A decent minimum wage for everyone

2 min
The current minimum wage is below the poverty line

The Spanish government's decision to set the minimum wage at €14,000 per annum is a milestone that was unthinkable only a few years ago. We have gone from a minimum wage of €10,304 in 2018, to €12,600 in 2019, €13.300 in 2020, €13,510 in 2021 and finally the €14,000 that will be applied retroactively as of January 1 this year. In total, this represents a 35% rise in 3 years, and the aim is for minimum wage to stand at 60% of the average salary before the next elections. According to government calculations, this will mean raising it again between €168 and €658. This was the commitment of the coalition deal between PSOE and Unidas Podemos.

Undoubtedly, the increase in minimum wage was a historical demand of the unions, but there was a strong theoretical debate among economists about what its real impact on the economy would be. Basically, there were those who thought that it would be a hindrance on job creation and competitiveness, and those who, on the contrary, considered that raising wages would reinforce consumption and provoke a virtuous circle in the economy.

Finally, the bad omens of, among others, the Bank of Spain, have not been fulfilled, since there are now more people in jobs in Spain than ever in history (almost 20 million) and there has been no shock which, at least in an evident way, has slowed either the creation of companies or competitiveness. It is true that a detailed analysis by sector would be needed to see its impact, but it is also true that this measure has significantly improved the salaries of the most vulnerable and precarious labour sectors, such as young people and women. Thus, there is reason to believe that the effects are more positive than negative.

In the case of Catalonia, moreover, where the cost of living is much higher than in many areas of Spain, it is difficult to think of a leading decent life with a salary of under €1,000 for a 40-hour work week. The rise in minimum wage was, therefore, especially urgent in Catalonia, where the unions had already set the milestone of €1,000 as a goal at least a decade ago.

Nor can it be forgotten that this measure comes at a particularly helpful moment for the Minister of Labour, Yolanda Díaz, who last week had to go through the ordeal of seeing how her labour reform, agreed with unions and employers, was approved on the rebound thanks to a mistake by a PP deputy. This time she has gone straight to the point and decided to dispense with the consensus of the main employers' association, which already opposed the last increase in minimum wage and was heavily criticised by PP and Vox every time it reached agreements with Díaz. The minister can now finally turn the page on an episode that could have seriously questioned her political career as a future candidate of a platform to the left of the PSOE.

In short, the rise in minimum wage is good news that can help create an economy in which having a job is synonymous with receiving a living wage.