The ERTE furlough scheme would have become more costly had pay increases gone through. | Josep Bagur Gomila

At the end of September 2017, Iago Negueruela was not Balearic tourism minister, but he was - as he also is now - the minister for employment. He was able to announce an “historic day”. History was made because the Mallorca Hoteliers Federation had stunned both the government and the unions by arriving at the negotiating table and presenting a proposal that neither could refuse. What had been thought would be long and tough negotiations were to be nothing of the sort. The hoteliers slapped a 17% pay increase over four years on the table. There was little for the collective bargaining discussions to discuss. The unions had been angling for ten per cent.

Negueruela observed that some 140,000 workers had endured tough years of economic crisis. The pay increase was in line with the revival of the Balearic economy. “The time had come for the generation of wealth to be redistributed.” He emphasised the improvement to the “quality of employment”, and so he and the government were vindicated in having sought this from 2015 when the PSOE-led pact came into power.

There was to be spin along the lines of the government (Negueruela) having driven the 17%, when, in truth, the proposal had come more or less out of the blue. There were dissenting voices. The pay increase was one that larger hotel groups could assume without difficulty. The bars and restaurants, covered by the same agreement, said that it was all very well for the hoteliers to make such an offer, but they didn’t have the same financial wherewithal.

Nevertheless, the agreement was to come into effect - five per cent increases in April 2018 and 2019; 3.5% rises in April 2020 and 2021. Other sectors, retail and transport, also agreed improved collective bargaining deals. These weren’t as generous as the hoteliers, but they were generous enough.

In 2017, the economy was in good shape, the future looked bright, workers were to be paid better, quality of employment was to improve, and the amount of employment was to increase. In April last year it was agreed to suspend the annual pay rise. President Armengol recognised that agreement to suspension for a year was a “tremendous gesture” on behalf of workers and companies, who were seeking to “maintain businesses and jobs”. She thanked the unions for their attitude in having adopted the recommendation for a suspension.

In reality, there were no real grounds for argument. The state of alarm was being extended on a rolling basis. No one could foresee when some economic normality might return. And when it did, it was shortlived. Meanwhile, the Spanish government had an investment in all this. The ERTE furlough scheme would have become more costly had pay increases gone through.

A year on, and a 3.5% pay rise is due to come into effect next month. If there were to be catch-up, then it would be seven per cent. But 3.5% it should be, and there are criticisms that the hoteliers federation is sleepwalking towards a situation where it will be 3.5%.

It has been suggested that Maria Frontera, president of the federation, is looking to the CAEB Confederation of Balearic Business Associations to take on the matter and negotiate a further suspension with unions and the government. The federation is a member of the CAEB, as it was of course in 2017 when the 17% pay increase was signed. It was the federation who dealt with that; not the CAEB, which wouldn’t typically be involved with direct collective bargaining negotiations. Why would it be? It is a confederation representing multiple sectors. The retail and transport sectors are apparently working on suspensions to pay increases. Announcements are expected at any time.

Despite the claims of sleepwalking, the federation will doubtless come to an agreement for the hotel and hospitality sectors. It must do. While workers clearly deserve their pay increases, they are impossible at present. The Balearic and Spanish governments will both be paying close attention, as they have the same desire to see pay and quality of employment rise. For the national minister of employment, Yolanda Díaz of Unidas Podemos, hers is a conflicted situation because of ERTE.

She will be presented with demands for a further extension this week. There’s bound to be some agreement on this over the coming weeks, but Madrid would ideally prefer that the ERTE bill doesn’t increase. Meanwhile, employers are simply not in any position to assume pay increases in any event.

The UGT union is agitating for there not to be suspensions, especially where pay in tourist regions are concerned. Unfortunately, that is an unrealistic proposition, but it highlights what may well be the foundations for industrial action going forward.

When will business be in position to assume pay increases? And in the meantime, what happens to the politician claims regarding quality employment, to say nothing of general economic recovery because people won’t have the extra pay to spend?