Minimum wage

Spanish government wants to raise minimum wage to €14,000 per annum

Unions, employers and the executive will meet again this Wednesday to decide on the increase for 2022

3 min
Second Vice President of the Spanish Government, Yolanda Díaz, to the Senate

MADRIDThe erroneous vote of PP MP Alberto Casero, which allowed the labour law reform to be passed, left a bittersweet taste in Ministry of Labour ranks. Minister Yolanda Díaz sought the support of the parties that invested Pedro Sánchez until the last minute, in order to avoid relying on Ciudadanos. Now, however, another measure in labour matters can revive the mood within the ministry: a retroactive increase in minimum wage to €14,000 per annum (applicable from January 1).

This is the proposal that the executive has sent to unions and businesses this Monday morning, at a meeting convened at the Ministry of Labour, chaired by Díaz herself. "I would like it to be €14,000," the minister said clearly at the press conference after the meeting. First, unions had anticipated an increase to €13,944, but sources in the Ministry of Labour clarify that the figure could be rounded up.

If the proposal goes ahead, the minimum wage would increase by €490 a year, a growth of 3.5%. The Spanish government does not want to delay the meetings as happened on previous occasions and maintains that the increase will be applied this month. In fact, the next meeting with the unions and businesses will be this Wednesday so that "its effects can be rolled out the sooner the better," Díaz said.

Employers are against it

The Spanish government has launched its proposal on the basis of the report on minimum wage by an expert committee last summer. With the increase, the Spanish government is more or less in the second scenario the committee proposed, which recommended an increase of €434 per annum. The Ministry of Labour's proposal would go hand in hand with what the main unions, CCOO and UGT, were demanding. Both unions will now transfer the proposal to their governing bodies and maintain that the SMI should be increased to €14,000 per annum. In fact, when, in 2021, minimum wage was increased by €210 per year (up to €13,510), the executive made a commitment to the two unions to reach this figure in exchange for their approval. "CCOO already said that we had to reach €14,000, this has been our claim," secretary for union action and work Mari Cruz Vicente said, who anticipated that the measure would go ahead with businesses' approval "or without it" at the meeting next Wednesday.

Employers, for the time being, have shown their opposition. In fact, they were not part of the agreement to increase minimum wage in 2021 and everything indicates the same will happen this year. The president of main employer association CEOE, Antonio Garamendi, has argued these days that a new increase in minimum wage "will destroy employment". "I will listen to all parties until Wednesday and hopefully we will be able to reach an agreement," said Díaz on Monday, showing optimism. For this reason, there are still doubts about whether the increase will be up to €14,000 euros or not. "The unions want more and employers want less, and I make a balance," Díaz reiterated. Even so, unlike other negotiations such as those on labour law reform and pensions, the negotiation on minimum wage is merely consultative, Díaz recalled.

60% of the average wage

The objective is that by the end of this Parliament, minimum wage will be between €14,154 and €14,686 per annum, that is to say, it will reach 60% of the average salary in Spain. The figure, however, is open and may vary depending on the average salary recorded next year in Spain, as Díaz has recalled. "We will not put any obstacles with anything that has to do with achieving 60%," the minister said.

The increases in minimum wage in recent years have consolidated Spain in seventh position among European countries with the highest minimum wage. However, Spain has only risen one position because most European partners have also increased their minimum wage. In fact, this year only two countries have frozen minimum wage, Bulgaria and Latvia – and, for the moment, Spain. This situation, however, that will be reversed this February.