Changes in social security contributions

At the end of December, the Spanish Government approved Royal Decree-Law 28/2018, which entered into force on 1 January. It is a set of measures that have a direct impact on Social Security, by increasing pensions, determining the minimum and maximum contributions for the year 2019, and by regulating the coverage of self-employed persons, among other measures.

The rule shows that the Social Security System is in a situation of deficit and underlines the need to increase the collection by EUR 3.150 million. To this end, it has increased the minimum and maximum bases for contributions to the General Social Security Scheme by 22% (from EUR 858.6 to EUR 1,050) and a maximum of 7% (from EUR 3,751.20 to EUR 4,070.10). What does this mean? Social Security expects to increase the revenue to be used, inter alia, for pensions. However, given that there is a ceiling on contributions, the contribution paid by the highest salaries is not proportional. For example, a worker who earns EUR 100,000 per year is quoted for the first EUR 52,250, not for the total annual wage. On the contrary, a worker who earns EUR 21,000 per year will be quoted for all the amount received. For self-employed workers, the minimum contribution base is EUR 944,40; for employers, managers and managers with more than 10 employees, it is EUR 1,214,08.

Article 189 of the International Labour Organisation (ILO) specifies that domestic workers must have the rights to any employee. However, the Royal Decree-Law does not comply with this resolution, as it only applies some subsidies. The Government of the Kingdom of Spain has therefore not solved the problem and household employees will not have the same rights as the workers of the General Scheme.

Among other important measures, the reform modifies the situation of temporary contracts and trainees. In the first case, the contingency contributions common to contracts under 5 days, such as those covering common diseases, have increased by 40%. In addition, it increases the coefficient of days in high. On the other hand, trainees will contribute to Social Security. However, the rule does not specify who should pay: the school or the company. We will have to wait for a development of the standard.

Increase in the minimum wage

Decree-Law 1462/2018 has resulted in an increase in the minimum wage of EUR 900 per month or EUR 30 per day. Only what is charged in cash shall be taken into account, with no less than the minimum amount being paid in cash (e.g. in the case of payment by genders).

According to the collective agreements of 2016 and 2017, which serve as a reference, an annual increase of 2% will apply to these 900 euros. In addition, the salary for working on Sundays and holidays does not reach EUR 900 and will be paid in a differentiated way. It should not be forgotten that this increase corresponds to a monthly salary, and that, as set out in the collective agreement, it is set at two extraordinary pay, with a minimum of EUR 1,050 gross per month.

When the rise was raised, the employers and right-wing economists were against the measure by considering that it would destroy jobs. Empirical evidence shows the opposite: it does not adversely affect all employment and increases long-term productivity, Ivan H. As Ayala has analyzed in her article “Truths and lies of the minimum wage hike”.

News in Labor Inspection

In the summer of last year, the Roadmap of the Labour Inspection was approved for the years 2018-2022, which defines the lines of work to be followed during that period. 55 measures will be implemented and particular attention will be paid to inspections in 5 areas.

The first block is aimed at preventing fraud in occasional contracts. To this end, more control of recruitment data will be provided and companies with high short-term recruitment will be investigated. The second contains measures to combat the abuses that occur during the day. Among other measures, the registration of hours worked in part-time contracts shall be compulsory. The third will analyse the subcontracting of business activities, especially in the area of wages. Equality will be the basis of the fourth to reduce the gender pay gap (14.2 per cent) and to analyse internal procedures in the event of sexual harassment. Finally, the situation of scholars in the black economy will be analysed.

Digital disconnection

Organic Law 3/2018 has meant a great change in the processing of personal data, not excluding the workplace. Article 88 deals with the right to digital disconnection in order to ensure that the rest period is observed outside working hours. This right will be regulated through labour agreements. The company shall determine the type of disconnection and set up a training and awareness-raising campaign. Such disconnection will be of great importance when working outside the workplace.

What is digital disconnect? Not receiving work messages (whatsapp and emails) outside working hours, for example, or limiting their availability. In other countries, the debate on this issue is well under way and action is already being taken.

France is a pioneer. The law was launched in 2018 and applies to all companies. In 2014, trade unions and employers agreed to include such clauses in collective agreements, which became widespread in the application of the state standard.

In the Kingdom of Spain, on the other hand, it is said that it will have to be implemented, but the practical application is left to the labour conventions. What is the conclusion? Digital disconnection is not guaranteed in the short term. Moreover, given the direction of collective bargaining, it does not seem that it will be addressed in a profound and serious way, as the Spanish employers' association CEOE in 2017 said that in certain sectors and workers this right could not be applied.

In this article we have summarized the main conclusions to which Decree 3(2018) may give rise, based on the report prepared by the Basque College of Economists.

This report has been published by El Salto and we have brought it to the Basque Country thanks to the CC-By-SA license.