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CEOE suggests companies link salary increases to productivity

The Executive Committee of the CEOE, meeting this Tuesday in an extraordinary way, confirmed the impossibility of reaching “at this time” an agreement on salary matters with the unions for the period 2022-2024. As I already communicated last week, given this impossibility, the business organization has decided to publish a statement that serves as a guide for the negotiators in charge of collective agreements with a battery of recommendations. His intention is to ensure agreements that help companies face an economic situation that “has worsened significantly after the start of the war with Ukraine.”

The CEOE suggests to the negotiators of the agreements, both company and sectoral, that when it comes to agreeing on possible salary increases, they replace “obsolete remuneration concepts with others linked to productivity and results.” On the contrary, he recommends avoiding linking wage increases to concepts “as volatile” as inflation, which also feed back the growth of prices. But if this is the case, he asks the negotiators on the company’s side that “limits or ceilings should be established.”

No revision clauses

But it is not only necessary to avoid agreeing to increases linked to inflation, but also wage review clauses. Thus, the statement insists that it is essential that salary updates do not have retroactive effects “due to the impossibility of affecting the cost of the product or services the accruals produced”. In this sense, the CEOE has chosen not to recommend a numerical range of wage increases for this and the following two years. That leaves it to the discretion of the negotiators.

However, among the fundamental criteria for determining salary increases, the CEOE considers it “essential” that each negotiator take into account the specific circumstances of their agreements, modulating them in each sector or company “considering productivity and employment, in such a way that the resulting figure allows us to maintain a competitive position”.

In any case, the text agreed by the Executive Committee of the CEOE understands that given the global context and the uncertainty regarding the scope of the economic recovery “it is necessary to make an effort to moderate wages [resaltado en el comunicado] to preserve the viability and competitiveness of enterprises and preserve employment.

And remember that a significant rise in wages will mean an increase in labor costs that may also constitute “a barrier to entry into the labor market for unemployed people.”

Likewise, it will entail a lower margin to introduce variable remuneration -which recommends its implementation to negotiators- and generate an inflationary spiral, according to the CEOE.

The CEOE recalls that it is worth remembering the existence of “mechanisms for non-application of the conditions agreed in the agreements”

On the contrary, the leadership of the employers recommends that the agreements currently under negotiation link wage increases to quantifiable and measurable economic variables and indicators. Among them, it suggests productivity, employment, the behavior of GDP, an indicator of guarantee of competitiveness and for company agreements, results or Ebitda.

In any case, the CEOE reminds the managers of the companies that due to the adverse situation, it is worth remembering the existence of “mechanisms for non-application of the conditions agreed in the agreements when there are economic, organizational or production technical reasons”, according to the Status of workers.

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