PSOE and Podemos will partially repeal the labor reform and raise taxes on higher incomes

The PSOE and Podemos have agreed in their Coalition Government program to repeal the most harmful aspects of the labor reform of the PP of 2012, guarantee the revaluation of pensions under the CPI and raise the Minimum Wage up to 60% of the average salary in Spain, as well as a tax increase to higher incomes.

This is contained in the 50-page document entitled ‘Progressive Coalition, a new agreement for Spain’, presented by the leaders of the PSOE, Pedro Sánchez, and United Podemos, Pablo Iglesias, in the Congress of Deputies, before the investiture of Sánchez as president of said Coalition Executive.

Both formations are committed to recovering labor rights “taken away” by the labor reform of 2012 and repealing “urgently” aspects such as the possibility of dismissal for absenteeism caused by sick leave and limitations to the temporary scope of the collective agreement, sending it beyond the provisions contained therein, after the end of its validity and until the negotiation of a new one.

They also promise to repeal the applicative priority of the company agreements on the sector agreements and modify article 42.1 of the Workers’ Statute on hiring and subcontracting work in order to limit the subcontracting to specialized services outside the main activity of the company, among others .

HIRING

As the Government itself announced, a new Statute of Workers of the 21st century will be prepared, after dialogue with social agents. In terms of contracting, they plan to limit the ability to unilaterally modify the conditions of the contract by the company and review the mechanism of non-application of collective agreements, orienting it to pay off-hook linked to serious economic causes.

The document includes the objective of simplifying and reordering the menu of employment contracts, reinforcing the principle of causality in temporary hiring and the penalties applicable to fraudulent use so that indefinite hiring is the ordinary form of access to employment; and review the regulations on part-time work to prevent fraudulent use.

Likewise, the possible options to reduce duality will be explored, favoring the use of the discontinuous fixed contract for cyclical and seasonal activities, and the causes of dismissal will be reviewed. The training contracts will also be reviewed and the Statute of the Fellow will be approved and developed, limiting the chaining of internship periods and establishing a maximum percentage of fellows in companies.

These measures will be undertaken parallel to a boost in the fight against labor fraud and to the improvement of the effectiveness and efficiency of active employment policies and the simplification of the unemployment protection system.

SMI AND PENSIONS

They also commit to raising the Minimum Interprofessional Salary (SMI) until progressively reaching 60% of the average salary in Spain, as recommended by the European Social Charter, which would foreseeably raise the SMI to 1,200 euros at the end of the legislature.

In this way, the social dialogue table will be convened in order to promote an agreement that will be the basis for the Government’s proposal and an advisory commission of the Ministry of Labor will be created and available to the social dialogue, composed of experts, unions and businessmen, that will study the evolution of the SMI. The CPI, the average national productivity achieved, the increase in the share of labor in the national income and the economic situation will be taken into account.

Regarding pensions, their update under the real CPI is guaranteed by law on a permanent basis and the increase in the purchasing power of minimum and non-contributory pensions and, for this, they will eliminate the Sustainability Factor and the Pension Revaluation Index.

REFORM OF SOCIAL SECURITY AND MINIMUM VITAL INCOME

Similarly, the reform of the Social Security system is planned, within the framework of the social dialogue and the Toledo Pact, to guarantee its sustainability in the medium and long term, with measures to ensure the increase in income, downloading the Social Security of “improper” expenses and review the hiring bonuses in order to reduce them.

The reorganization of Social Security to provide more effective management with lower costs is another of the points set out in the document, which also includes the development of Minimum Vital Income as a Social Security benefit.

The idea is to start initially with the decided increase in the benefit for dependent children for vulnerable families, and then through a general income guarantee mechanism for families with no income or low income. The Public Indicator of Multiple Effects Income (IPREM), the reference for the allocation of aid will also be uploaded.

AUTONOMOUS

For the self-employed, better coverage is projected and the gradual equalization of the rights of this group with those of employed persons. In detail, a contribution system for real income will be established, based on tax information, which will give them greater social protection in case of unemployment, illness or retirement.

The current special regime of the cash criterion in VAT will also be evaluated to proceed, where appropriate, to its revision so as to, within the limits of the harmonized directive, make it “attractive” to freelancers and small businesses, and the Council will be established of Autonomous Work.

INCREASE OF TAXES TO HIGH INCOME

With regard to the fiscal area, PSOE and Unidos Podemos largely maintain the measures included in the failed 2019 Budget project, with some minor variations. Thus, in Corporations they will set a minimum tax of 15% of the large corporations, which would be extended up to 18% for financial entities and hydrocarbon companies. In contrast, SMEs that invoice less than one million euros will be taxed at a rate of 25% to 23%.

Exemptions from dividends / capital gains of companies will be limited by their participation in other companies, reducing the aforementioned exemptions, by way of non-deductible expenses in the tax, of management of the participation held by the parent company in the subsidiary.

In Personal Income Tax, tax rates are increased by two points on the general basis for taxpayers with incomes exceeding 130,000 euros and four points for the part that exceeds 300,000 euros. The state rate on capital income will be increased by four percentage points for such income over 140,000 euros. In addition, “the taxation of the great fortunes will be studied in order to contribute to a more just and progressive fiscal system.”

It also maintains the approval of the tax on certain digital services (‘Google Rate’) and financial transactions (‘Tobin Rate’), as well as new green taxation without falling on middle, autonomous and SME classes.

The establishment of a border CO2 compensation mechanism for imports will be promoted at European level and the VAT rate of veterinary services and feminine hygiene products will be reduced in VAT.

Another aspect is the review of the tax regime of cooperatives and labor societies and the reform of the legal and tax regime of the ‘socimis’, applying a 15% tax rate on undistributed benefits.