doubts that it will generate employment and advises that salaries also be lowered
“This will be the legislature of time.” This phrase has become leitmotif by Yolanda Díaz in this second edition of the coalition government. The reduction of the maximum working day established by law from the current 40 hours to 37.5 in 2025 without losing salary is the star measure of his vice presidency. The Ministry of Labor led by Díaz trusts that Working fewer hours is an incentive for companies to be more productiveincrease employment and make better use of time.
However, a reduction in working hours such as that pursued by the Government is not without risks. The International Monetary Fund (IMF), one of the guardians of the essence of economic orthodoxy, warns that It is not guaranteed that reducing working hours will increase employment. He also points out that Workers may end up paying for increased costs what it will mean for companies and they see the risk that per capita income will end up reducing.
This is reflected by the Monetary Fund in its annual report on the Spanish economy within the framework of Article IV published last Thursday. The document draws an exhaustive x-ray of the situation in the country. The IMF highlights the “resilience” of the Spanish economy In these turbulent times and “exceptional” labor market strength. Factors that have led the institution to revise upwards its growth forecast for Spanish GDP from 1.9 to 2.5% this year.
However, it is not all good news. The Monetary Fund warns about the country’s high levels of debt and public deficit, in a context in which public spending linked to aging will increase, and is critical of some economic policies. In this aspect, the analysis carried out by the Fund’s economists on the reduction of the working day stands out.
French experience
The study draws some of the lessons learned from the reduction of working hours that France adopted in the late 1990s. Firstly, they point out that lowering the maximum working day does not guarantee a boost to hiring. “The increase in employment is not clear and would possibly be smallespecially if the working week is reduced without reducing weekly or annual wages,” explains the Fund. “French experience indicates that, to minimize production losses and fiscal costs, “The reduction in hours worked must be accompanied by wage moderation”they add.
Another important point is the costs that the reduction in hours would entail. The IMF warns that even if wages are not reduced initially, workers could end up assuming part of the cost in the form of lower wage growth in the future. Furthermore, the Fund sees it as “likely” that per capita income will decline in the medium term, a drop that they estimate to be around 2-3%.
They also advise the Government to pay attention to how the reduction of working hours matches the minimum interprofessional wage (SMI). Specific, They recommend avoiding sharp increases in the hourly wage by reducing the working day if the SMI also rises.. Likewise, they suggest studying the consequences it may have on public services when applied to the public sector.
Stalled negotiation
The IMF also recommends that the Government negotiate the measure with social agents (unions and employers), to minimize the problems that it may generate in economic activity and be more likely to gain productivity along the way. To do this, the Fund advises taking into account the different impact that the measure will have on the sectors of the economy. Entrepreneurs in sectors such as the hospitality industry have protested ostensibly at the possibility of a reduction in working hours. A flexibility measure that the Fund would welcome would be for the reduction in working hours to be applied on an annual basis.
The Executive has been talking for months with social agents about how to reduce hours, but until now the progress that has been achieved has been limited. The last meeting, held on May 30, concluded again without an agreement to the frustration of the unions. The unions and Labor are committed to a reduction in working hours that is established in the Workers’ Statute and that is accompanied by measures to better control compliance with the hours worked. On the other hand, employers prefer greater flexibility and negotiate the measure agreement by agreement.
