MWh at 200 euros, when it is being produced at 20 euros or below,” stressed Sordo, who, on the other hand, stressed “that we do not agree that this is resolved with a reduction in taxes, since we do not It would mean a drop in prices and it would be a reduction in tax revenue when we need more public spending to protect the most vulnerable families.”
The general secretary of the CCOO also warned that impoverishing the State could lead to austerity policies in a few years, given the vulnerability of Spain, which currently supports an over-indebtedness close to 120% of GDP. “The tax cut is a trap,” he said.
An unexpected ally for the rent agreement
The workers found an unexpected ally last week: the governor of the Bank of Spain, Pablo Hernández de Cos, asked before an auditorium full of businessmen “explicit commitments to moderate the margins [los beneficios que obtienen las compañías de sus ingresos totales tras hacer frentes a costes como la energía o los salarios y a los impuestos]”.
“We must avoid the spiral of prices and wages, and the income pact is fundamental, because it is crazy to raise wages for all the loss of purchasing power that is going to occur, and for this, multi-year improvement agreements must be reached, and it must be done well, because if it is done wrong, the Spanish economy will lose competitiveness and the foreign sector is crucial for recovery”, explains Ignacio Conde-Ruiz, professor at the UCM and deputy director of Fedea, who, for the other part of the negotiation points out that it is necessary to ensure that “companies do not have extraordinary margins, something that will not happen if there is competition between them, if they compete on prices”.
“If margins rise, it means there is no competition and they would have to suffer sanctions from the authorities,” continues the UCM professor, who acknowledges that this is the most complicated part of the rent agreement. “Another option is to raise taxes, but doing it in a generalized way is not the most appropriate, but in the stressed sectors.”
Are there examples of other types of commitments? A recent one is the temporary limitation on distributing dividends that was established in the coronavirus pandemic for companies that benefited from the ERTE (employment regulation files) financed by the Administration. However, Albert Recio, professor of applied economics at the UAB and member of the Attac scientific council, considers it an asymmetric measure, “because if they freeze your salary or lower it, you lose income, but if a company limits the dividend distribution, that profit stays in the company”.