The socialist government in charge of the nation recently raised the minimum wage by 22 percent. This transforms Spain from the country with the lowest minimum wage to one of the highest across the EU. Spanish Premier Minister Pedro Sánchez wants to prevent his citizens from becoming working poor. Meanwhile, Austria’s government is busy cutting social support programs for its poorest citizens – and job opportunities are dwindling.

Austrian chancellor Sebastian Kurz and his right wing government are cutting the minimum benefit system (which is supposed to provide some security to Austria’s poorest citizens) in order to make going to work “worth it” again. Kurz commits – or rather uses – two argumentative fallacies when arguing in favour of such policies.

  1. Considering Austria’s 380,000 unemployed and its 70,000 open positions, even a perfect distribution would leave more than 300,000 citizens without jobs. Cutting benefits for people out of jobs doesn’t create jobs, it might even destroy jobs by lowering demand and, as a consequence, consumption.
  2. If going to work isn’t “worth it”, it is most likely due to the fact that working is no longer sufficient to sustain a normal life. While lower-position incomes have been stagnating for years, top level incomes are still skyrocketing.

Spanish socialists raise wages

In order to make working “worth it”, good jobs and higher minimum wages are a necessity. A few days before Christmas, Spain has started aiming to achieve this goal. A government spokesperson announced:

“This is the most significant raise of minimum wages since 1977. It will benefit over 2.5 million people, and most of them are women.”

The announcement came as a perfect surprise: the newly-elected socialist government under PM Pedro Sánchez raised Spain’s minimum wage by 22 percent to 1050 Euros, making it one of the highest across the EU.

The entire economy is to be modernized.

“Agenda for change” – this aptly titled policy shift targets inequality in Spain: urban-rural disparity, gender inequality and generational differences are to be challenged.

Spain’s poverty rose under conservative rule

Sánchez’ conservative predecessors allowed once-secured wage agreements to be ignored through a labour market reform. As a result, wages dropped significantly and many Spaniards could no longer sustain themselves. In combination with then-PM Mariano Rajoy’s approach of slashing social welfare safety nets, the country’s gap between the rich and the poor continued to grow larger.

The new socialist minority government vowed to put an end to this:

Premier Minister Pedro Sánchez declared that there should be no poor workers in a rich nation.

Raise wages instead of eroding social security nets

Austria, too, is a rich nation – much richer than Spain, in fact. Yet, there are 300,000 people, who are poor while being employed. These citizens are what is referred to as “working poor”. Nearly half of Austria’s working population struggles to make ends meet. Women are especially affected by this form of poverty. Still, top level salaries are exploding.

Austria: two thirds of minimum benefit system recipients have multiple sources of income

Two thirds of those receiving minimum benefits are in fact only receiving top-up benefits, which means that these poor actually do have additional income (e.g. low pensions or low-paying jobs), and receive only as much as they are lacking meet the official minimum benefit system amount.

The Austrian minimum benefit system is by no means an insurance service, but rather paid by our taxes. Ergo: every taxpayer is a contributor – and high poverty is a ticking time bomb:

The minimum benefit system is in place because we want to prevent extreme poverty from getting a foothold. We don’t want slums or ghettos.

This safety net also contributes to low crime rates. It is due to policies like the minimum benefit system that Austria is one of the safest countries worldwide.

Therefore, it’s wrong to cut the minimum benefit system. Such a move would neither generate new jobs nor benefit working peoples’ wages. Spain chose another approach – raising wages to a humane level.

Source: Kontrast.at / Creative Commons Lizenz CC BY-SA 4.0