Díaz asks experts in the SMI to propose two figures depending on whether they pay personal income tax.

MadridSecond Vice President and Minister of Labor, Yolanda Díaz (Sumar), has asked the committee of experts on the minimum interprofessional wage (SMI) to propose two different increases for 2026: one that does not include personal income tax, and another that does take this tax into account. In this way, Díaz avoids the clash that arose with the Ministry of Finance over the 2025 increase. The head of this ministry, María Jesús Montero (PSOE), suggested that with the latest approved increase, recipients of that income should already be taxed, something the ministerial team argued. Finally, the battle ended with a deduction for SMI recipients so they wouldn't pay personal income tax.

"I will be very clear. We will comply with a minimum wage that is 60% of the average salary [in Spain] and we will not be distracted by discussions. So we will propose a minimum wage that is 60% [of the average salary] exempt from taxation, and another 60% that is taxable," Díaz said at a press conference on Wednesday. With the two figures on the table, the Minister of Labor leaves the decision of whether or not minimum wage earners should pay personal income tax in the hands of the Treasury. If they ultimately must begin to pay tax, Díaz would propose the largest increase. If they do not have to pay this tax, she would propose the smallest increase. "It will be the Treasury that decides whether or not they pay tax," she reiterated. Regarding the deadlines for approving a new increase, Díaz has refrained from getting involved.

Díaz's tone this Wednesday was different from last year, when she did decide to fight for minimum wage earners to avoid paying taxes. The Ministry of Labor reiterates that this decision should go beyond whether or not those earning minimum wage should pay personal income tax: "The discussion is clear; let's start at the top. It's unfair that a salary of €17,000 has the same marginal rate as an income of €100,000."

The minimum wage rose by 50 euros in 2025, reaching 1,184 euros gross per month in 14 installments. It was agreed with CCOO and UGT, but without the Spanish employers' association CEOE. This Wednesday, Díaz convened the committee of experts to kick off the technical work to propose how much this minimum income should increase in 2026. The committee of experts is responsible for advising the Spanish government on the increase in the minimum wage. It includes members of the executive branch, social stakeholders, and academic professionals. It was established in 2021 to determine how the minimum wage should be increased so that it translates into 60% of the average wage, as established by the European Social Charter.

"The minimum wage is a success story for our country," Díaz argued at a press conference this Wednesday. The Minister of Labor recalled that when she took office, the minimum income stood at 735 euros gross per month. "That meant that the salaried population receiving the minimum wage was poor," she denounced.

In parallel with the expert committee, Díaz must also convene the social partners to address a new increase. With them, she not only wants to negotiate the increase for 2026, but also the transposition of the minimum wage directive, which should ensure that people who receive this benefit are not affected by the salary supplements included in their paychecks, which unions have denounced as in some cases absorbing and therefore diluting the increase.

Beyond social dialogue,Díaz will have to speak with the Ministry of Economy, who has always been cautious in advocating for significant increases. Since 2018, when Pedro Sánchez took office, the minimum wage has increased by 61%. The latest increase benefited approximately 2.4 million workers.

The processing of time registration is being accelerated.

After the failure of the reduction of the working day to 37.5 hours a week –the PP, Vox and Junts defeated the reform in the Congress of Deputies.–, the Ministry of Labor's flagship measure this term, a new increase in the minimum wage could provide a boost to Díaz and her team's agenda. In this regard, the Spanish government, at the proposal of the Ministry of Labor, has just approved the urgent processing of the reinforcement of the time recording system. This will expedite the process so that the regulatory change can soon be implemented.