Spain | Getting to grips with the minimum wage and regional differences

Summary

The empirical evidence on the minimum wage provokes a heated debate on its increases and the need to differentiate it according to age and work experience, or region.

Key points

• Key points:
• This debate ought to consider other objectives at least as important as that of reaching 60% of the average wage that the European Social Charter recommends. These involve reducing unemployment, temporary employment and the hidden economy to a minimum, while at the same time maximizing productivity, the employability of younger and older workers, and increasing equity.
• The regional differences in workers' qualifications and business productivity and competitiveness leads to huge differences in the matching of workers with the jobs available.
• Those regions where a high percentage of these matches involve low-productivity workers, run a greater risk of the same minimum wage for all of them leading to a higher unemployment rate.
• The best-case scenario would see the regions converge in human capital and business productivity and competitiveness. The problem is that this convergence between autonomous communities has been practically non-existent in the last four decades.
• We should not give up on introducing a wide range of comprehensive policies, which are coherent and efficient — guaranteeing equality of opportunity between the regions and facilitating their long-term convergence without condemning some of them to a higher structural unemployment rate than others.

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