SPAIN'S government has increased the minimum wage after striking a deal with national unions, a move that will affect at least 1.8 million workers.
According to figures held by work minister Yolanda Díaz's department, the typical profile of an employee who will see their salary rise is a woman aged from 16 to 34, on a temporary job contract, working in the service sector, the food industry, or farming.
The coalition government of the centre-left socialists and left-wing Podemos had always intended to work towards bringing the minimum wage into a four-figure monthly take-home sum by the beginning of 2022 or 2023 at the latest – and although the increased salary will take a couple of weeks to come into effect, when it does, this will be retroactive.
Pay rises will be backdated to January 1 and, as it is likely they will already be included in wage slips at the end of February, these will also include the additional figure for January.
In other words, someone who was on the minimum wage of €965 a month before tax – payable in 14 monthly instalments, in line with the dying-out tradition of companies giving a double salary in August and at Christmas – will, from March onwards, get an additional €35 a month gross in their pay slip, but for February, will receive an extra €70 before tax, to cover the rise for January's wage packet, which has already been and gone.
Now, the gross figure is €1,000 a month in 14 payments, or €14,000 a year before tax for a full-time, 40-hour-a-week job.
If this is received in 12 payments, a minimum wage-earner will now be taking home approximately €1,029 after taxes and other deductions.
Those who still work for companies which give a double salary twice-yearly will, in a normal month, get €871.50 after tax, but in August and December will receive an additional €945.60 each time – or, in summer and again at Christmas, will earn €1,817.10.
Prior to the 2022 increase, minimum wage-earners who received 12 monthly pay packets with no 'extras' would take home €1,006.50 a month after tax, whilst those getting a double pay twice a year would, in a standard month, earn €852.50 after tax and, in August and again in December, an additional €924, giving a total for each of these months of €1,776.50.
The increased minimum salary automatically means that the minimum threshold for Social Security (national insurance) contributions, the bulk of which is paid by the employer and only around 6.35% by the employee – stopped at source – will also increase, ensuring that nobody's wage rise will be obliterated by a corresponding hike in their contributions.
Spain's government pledged, when it won the November 2019 elections, that by the end of 2023, the minimum wage would be at least 60% of the mean average salary in the country – a guideline set by the European Union for all its member States.
The mean average wage – which is, naturally, skewed by the top figures and distorted by the upper and lower quartiles – comes in at an after-tax monthly take-home pay of between €1,579 and €1,628, if received in 12 monthly payments.
This means that, if the mean average stays as it is and the 60% figure is indeed reached, by the time of the national elections in December 2023, a minimum wage-earner would be taking home between €1,036.20 and €1,060.70 after tax, in 12 payments.
Spain's business community has not voted in favour of the wage rise, but the nod from the unions was sufficient for it to go through.
Industry representatives complain that with the minimum salary having gone up 36% so far since 2019, very small, struggling firms are set to struggle even further, possibly facing closure.
Unions respond that the idea of a minimum wage is that it should be paid to those in jobs requiring only the minimum skills, experience and qualifications, not as a 'standard' figure that companies can 'get away with' paying to the majority, meaning that its rise should, by rights, only affect a small number of entry-level employees in unskilled rôles – small, struggling firms are not being forced by law to give their staff pay rises across the board, only to those with little or no experience and in grass-roots-level jobs; and it would seem unlikely that a large percentage of small businesses have many, or even any, employees in this situation.
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