Spain's PSOE and Podemos commit to partial roll-back of labour market reforms
Spain's Socialists (PSOE) and far-left Podemos party have unveiled the political programme that they intend to pursue if they garner the parliamentary support thay need to form a coalition government, including a roll-back of the previous government's labour market reforms, higher taxes on capital gains, and on those individuals in the highest personal income tax brackets.
And while the two parties committed to sticking to Brussels's targets for government deficits, their proposals appeared to be short on measures to stimulate economic growth.
Thus, aside from some promises for small and medium-sized enterprises, the two appeared to place the emphasis instead on higher taxation, public spending and a more rigid labour market, such as via a higher minimum wage, as per the recommendations of the European Council itself.
The two parties did not win enough parliamentary seats in the December general elections so as to form a coalition government, but there was heightened speculation that the far-left Catalan nationalist party, Esquerra (ERC), would soon offer its abstention in exchange for various political concessions.
Indeed, a new government might be voted in at the start of 2019.
Key among those concessions to ERC could be the easing of the jail sentence against its leader, Oriol Junqueras, for sedition, as per a recent controversial ruling from the European Court of Justice.
Significantly, according to the text of the two parties' programme, the coalition would "repeal" several aspects of the previous goverment's labour market reforms.
In particular, the new government partners said that they would revert to sector level wage bargaining agreements with unions, instead of at the company level, a move that will displease most economists.
They also vowed to raise the minimum wage again, "progressively" from €900.0 per month at present until it reached the equivalent of 60.0% of the average wage in Spain, which was then at €1,200 per month, as per the European Social Charter, or as the European Council had recently dubbed it, the "Social Constitution of Europe".
What the EC did not explain however was how to reach and, more importantly, sustain, such worthy goals.
Already in January 2019, the minimum monthly wage was raised by approximately 22.3%, from €735.9 to €900.0.
Linked to the above, and also due in part to the ongoing political uncertainty in the country as well as overseas, after falling for nearly six years after reaching 26.3% in February 2013, Spain's rate of unemployment had flatlined over the course of 2019 at roughly 14.2%.
Local and regional governments would also be given the power to set rent controls on housing in those areas with the greatest house price inflation.
Spanish income taxes were also set to head higher, with the maxium rate on capital gains rising from 23.0% to 27.0%, versus 20% in the UK.
The marginal income tax rate for those earning more than €130,000 per year meanwhile would rise by two percentage points and that for those earnings over €300,000 by four points.
A minimum corporate tax rate of 15.0% would also be set, or 18.0% in the case of banks and energy companies.
There were also to be changes when it came to the public pension system, with the link between pension payouts and factors such as longevity and economic growth set to be removed.
PSOE and Podemos also proposed opening a debate into lowering the eligible age for active and passive voting to 16 and 17 years, respectively.
And on the social front, religion would no longer count as coursework towards school degrees.