Spain Sticks to Raising Minimum Wage to Reduce Wealth Gap

(Bloomberg) --

Spain is sticking to its strategy of raising the minimum wage to tackle the growing wealth gap in the country amid the fastest acceleration in inflation in nearly a decade, Economy Minister Nadia Calvino said.

“It’s an important instrument to reduce inequality, which has risen in our country in the past years,” Calvino, who also serves as deputy prime minister, said in a Bloomberg Television interview on Saturday. “Since we got to the government three years ago, the increase of the minimum wage has been one of elements of our policy priorities.” 

Her comments at the Ambrosetti Forum in Cernobbio, northern Italy come as Spain, as well as Italy, saw a strong rebound with their economies set to grow at their fastest pace since the 1970s after being slammed by the Covid-19 pandemic. Spain’s economy contracted almost 11% last year.

Spanish Prime Minister Pedro Sanchez announced plans to increase the minimum wage of 950 euros ($1,123) this year to protect workers’ spending power as the economy expands and the cost of living rises. Spain’s consumer prices have also been boosted by a surge in energy prices that’s fueling inflation across the region.  

Calvino said the jump in inflation shouldn’t come as a surprise because of years of low inflation and stable prices amid the pandemic, and called the recent increase a “transitory feature.”

“We have to avoid that it becomes structural but it’s a natural feature of a very strong recovery that we have been witnessing,” she said. “That’s not a source of concern.” 
 

©2021 Bloomberg L.P.