An end to the free lunch? Meal tickets become just another part of the salary

Employee perks will now count toward Social Security contributions

Meal vouchers are not always used for what they are meant to be used.
Meal vouchers are not always used for what they are meant to be used.Massimiliano Minocri

Meal vouchers are among the employee perks enjoyed by thousands of Spanish workers, along with medical insurance, retirement plans, daycare benefits and transportation allowances.

Very often, especially when a worker's base salary is low, these "restaurant checks" are crucial to make ends meet.

But they were not all good news: meal vouchers did not count toward Social Security contributions, meaning that were an employee to lose their job, unemployment or retirement benefits were lower than they would have been if the full wage value had been taken into account.

The Popular Party (PP) government recently decided that all of these benefits in kind will contribute to the Social Security system. The agency needs the money after years of crisis and unemployment. And in the future, employees will get better benefits out of the new system.

Employers warn that this rise in labor costs will mean cutting back on employee benefits, and in some cases, new rounds of layoffs.

But employers are furious, and warn that this rise in labor costs will mean cutting back on employee benefits, and in some cases, new rounds of layoffs.

The payoff is clear to the Labor Ministry: revenue will increase by 900 million euros at a time when Social Security badly needs a shot in the arm. And the government does not think that raising labor costs by an average of six euros per worker will really trigger sackings.

"If companies want to conduct social policies, let them draw from their own profits, not from Social Security," said Labor Minister Fátima Báñez. "If daycare benefits are good for balancing work and family life, they are good because they balance work and family life, not because they don't contribute to Social Security."

"Workers should be happy about this type of compensation in kind being considered income," notes Felipe Serrano, a professor of economics at the Basque Country University. As for employers' complaints, "we all want good pensions and a functioning Social Security system, and that requires funding," he says.

Take the example of a salary of 1,050 euros a month, where 50 euros are benefits in kind that do not contribute to Social Security. That represents a five-percent difference in temporary disability benefits, unemployment benefits and in retirement benefits, according to the ministry.

But businesses - the only ones to lose out under the scheme - as well as other experts, warn that employees will ultimately suffer. The employers' association CEOE insists that "jobs will be lost" and that companies "will be less competitive," and even that "economic recovery is at risk."

"It's a new blow to workers, who have already had wage reductions, extended working hours, and now they stand to lose employee benefits," says José Luis Tortuero, a professor of labor and social security law at Madrid's Complutense University. "The brunt of the impact will be borne by workers with lower incomes, who are usually the ones who get the meal vouchers. Higher earners will not feel it."

This is because employees with the highest salaries who are already contributing top rates to Social Security (3,597 euros a month, representing around four percent of Spain's 16.3 million employees) are exempt from contributing for their benefits in kind.

The labor union CCOO is not happy, either. Its Social Security department chief, Carlos Bravo, says they deplore the fact that the executive made this decision without informing the unions first, and obviously without negotiation. The CCOO does not believe that all employee benefits should be considered part of the salary.

"Each concept has a whole debate behind it," says Bravo. "Many exemptions should not exist in the first place, like stock options. But others make sense. That's why it was important for the government to have entered into talks before passing this measure."

The other major labor union, UGT, is even angrier. Carmen López, head of the Social Security department, has written a letter asking for the decree to be repealed, and worries that the unilateral government action will hurt collective bargaining.

"This change will act as a disincentive for employers when it comes to negotiating these benefits, and it will have major effects on salary issues," she says.

The decree was passed by the Cabinet on December 21 and went into effect the next day. Congress confirmed it on January 22, although companies have until May 31 to comply, given all the extra work it will involve for their human resources departments.

Josep Ginesta, director of labor and human capital at Ribé Salat Consulting, has calculated the cost of the new measures for businesses. He thinks that the measure will cost workers between three and 50 euros a month, and companies between 11 and 315 euros, depending on the percentage of the salary that is paid out in kind (the maximum allowed by law is 30 percent).

"For a small business that already has trouble with its budget, that's a lot of money," says Ginesta.

The Labor Ministry insists that costs will be no more than an average six euros for employers and 1.09 euros for workers.

Another expert, José Luis Tortuero, questions the point of this measure, precisely because the amounts in question are not huge. "If it's not a lot of money, all the more reason not to go ahead with it, since it creates additional costs for businesses, such as computer-related changes, at a delicate time financially speaking."

As for the companies that issue the meal vouchers, they herald widespread disaster. The Spanish Association of Meal Voucher Providers figures that more than 600,000 workers currently enjoy these benefits (the ministry says it is 275,000), and warns that the restaurant industry will lose 500 million euros in turnover, 275,400 regular customers and 48 million meals a year. It even figured how many jobs will be lost, down to the very last one: 10,059.

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