The Ministry of Labor proposes a 3.1% increase in the minimum wage, to €1,221.

The Ministry of Labor has proposed a 3.1% increase in the national minimum wage (SMI) to social partners for 2026, maintaining this reference salary exempt from taxation. This would raise it from €1,184 to €1,221 gross per month, paid in 14 installments (an increase of €37). The Spanish employers' association and the major unions CCOO and UGT agreed to study the proposal, as explained at a press conference this Wednesday by the Secretary of State for Employment, Joaquín Pérez Rey, following the meeting between social partners to try to reach an agreement. The positions of the employers' and workers' representatives were quite far apart, as is usual when it comes to increasing the SMI. The unions wanted a 7.5% increase up to 1,273 euros per month, The employers' association CEOE lowered that figure to 1.5%.For its part, the committee of experts that advises the Spanish government In this matter, he proposed raising it by 37 euros per month (1,221 euros per month in 14 payments) by 2026 if it remained tax-exempt, or by 56 euros per month (up to 1,240 euros) if it were subject to income tax. Ultimately, the first option was chosen. Despite the disagreements between the different positions, after this latest meeting, Pérez Rey asserted that the dialogue between both parties was "sincere and very constructive." However, for now, neither unions nor employers have left the meeting with a yes or no to this proposal from the ministry led by Yolanda Díaz. The high-ranking official from the Ministry of Labor also expressed openness to "exploring" with the Treasury the possibility of "relaxing" the indexation rules related to the impact on public sector salaries. This was a recurring complaint from the employers' associations CEOE and Cepyme, who criticize the fact that with the latest increases in the minimum wage, it was necessary to update the bids in order to pass on this increase in labor costs to the administration, since they claim that this reduces the profitability of companies. The unions have also supported this review of prices in public contracts in line with any regulatory changes that may be approved, as outlined in the latest National Collective Bargaining Agreement (Agreement for Employment and Collective Bargaining, the state framework that serves as a guide in collective bargaining) approved in 2023. The Deputy Minister of Labor stated that it makes perfect sense that increases in the Minimum Wage (SMI) cannot be passed on to what companies charge the government for their services and mentioned sectors such as cleaning and private security, jobs with low wages closer to the minimum wage that have seen salary increases in recent years. "It's a matter of fairness," said the Deputy Minister. He also noted that the new European directive on minimum wages—which the Court of Justice of the European Union (CJEU) almost fully endorsed last November—already requires member states to incorporate it. [BK_SLT_LNA~ Exempt from Personal Income Tax]

Regarding the exemption of the minimum wage from income tax, Pérez Rey explained that this position was agreed upon with the Ministry of Finance, which will be responsible for the technical implementation of this measure. However, the Ministry of Labor is confident that the "2025 approach" will be followed and the tax relief will be presented in terms similar to those agreed upon last year. "The minimum wage cannot lose even a tenth of a percent of its purchasing power; those who earn it should not be the ones who pay taxes. Tax justice begins with those who have the most, not those who have the least," Pérez Rey emphasized. The Spanish minimum wage has been one of the flagship measures of the Spanish coalition government—first with the PSOE and Podemos, and now with the Socialists and Sumar—which has increased it by 61% since taking office. "It is the main antidote to inequality. This is an increase that makes the difference between decent wages and those that are not," the Secretary of State for Labor asserted. Following the meeting, Fernando Luján, Deputy General Secretary for Trade Union Policy at UGT, and Javier Pacheco, Secretary for Trade Union Action at CCOO, described Wednesday's meeting as "positive" and welcomed the Spanish government's willingness to relax the law on the de-indexation of public contracts. Pacheco noted that although their proposed increase to the minimum wage for 2026 was 7.5 percent, the union "will not obstruct" reaching an agreement that guarantees this benchmark will reach 60 percent of the average net Spanish salary. He also celebrated that the increase is above the projected inflation rate of 2.8 percent for 2025. "We are living in times that require us all to pull together to provide reassurance," Luján stated.