Andorran Parliament Rejects Automatic Salary Indexation to Inflation

The Andorran Consell General has rejected a proposal from the Partit Socialdemòcrata (PS) to conduct a study on the potential impact of automatically adjusting all private sector salaries to the consumer price index (IPC).

The motion, presented by PS group president Susanna Vela, sought to evaluate how such a measure could address rising living costs and protect purchasing power amid inflationary pressures, including those linked to recent geopolitical tensions. Vela argued that the current system fails to distribute wealth equitably, with salaries above the minimum often lagging behind price increases, leading to a compression effect where intermediate wages drift toward the minimum. She highlighted benefits like economic stability, reduced labour conflicts, and safeguards for workers, while criticising the government for not analysing the idea despite prior requests.

The proposal gained support from opposition groups Andorra Endavant and Concòrdia. Andorra Endavant's Carine Montaner drew a parallel to rents, stating that if leases rise with the IPC, salaries should follow suit, and called for legislative changes. Concòrdia's Maria Àngels Aché emphasised everyday price hikes—such as the cost of a coffee—and warned that many workers struggle to make ends meet without overtime or second jobs. She stressed the need for dignified living standards, lower staff turnover, and retaining talent through better conditions.

However, the parliamentary majority—Demòcrates and Ciutadans Compromesos—voted it down. Consellera Meritxell López defended government policies, noting that over the past five years, the minimum wage has risen 45%, outpacing the 22% accumulated inflation, with median salaries showing similar trends. She pointed to measures preserving purchasing power, including free public transport, a rent thaw law with strict limits on increases, €22 million in family aid, €5 million in rental support, housing guarantees, and public park developments. López acknowledged individual hardships but said social services provide targeted assistance, denying evidence of wage compression.

The rejection underscores ongoing divides between the majority, which prioritises existing supports and business flexibility, and the opposition, focused on broader salary protections.