The downward path undertaken by the Euribor in the final stretch of 2023 continues, although at a slower pace. With one day left until the end of the month, everything indicates that the reference index for the vast majority of variable rate mortgages in Spain will close January at around 3.61%, thus experiencing a slight drop compared to December. This decrease will translate into decreases in the monthly payments of mortgages that have a semiannual review with the January data. However, mortgage holders with loans that are updated only once a year will still have to wait to enjoy the first drops in their bills.

While waiting to know the data for the last day of January, the monthly Euribor currently stands at an average of 3.611%, its lowest mark since February 2023. If this figure remains unchanged, the index would record its third consecutive monthly decline at the start of 2024, after peaking at 4.16% in October.. However, the drop in January is expected to be much less pronounced than those recorded in previous months.

The Euribor fell from 4.022% in November to 3.679% in December, experiencing its largest monthly drop since 2009, of more than three tenths. However, the decrease in January does not reach one tenth, which confirms a slowdown in the rate of decline. “The market became overly optimistic at the end of 2023 and now adjusts its expectations to reality: there is no scheduled date to lower rates,” assesses Miquel Riera, HelpMyCash analyst.

In fact, despite the downward trend, the Euribor is still almost three tenths above the level registered a year ago. In January 2023, the index stood at an average of 3.337%, still immersed in an escalation that led it to exceed 4% in the second half of the year, between June and November, recording figures not seen since the outbreak of the housing bubble. This increase was driven by the consecutive increases in interest rates by the European Central Bank (ECB), undertaken with the objective of containing prices and returning inflation to the 2% goal.

The moderation of the Euribor in recent months has distanced the index from the 4% threshold crossed in June. That is, the index is already below the level recorded six months ago.. Therefore, variable mortgages that are reviewed semiannually with the January data will experience the first decreases in monthly payments, since in July the Euribor reached 1.149%. For example, the semiannual update of an average loan of 150,000 euros signed in January 2021 for 30 years and with a differential of 0.99% over the Euribor, will mean a reduction in the monthly bill of 47.71 euros, going from 787 .16 to 739.45 euros. In a mortgage of 300,000 euros with the same conditions, the savings will be 95.43 euros per month.

“We are already seeing decreases in the installments of variable mortgages with semi-annual review because, although they are the first to suffer the increase in the price of their installments if the Euribor is on the rise, with this downward indicator they are also the ones who see first how their installments decrease and, in addition, they experience more pronounced decreases”, explains the director of Mortgages at iAhorro, Simone Colombelli.

On the other hand, the relief has not yet reached mortgages with annual review, given that the Euribor is still higher than a year ago. In this way, whoever signs a mortgage loan of 150,000 euros at a variable rate in January 2021, with an annual review and with a differential of 0.99%, will see their monthly payment increase by 21.83 euros after the January update, which means 261.99 euros more per year until the next review. In the case of a mortgage of 300,000 euros with the same conditions, the increase would be 43.67 euros per month. Despite these being limited increases compared to the previous year's increases, mortgage holders have accumulated three consecutive years of increases.

“If nothing changes, the first reductions in mortgages that are reviewed annually would arrive from March-April. Now, the decline will not be motivated by a notable drop in the Euribor in the short term, but because the indicator would begin to be compared with the figures from the spring of 2023, when a very pronounced upward path began,” predicts Estefanía González, spokesperson from the mortgage comparator Kelisto.es.

“It is very likely that, if the Euribor continues with this downward trend, even if it decreases only a few hundredths each month, starting next March we will already see decreases in mortgage payments with annual review,” agrees Colombelli, who remember that the downward trend of the reference index for variable mortgages has arrived without the ECB having undertaken any rate reduction yet. “This leads us to think that, when the ECB begins to lower rates, the Euribor will fall even faster than it is doing now,” he adds.

In 2023, the Spanish economy is experiencing strong growth, which will have direct positive effects on the country’s three million public employees. As a result, the salaries of civil servants and staff are set to increase by an additional 0.5% with retroactive effects for the entire year. This increase translates to roughly 15 euros gross per month for the average public employee and will be reflected in their February payroll. The endorsement of this increase by the Council of Ministers is expected to happen in the coming week.

In 2022, a salary agreement was signed between UGT, CCOO, and the Government, which included a base salary increase of 2.5% for 2023. The agreement also included two additional clauses of 0.5% each based on the evolution of prices and the economy. The first clause was activated in September when it was confirmed that the accumulated inflation since 2022 surpassed the agreed-upon remuneration improvements. The second clause is now being activated due to the economic growth in 2023 surpassing the Government’s initial expectations.

According to the agreement, if the increase in nominal GDP meets or exceeds the Government’s estimate in the macroeconomic table accompanying the Budget law preparation, an additional 0.5% increase will be applied. The Government initially estimated a 6% increase in nominal GDP, but the final figure ended up being 8.6%, triggering the activation of the second clause.

With both clauses activated, public officials will receive a total raise of 3.5% in 2023, aligning their increases with those agreed upon by private company employees. This ensures that purchasing power is maintained overall.

For an average public employee with a monthly salary of 2,835 euros gross in 12 payments in 2022, the 0.5% increase amounts to approximately 15 euros per month. Taking into account the entire year, the 3.5% salary increase equates to about 99 euros per month for the average public salary. As this increase was not applied in 2023, public employees are likely to receive compensation in February for the 12 months lost in 2023 and January 2024, amounting to around 195 euros for an average sector salary.

The estimated cost of salary increases for the half a million employees in the state public sector in 2023 is 4,631 million euros. Looking ahead to 2024, the unions and the Government have agreed on a fixed salary improvement of 2.5% with an additional half-point clause linked to inflation. The State has allocated 4,746 million euros in its budget plan for these increases. The salary increases for the 2.5 million public employees in the regional administration must be ratified by the regional governments and corresponding local corporations.

Towards a new agreement

The current salary agreement between the unions and the Government will expire this year, meaning any future increases will be negotiated outside of the current framework. The unions have already initiated preliminary discussions with the Public Service department, which is now part of the Digital Transformation portfolio led by José Luis Escrivá, to begin negotiating a new agreement.

Last week, representatives of CSIF, CCOO, and UGT met with the Secretary of State for Public Function, Clara Mapelli, at the ministry headquarters to kickstart the negotiations. A meeting is scheduled with Minister Escrivá on Wednesday, where the unions will communicate their priorities.

While the negotiation process has just begun and specific figures have not yet been proposed, the unions plan to address other outstanding issues with the minister, such as partial retirement, the implementation of a 35-hour workweek, and workforce adaptation.

A few weeks ago, the Minister of Transport, Óscar Puente, acknowledged that the rise in airfares was unavoidable and, as of March 1, the Council of Ministers has confirmed the approved AENA proposal for a 4.09% increase. This increase is based on taking into account the inflation rate of 3.5% in 2022, which was impacted by the energy price crisis. AENA and the Government have downplayed the impact on plane ticket prices, stating that the increase only amounts to an additional 40 cents per passenger. The Ministry also noted that the rates are still lower than they were in 2015 and that the increase is significantly lower compared to other European airports, such as a 12% increase in Amsterdam or a 9.5% increase in Frankfurt.

The Council of Ministers approved an increase in airport taxes charged by AENA to airlines for the use of its facilities. The increase is expected to come into effect on March 1, with rates being 4.09% higher than the current ones. This figure takes into account the 3.5% inflation rate in 2022 and other adjustments, taking into consideration the effect of inflation during the energy crisis in that year.

However, the Ministry of Transport emphasized that discounts ranging from 15% to 70% are applied at airports in the Canary Islands, Balearic Islands, Ceuta, and Melilla. Airlines also benefit from a government-approved aid package of 45 million euros to support the sector in the wake of the pandemic. Additionally, AENA is working on designing incentives for companies that promote certain routes, particularly those connecting international destinations with regional airports.

The proposed 4.09% increase was deemed excessive by the airlines, who suggested freezing the rates in 2024 or increasing them by a maximum of 1.5%.

Cheapest Spanish airports

The Ministry of Transport emphasized that even with a 4.09% increase, “average rates will continue to be lower than they were in 2015,” and AENA’s rates are “the most competitive in Europe,” especially compared to larger Spanish airports. According to the government, layover prices at Barajas or El Prat in Madrid or Barcelona are “up to 60% lower than the average of its competitors” relative to London Heathrow, Paris Charles de Gaulle, Frankfurt, and Amsterdam Schipol.

The 4.09% increase in Spain was also compared to airport taxes in other European airports. By 2024, Amsterdam Schipol has seen a 12% increase, and Frankfurt’s rates have increased by 9.5%. In London Heathrow, the increase was 37.4% in 2022 and is projected to be 4.5% in 2023.

The volume of temporary workers has been significantly reduced in Spain after the entry into force of the labor reform. The temporary employment rate marked a new low at the end of 2023, falling below 17% for the first time, as reflected in the latest data from the Active Population Survey (EPA) released this Friday by the National Institute of Statistics (INE). ). However, while temporary contracts are reduced, shorter employment relationships are also gaining weight.. One in three temporary contracts signed in 2023 lasted less than a week.

According to the details of the contract statistics of the State Public Employment Service (SEPE), in 2023, 8,823,222 temporary contracts were signed, 21.8% less than in 2022 and the lowest volume of the series accumulated in the whole of a anus. They represented 57.13% of the total of 15,444,205 labor agreements signed throughout the year, 15.65% less than the previous year.. This decline in hiring is a reflection of the decline of temporary employment, compared to the heyday of permanent employment.

Spain has 2,974,400 workers with temporary contracts, the lowest figure in the historical series, even despite record employment levels.. According to EPA data, in the last year, between the fourth quarter of 2022 and the same period of 2023, 783,000 jobs have been created, an increase that has allowed us to overcome the barrier of 21 million employed people.. Never before have there been so many people working in Spain and, at the same time, never before have there been so few with a temporary contract. The number of employees with an employment relationship for a certain period of time was reduced last year by 140,300 people, which caused the temporary employment rate to fall to 16.49%, its lowest level in historical series.

Only one in six workers in Spain has a temporary contract, although the rate shoots up to 29.6% in the public sector – driven especially by hiring habits in Health and Education -, compared to the minimum of 13.2%. registered in private company. “The labor reform that we have promoted through social dialogue is managing to put an end to abusive and unjustified hiring,” said the second vice president and Minister of Labor, Yolanda Díaz, this Friday, recalling the purpose of stimulating permanent hiring that motivated the regulatory change.

The labor reform, which came into full force in April 2022 after a period of three months to apply the modifications, eliminated the work and service contract, which was one of the most used.. Before the legal change was adopted, this extinct formula represented more than a third of the 1,681,550 contracts signed in December 2021, only surpassed by the figure of the eventual one due to production circumstances. The disappearance of this type of contract produced the transfer of temporary workers to permanent workers throughout 2022, with a special growth in permanent-discontinuous workers.

40.53 days on average

However, beyond reducing the volume of contracts, the legal reform has also had as a collateral effect a shortening of the duration of temporary employment relationships, since the extinct contracts for work and service used to be longer than the temporary ones due to circumstance. of production, now predominant alone among the temporary. According to SEPE data, in December 2021, the average duration of contracts for work and services was 65.3 days, compared to the average of 35.97 days for eventual contracts due to production circumstances, which represented the 47.5% of contracts signed.

When observing all types, the average duration of temporary contracts in the last month of December before the entry into force of the labor reform was 45.62 days. Two years later, this figure has been reduced to 40.53 days in 2023, 7.21% below the 43.68 days in which the average was at the end of 2022.

Specifically, contracts of less than seven days gained weight last year, despite reducing their volume by 12% compared to 2022.. 3,184,240 labor agreements of these characteristics were signed, which represented a third of the total temporary contracts signed throughout the year. 79.75% were concentrated in the services sector, where 212,062 contracts of this type were signed, followed far behind by the 31,329 signed in industry and the 20,541 in agriculture.. In 2023, 1,601,105 contracts were also signed for between one and three months and 1,117,554 for between fifteen days and one month.

Contracts due to production circumstances were the most used among the temporary modalities, with 6.5 million signatures. This formula has a maximum legal duration of six months – extendable to twelve by collective agreement – to cover unforeseen situations and 90 days if they are foreseeable.. In this second case, a duration of less than 30 days is penalized with an additional contribution.. In the replacement modality, the labor reform reduced the duration of the chain of contracts necessary to consider a permanent person from 24 months in a period of 30 months to 18 in a period of 24.

Impact on permanent employees

Regarding indefinite contracts, their duration at the time of signing is evidently indeterminate.. However, a recent study by the Foundation for Applied Economics Studies (Fedea) suggests that the labor reform has not improved the duration of permanent contracts either, given that, although this formula has been encouraged, no longer hiring patterns are observed. stable over time. Economists José Ignacio Conde-Ruiz, Manu García, Luis Puch and Jesús Ruiz base this conclusion on the fact that employment data maintain the three usual patterns of job creation and destruction: hiring is done on Monday and fired on Friday, hire only for the weekend or hire on the first day of the month to fire on the last day.

“The situation prior to the reform is almost exactly replicated in terms of job stability for workers,” says the report, in which they maintain that the temporary employment rate “is surely not the best tool” to measure job insecurity.. “We must look for other ways to measure precariousness that are not based only on the structure by type of contract, but also take into account other variables and in particular the real duration of the contracts,” they say.

The implementation of European recovery funds in Spain has presented both positive and negative aspects. On the positive side, the government has committed 94% of the allocated direct aid for 2021, amounting to 66,296 million euros. However, the execution of these funds, i.e., the allocation to specific projects that have begun, is less optimistic, with only 46% of the original allocation being executed. This delay in execution is particularly noticeable in the regional administration, where information is scarce.

These findings are from a recent report by the consulting firm Llorente & Cuenca (LLYC), which analyzed the execution of the Spanish recovery plan. The report examined published calls and tenders as well as estimated data from autonomous communities. The report highlights the need for an enormous effort to execute all funds within the remaining two and a half years, as any projects not launched by August 2026 will lose funding.

To meet this goal, public administrations must allocate 37,769 million euros to specific projects, more than half of the original direct aid granted by the European Commission. In addition, the Spanish administration must mobilize another 9.5 billion euros in non-refundable transfers and 83.2 billion euros in loans included in the recovery plan’s addendum.

The main bottleneck in the execution is observed in the regional administration, where the figures are unknown. While the state has awarded 79% of resolved calls (23,977 million euros), the autonomous communities have only awarded around 8.6 billion euros. The LLYC study emphasizes the challenges faced by the autonomous communities, including complex bureaucracy, limited resources, and a lack of interest in certain projects. This has led to complaints that the central government did not include them in the decision-making process.

In terms of distribution, Andalusia, Catalonia, Madrid, and the Valencian Community share half of the aid, with a total of 24,191 million euros. However, the per capita distribution varies significantly, with less populated territories receiving more resources per inhabitant. The report also highlights that 17% of the tendered funds have not been awarded due to lack of demand, which amounts to 11,762 million euros.