Mid-scale salaries haven’t kept up with the rapid rise of the minimum wage in Spain, and new data reveals that over the past five years the most frequent annual earnings in Spain are just €450 above the legal minimum.
Spain’s Socialist-led coalition government has repeatedly increased the minimum wage since 2019.
Most recently, back in February Spain’s minimum wage or SMI (Salario Mínimo Interprofesional) was increased by €50 per month, up to €1,184 across 14 payments.
This created some controversy as it means that many of these low-income workers will now earn enough to pay income tax (IRPF in Spanish) for the first time, as well as creating tension between the coalition partners in the Spanish government.
READ ALSO: Spain’s minimum wagers to pay income tax for first time due to salary rise
Spain’s leftist government has prioritised increasing the minimum wage and state benefits more widely, but new data now shows that this could have had consequences for the overall pay scales in the country.
This is seemingly having an impact on wages in Spain, which have also grown but not been able to keep pace with the SMI.
The consequence of this is that the minimum wage has in practice become, according to one Spanish outlet: “the most common wage in Spain.”
Sensationalist though that is, it’s not entirely unfair. Let’s unpick it.
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In 2018, the year before the current cycle of SMI rises began, the most frequent or commonly earned salary in Spain amounted to €18,469 gross per year. This was €8,200 less than the minimum wage at that time, when the SMI was just €10,303.
Only five years later, these two salaries had practically aligned. According to the 2023 Wage Structure Survey, published by Spain’s national stats institute INE, the most frequent full-time wage has fallen to €15,575 gross a year, just €450 more than the SMI.
In other words, the minimum wage has gone from 56 percent of the most frequent wage to 97 percent in a period of just five years.
It’s also worth noting that Spain’s average and median annual salaries are considerably higher: €28,050 gross and €23,349 gross respectively. The average is the sum of all salaries divided by the number of workers, while the median is the middle value in the ordered salary data set. Calculating the average is generally useful when data is normally distributed or free of outliers, while using the median is better when the data is skewed or contains outliers.
In this case, given the huge salary disparities that can exist in Spain, the median salary – €23,349 gross per year – is a truer reflection of wages in Spain as at least half of the working population earnt this.
But this doesn’t change the fact that the most frequent salary in Spain in 2023 was €15,575 gross a year.
Increasing the minimum wage has undoubtedly helped many Spaniards move away from lives of poverty, however if the minimum wage has been outpacing normal wages, it raises questions about pay in Spain more broadly.
This is particularly worrying in the context of the cost of living and housing crises the country is currently experiencing.
