The 10% wage increase over three years in the construction sector and its fine print
The National Construction Confederation (CNC) and the sector’s trade unions have reached an agreement in principle for nearly one million construction workers that includes a 10% increase in wages staggered over three years, thus decoupling them from the rise in the CPI.
Specifically, employers and trade unions have agreed on a wage increase for workers in the construction sector of 4% for 2022, 3% for 2023 and 3% for 2024, part of which will be used for contributions to the Pension Plan promoted.
Although the temporary scope of the agreement is established until 2027, this pre-agreement includes wage increases for the next three years, establishing a wage guarantee clause subject to the economic situation in Spain during this period.
The CNC, CCOO del Hábitat and UGT-FICA have agreed that companies will make contributions to this sectoral pension plan as a complement to the public pension system, incorporating into the sector a new historical improvement of a markedly social nature.
This pre-agreement is part of the 7th General Agreement of the Construction Sector, which will also regulate the indefinite-term contract assigned to work, establish a maximum duration of the temporary contract for circumstances of production of one year – receiving a 7% indemnity on its termination – and regulate the fixed-discontinuous contract in relation to the duration of the period of inactivity and the amount to be received in the cases of contracts, subcontracts or on the grounds of administrative concessions. Employers and trade unions have also agreed on the creation of a sectoral employment exchange and the regulation of forced retirement, among other measures.
Similarly, training contracts are developed with regard to their remuneration and duration in order to obtain professional practice appropriate to the level of studies.
The CNC considers that this pre-agreement is a success of the social dialogue and that its signing implies an exercise of co-responsibility in negotiation, especially taking into account the problems that the sector is currently suffering as a result of the energy crisis and the rising costs, which are suffocating many construction companies.
The small print of the first sectoral pension plan: how much and how it will be contributed
The pre-agreement for the 7th General Construction Agreement includes the creation of the first sectoral pension plan under the umbrella of the future law on the public promotion fund that the Government plans to bring forward in Parliament before 30 June.
It is the first one because the law has not even been approved, as it is being processed in the Lower House and does not have its subsequent regulatory development yet. However, construction employers and trade unions have already committed themselves to promoting this sectoral plan and have designed some issues according to the Executive’s bill.
The most common question when it comes to these so-called employment plans is where the money to fund them will come from. Who is going to provide it. The idea of the social partners in construction is clear: the contributions will be taken from the agreed wage increases. The initial idea is “that it does not cost companies any money”, explains Miguel Ángel Menéndez, director of social welfare at Mercer, who has participated in advising on the creation of this future plan. Hence, the design of this collective savings instrument foresees that of the 4% salary increase agreed for 2022, 1% will be allocated to contribute to the plan; of the 3% increase foreseen for 2023, 1% will be allocated; and of the 3% increase for 2024, 1.25% will go to the fund.
But to which part of the salary will these percentages be applied to contribute to the future plan? That has also been determined in the negotiation of this agreement and the decision has been to refer the contribution to the wage tables of the provincial agreements in the sector. This leaves out bonuses and other contributions that are not included in the basic salary, Menéndez explains.
Another of the most unknown questions about these future plans is the degree to which they are compulsory. In this case, given that it is included in the sectoral agreement that binds the more than 130,000 companies in the sector (which employ more than one million workers), its subscription to the public promotion fund will be mandatory. From then on, companies will have to allocate the part of the agreed wage increase to the plan, without prejudice to the company or the worker wanting to contribute greater amounts.
Moreover, taking into account that construction is a sector with a lot of temporary work and mobility between companies, the worker will always keep his plan, even if he moves to another company or even to another sector. If that other sector also has a pension plan, he could take it out of the construction plan and take it to the one for the new activity, or to an individual one. It operates what is called “irrevocability of contributions”, which means that once they are in your plan account they are yours, says the Mercer executive.
The law has yet to be passed
However, the conditions for portability between plans are one of the many issues that still need to be included in the law once it is passed and enacted. But, above all, these details will have to be regulated in the regulatory development of the law, which began to be designed in parallel to its parliamentary processing.
However, it is currently at a standstill, also due to tensions between the government and its investiture partners. In spite of this, sources close to the Executive assure that those in charge of the Ministry of Inclusion, Social Security and Migration are determined to move this process forward before the end of June, which is what the government has promised Brussels as a requirement for new disbursements of European reconstruction funds.
By Okdiario and 5Dias.