The Pandemic and Minimum Living Wage May See Return to Black Economy

Pablo Iglesias and Pedro Sánchez champions of minimum living wage Credit: La Moncloa flickr

THE concept of a legal minimum income, backed by Spanish government financial support has been an important plank in the left leaning political parties in Spain.

It has finally been voted in but could come with some unexpected problems as those undertaking the least well-paid jobs could well be tempted to enter the ‘black economy’.

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The problem for the authorities is that it will be very difficult to check on whether recipients of the government support are ‘topping up’ their income by taking on second jobs where they are paid in cash and no declaration is made.

A perfect example would be domestic staff at smaller hotels who will be officially registered, will earn sufficiently low amounts for them to claim the government support but who can then undertake private domestic work such as cleaning, ironing etc where they are paid cash in hand.

The concept of trying to ensure that every person in Spain is entitled to sufficient income to allow them to move above the poverty line is undoubtedly one that many nations would aspire to, but considering the huge cost to the nation of the Covid-19 pandemic, it remains to be seen if this is actually the right idea at the wrong time.

Eventually all the money that has been spent in the first six months of 2020 (as well as the billions of euros still promised in the second half of the year) will have to be replaced somehow and it could well be that those ‘middle class’ workers who have battled through the pandemic will be the ones to ‘settle the account’.


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