Money MattersNewssliderSpainSpain Destinations


by Rose Maramba

During an interview on television, Antonio Garamendi Lecanda, President of the powerful Confederación Española de Organizaciones Empresariales or CEOE (Spanish Confederation of Business Organizations), didn’t seem to be even remotely put out by the 5.5% rise in the national minimum wage, relative to 2019, that the Spanish Government has approved on 22 January 2020. Such increase means a monthly pay packet of €950 in a 14-month annual calendar, bringing the yearly total to €13,300 for the employee.

Per the CEOE’s official website, the confederation that Garamendi presides over “represents and defends the interests of Spanish entrepreneurs. It brings together most of the self-employed entrepreneurs and companies of all sizes and from any sector of the economy through its base associations, which are networked within 240 employers’ organizations.”

The CEOE “is the main interlocutor representing Spanish companies before the Government, the different Public Administrations, trade unions, political parties and international institutions.”

Almost by definition, profit-driven private companies would oppose a pay rise as this would naturally encroach on their profit margins that, more frequently than not, are a stranger to social welfare.

Surprisingly, however, a smiling (and not the grin-and-bear-it kind of smile either) Garamendi appeared on TV making clear that the CEOE supports the deal.

Unai Sordo, CC OO Secretary-General

The negotiation for the raise has been three-pronged involving the newly invested PSOE-Unidas Podemos Coalition Government; the management as represented by CEOE and CEPYME (Spanish Confederation of Small and Medium Companies), this last headed up by Gerardo Cuerva; and the trade unions UGT and CCOO, representing employees.  It has not been a cake walk. The Government wanted to spike the minimum wage to €1000 (even €1,200) but CEOE and CEPYME would not hear of it. Not after the whopping 22% raise just last year under the PSOE Government, the steepest rise since democracy was restored in Spain in 1978!

Yolanda Diaz and Pablo Iglesias: They took on the titans of labor and management

What is even more surprising was the choice by Prime Minister Pedro Sanchez of who would lock horns with Garamendi and Cuerva on one hand, and the labor unions on the other, for the pay hike. He picked Pablo Iglesias, leader of the radical-left Podemos party and Vice-Premier of Social Rights in the Sánchez Coalition Government, and Minister of Labor Yolanda Diaz from the communist party Izquierda Unida.  The tandem had the makings of an infallible formula for a precipitous fall.

There was a time when, after the last general elections in 2019, Garamendi publicly suggested calling for yet another election – that would have been the third in a period of one year – if PSOE, the most voted party albeit without an absolute parliamentary majority, was unable to form a government on its own. Garamendi made no secret of his aversion to a PSOE government in coalition with Unidas Podemos.

Success! Minister of Labor Yolanda Diaz, center, with , L-R, Secretaries-General Unai Sordo and Josep Maria Alvarez of CCOO and UGT respectively, and Presidents Antonio Garamendi of CEOE and Gerardo Cuerva of CEPYME, during the meeting at the Ministry of Labor that ended up with a 5.5% pay hike

Just the same, all the actors showed up at the bargaining table in the afternoon of 22 January. And immediately after, the Government — a coalition of the social democratic PSOE, the radical-left Podemos, and the communist Izquierda Unida — was able to announce that a deal had been reached. This was nothing short of a miracle, considering the initially antagonistic positions of the actors.

Predictably, there is no lack of doom-and-gloom soothsayers but, meanwhile, it has turned out just fine for the workers who had been living on frozen wages for so long. As if that weren’t enough, the International Labor Organization states that the hike will stimulate the Spanish economy.

Council of Ministers, 14 January 2020, at the Moncloa Palace, Seat of the Spanish Government. This is the first time contemporary Spain is under a coalition government

The Government wants another pay rise in 2021. Is it pushing its luck just a little too far? It looks like beyond a certain red line the CEOE and CEPYME will no longer play along.

The era of a progressive government in Spain has started, after seven years of conservative rule (2011-2018) during which a harsh labor reform was passed and consigned 13% of the labor force to working poverty.

How long can the new era last, considering the precarity of the Coalition Government?


Featured image/Meridican, CC BY2.0
CEOE logo/Confederación Española de Organizaciones Empresariales, PD via Wikimedia Commons
CCOO leader Unai Sordo/Comisiones Obreras-38, CC BY2.0 cropped
Yolanda Diaz/Twitter; Pablo Iglesias/Facebook
At the Ministry of Labor, for the pay hike/ Ministry of Labor Twitter
Council of Ministers/Pool Moncloa-Fernando Calvo