Only half of the salary increases due to inflation reach workers, according to Pimec

BarcelonaA significant part of the costs that companies are incurring to improve salaries in line with inflation is not reaching workers' pockets. This is detailed by the Catalan employers' association of small and medium-sized enterprises, Pimec, in a report published this Thursday dedicated to the so-called fiscal drag, or frozen progressivity. This is the dysfunction that occurs when salary increases associated with price increases are not met with a fiscal response in the form of IRPF deflation. "A perversion occurs, which is that we raise salaries, but this does not translate into greater purchasing power," denounced the president of the business association, Antoni Cañete.

According to the study, for every 100 additional euros of labor cost assumed by the company to absorb salary increases, the worker receives between 48 and 56 euros; while the remaining 44 to 52 euros end up in public coffers. Thus, a net improvement of 100 euros per month in the paycheck represents an expense of between 180 and 210 euros. The trend is aggravated by the intense salary improvements that have been applied lately to balance price tensions, which already exceed 22% in the last five years, according to the document.

The association's Economy and Taxation commission has warned that, with the current format, it is not only the expense per worker that increases with salary increments: the effective IRPF rate applied to labor income has also increased. According to the study, presented by the commission's president, Silvia Gabarró, the tax burden on salaries has increased by between 1.3% and 3.2% between 2020 and 2025, a period that concentrates the inflationary tensions caused by the war in Ukraine.

A "silent increase" in taxes

According to Gabarró, this imbalance particularly affects lower incomes: salaries of 18,000 euros per year, with the increases applied to balance inflation in recent years, would have more than doubled their contribution to public finances. The relative increase is more modest in middle and high incomes: contributions would expand by 18% in the case of salaries of 25,000 euros per year, and by 14% in the middle-high bracket, of 35,000 euros per year.

The increase in effective rates responds, according to the employers' association, to the freezing of contribution brackets; but also to other factors that remain intact, such as the minimum tax-exempt amounts or personal bonuses, which also do not scale with salary increases. Overall, workers would be losing between 2.8% and 4% of their purchasing power due to this paradox.

"It is a silent increase in taxes," reasons Gabarró, who calls for a complete deflation of personal income tax to undo the grievance. Cañete, for his part, has pointed out as "absolutely unfair" that companies "make a salary effort that benefits the Treasury, and not the workers." "It is unfair and makes us less competitive"; concluded the president.