A 37.5-hour day would cost companies 15.3 billion and boost the underground economy

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A 37.5-hour day would cost companies 15.3 billion and boost the underground economy

Reforms and even minimal adjustments in financial or labor structures usually have a more or less relevant economic impact on those affected, yet this is often ignored by the promoters of these regulatory changes. Proposals are made without prior economic analysis and are often critical. Executive managers struggled to evaluate a bill initiated by Second Vice-President and Labor Minister Yolanda Díaz to reduce the maximum weekly working day in Spain to 37.5 hours. Increase the cost of business fabric by more than 15.3 billion euros.

The company led by Fernando Santiago has made its assessment based on calculations The potential cost of approval of this action in a typical company Spanish manufacturing fabric, with 4.5 employees, i.e. four full-time employees and one part-time worker with an average work week of 40 hours and a weekly workload equal to 180 hours. To try to simplify the calculation, the salary reference used to calculate the cost is the minimum professional salary, not the average salary.

Under these parameters, the first effect of limiting the maximum working day in the law to 37.5 hours per week is that it forces the typical company to increase the working hours of the part-time worker it has on its staff. Be able to cover your weekly workload, from a part-time contract to cover 80% of the full day. The effective cost of this reorganization of the working day will increase the labor cost chapter of that fixed company by more than 5,000 additional euros, a very relevant additional cost for an SME, which will not only go to improve the employee’s wages. But an additional bill must be paid on the social contributions received from it.

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The training of the College of Administrative Managers shows that this regular company multiplies this additional cost by the 2.9 million companies registered in Spain, raising the total bill of the production fabric to more than 15,000 million euros, to the specific 15,332.9 million. This exercise also reveals that every half-hour shortens the effective working day 3,000 million euros in induced spending on manufacturing fabric.

The company also cautions that this is a minimum estimate because it is calculated for a company that pays SMI for all its workers, which is actually very difficult to find, and does not take into account the additional cost of coverage and the large number of hours on vacation due to the reduction of the effective working day.

Encourage the underground economy

According to the association, which brings together professionals who are responsible for managing and solving the day-to-day operations of companies and are familiar with their day-to-day problems, the government-promoted reform “may have other effects” on companies. Overtime will add up Avoid extending normal working hours and avoid the additional costs this causes in companies with already very tight margins. “There may be an increase in the underground economy in some sectors, where time restrictions and monitoring by inspection may not make it possible to replace missing ordinary hours with extraordinary ones,” they warn in a technical note. ABC had access.

“The end result will not be good for anyone,” warned Fernando Santiago, who doubts the reform could boost job productivity because it could go hand-in-hand with more automation and translate into worker layoffs. “If they want to shorten the work week, Covers additional cost to companiesWith less social contributions or by fixing SMI,” says the head of the college.

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