In today’s evolving economy, Spain recently raised the Minimum Interprofessional Wage (SMI), a move with wide consequences for the labor market. The purpose cited by the Ministry of Labor is to boost workers’ purchasing power and reduce wage gaps. This reform was highlighted by Yolanda Diaz in a public appearance.
The SMI increase directly touches millions of workers, especially in sectors known for lower pay. Forecasts suggest the higher wage will raise living standards and stimulate consumption, while also presenting challenges for small and medium-sized enterprises as they adjust their cost structures.
An agreement was reached between the Ministry of Labor and Social Economy and the trade unions CCOO and UGT to raise the SMI by 5% in 2024. The adjustment equates to an extra 54 euros per month paid in 14 installments, totaling 756 euros over the year. Since 2018, the SMI has risen by 54%, and with this latest increase, employees gain 5,573 euros more annually. Domestic workers will be entitled to at least 8.87 euros per hour.
Officials say the reform will benefit more than 2.5 million people, with women and young workers accounting for about one third of the beneficiaries.
The SMI increase has sparked a range of reactions. Unions and labor groups view it as progress toward fairer pay, while some business sectors worry about potential impacts on employment and competitiveness. The debate underscores the ongoing balance between economic growth and social protection.
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How does the SMI increase affect unemployment benefits?
A recent video on the channel Laboroteca, hosted by labor attorney Ignacio Solsona, examines how the SMI rise touches various issues. Solsona notes that the SMI also functions as an indicator for several Social Security benefits and subsidies, and lists the following important connections:
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Budget thresholds that determine eligibility for certain benefits.
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Maximum payment amounts covered by FOGASA.
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Limits on self-employment income that allow a retiree to combine work with retirement.
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Income limits that reduce unemployment subsidies for pensioners.
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Its use as an indicator for other pensions such as survivor benefits or benefits for dependents.
This raises the question of how the SMI increase affects subsidies for those over 52 years old. Unemployment benefits recipients, as defined by SEPE, must not have income exceeding 75% of the current SMI.
Solsona also notes that, in 2023, a gross monthly limit of 810 euros applied since the extra payments were prorated. After the 5% SMI increase, the 2024 subsidy cap for beneficiaries over 52 rises to 850.5 euros gross per month.
In plain terms, individuals who receive or apply for SEPE assistance for those above 52 should know their monthly gross income cannot exceed 850.5 euros. This adjustment marks a meaningful change for many potential beneficiaries in the over-52 unemployment group.