Spain proposes bumping up the minimum wage in 2026
The lowest salaries in Spain could increase by between 3.1% and 4.7% next year
The committee of experts advising the Ministry of Labour has put forward two proposals for raising the national minimum wage (SMI) next year. The first proposal involves a 3.1% increase if it remains tax-exempt, while the second proposes a slightly higher increase of 4.7% if it becomes subject to income tax.
According to sources at the Ministry, the first proposal involves raising the minimum wage to €1,221 gross per month, paid in 14 instalments (an increase of €36.70 compared to the current rate). The second proposal would raise it to €1,240 after increasing it by €55.60.
On an annual basis, this would mean a minimum wage of between €17,094 and €17,360 gross per year. In other words, the annual increase would range from €518 to €784 gross. To determine how much of this increase will actually reach workers' pockets, it remains to be seen whether this income will be taxed, a decision that rests with the Ministry of Finance.
The department headed by María Jesús Montero has not yet weighed in on the issue, which already sparked heated clashes between the Ministries of Labour and Finance during negotiations for the last minimum wage increase. On that occasion, the conflict was resolved with a stopgap measure in the form of an income tax deduction to prevent the pay rise from being eroded.
At the time, the Register of Tax Advisors (REAF) estimated that taxing the minimum wage could mean that, in some cases, almost half of the increase would be paid in income tax.
The experts' proposal falls somewhere between the demands of the unions and the one launched this week by the CEOE and Cepyme employers' associations. The two employers' associations are advocating for a 1.5% increase, below the projected inflation rate for the coming year, arguing that this is a "reasonable" increase that would place it above 60% of the country's average salary, the target set by the Ministry of Labour and established by the European Social Charter.
However, the Ministry, which is headed by Yolanda Díaz, considers this proposal to be superficial and speculative. With the percentage offered by the employers' associations, the minimum wage would reach €1,202 gross per month, paid in fourteen monthly instalments .
The figure put forward by the CEOE (Spanish Confederation of Employers' Organisations) falls far short of the unions' demands, which include a 7.5% increase that would bring the minimum wage to €1,273 per month, paid in 14 instalments for full-time work. This represents an increase of €89 per month compared to the current €1,184.
Both the CCOO (Workers' Commissions) and UGT (General Union of Workers) are also calling for a legal change to prevent the minimum wage increase from being absorbed by bonuses and supplements.
In the last few hours, employers' associations have released a cost estimate for their proposed 1.5% increase. They believe it would cost companies €862.5 million. Business organisations estimate that for every 1% increase in the minimum wage, the cost rises to €575 million. Following this logic, the 7.5% increase sought by the unions would cost €4.312 billion.
The Ministry of Labour will now present both proposals to representatives of the effected sectors, though it will ultimately be the government that has the final say on how much salaries are bumped up.
Last year, the increase was 4.4%, bringing the gross monthly minimum wage to €1,184.
Image: Freepik
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