The Government plans to make a series of economic decisions in the short term that will particularly affect small and medium-sized businesses (SMEs). Specifically, next year there will be a new increase in the interprofessional minimum wage (whose initial negotiation could be around 4%); In the middle of the year, weekly hours without a salary cut could come into effect; and from January 1, contributions will increase again to cover the increase in the cost of pensions. Cepyme, the association of SMEs and partner of CEOE, sees this upcoming scenario as and warns that it is raining in the wet, mainly in what has to do with labor costs. According to the last Cepyme indicator on the situation of SMEsa current situation report published quarterly, this spending has grown 18% since before the pandemic.
Specifically, the employer’s study indicates that labor costs grew between July and September of this year by 4.2% (3% if adjusted for inflation) compared to the same period in 2023. This It represents the largest increase since June 2021. But, above all, the SME employers complain that if current costs are compared with those of 2019, these have increased by 18.1% in the whole of SMEs (19% among the smallest and 15.3% among the medium-sized).
The rising cost of labor affects smaller companies to a greater extent, especially microSMEs with fewer than 10 workers. In fact, Cepyme draws attention to the fact that since the recovery from the worst moments of the pandemic began, for most of the time, labor costs increased faster in small companies than in medium-sized companies. Hence, since the first quarter of 2021, a difference of more than six percentage points has accumulated between the increase in labor costs according to the size of the company (24% more in small companies, compared to 18% in the medium ones).
The SME employers attribute the greatest increase in labor costs in companies with fewer workers to “the rapid increase in the minimum interprofessional wage (SMI) decided outside the provisions of the Workers’ Statute.” As they explain, the average salary of smaller companies is lower. Therefore, the same increase in the legal minimum remuneration tends to have a proportionally greater impact the smaller the size of the firm.
This has caused the successive increases in the SMI (26% since 2019, going from 900 to 1,134 euros per month) to have reduced the gap between the salaries of small and medium-sized companies. Specifically, the average salary of the smallest companies is 84.1% of the salary of the medium-sized companies, compared to 79% three years ago. This represents the smallest difference since this comparison began in 2005. According to employers’ calculations that will be updated soon, the latest increases in the minimum wage have prevented the creation of some 350,000 additional jobs.
Little room to invest
Diego Barceló, head of Studies at Cepyme, considers that this difference in impact depending on the volume of a company “leaves smaller companies with less room for job creation and investment.” This is reflected, according to his story, in a slowdown in new employment and an increase in credit applications.
Thus, in the third quarter of 2024, the workforce of SMEs increased by 1.9%, compared to a year before, which has represented the smallest advance in the last three and a half years. And, for the first time in seven quarters, the number of employees in SMEs grew less than the volume of sales (which has barely advanced 0.6% since before the pandemic, although they are recovering in recent quarters). This has helped to compensate for part of the average productivity lost in previous quarters, but not enough to turn this indicator positive after seven consecutive quarters of year-on-year declines.
For its part, new bank loans to SMEs grew by 12% year-on-year at constant prices in the third quarter of the year. In this way, credits for these companies “have returned to where they were in 2017, despite the fact that the GDP is close to 11% higher,” they point out at Cepyme.
Fall in profitability
In this scenario, the study summarizes the situation of SMEs in the progress of one indicator: their gross profitability. It involves measuring the difference, before taxes, between sales and the cost of goods sold (raw materials, labor, energy, and other inputs). The result is that SMEs are now 12% less profitable in gross terms than in 2019. Thus, the moderation of inflation, the price of energy (which fell by 10% in the third quarter) or the latest rebound in Sales are not enough to compensate for other extra costs, mainly labor costs.
For all this, those responsible for Cepyme insist on demanding “that SMEs be thought of when adopting economic measures and ensuring that these encourage the gain in business size, especially before adopting decisions regarding minimum wage or increase in contributions.” ”.
