In the shifting landscape of the economy, Spain recently updated the Minimum Interprofessional Wage (SMI), marking a notable change for the world of work. The government explains that the purpose of this adjustment is to boost workers’ purchasing power and reduce wage inequality, a goal highlighted by the Minister of Labor, Yolanda Díaz, in a recent public appearance.
The rise in the SMI directly affects millions of workers, especially those in sectors with historically lower wages. It is anticipated that the increase will lift living standards and stimulate the economy through higher spending. At the same time, attention is needed from small and medium-sized enterprises, which may face challenges in adapting their cost structures to the new level.
Ultimately, a formal 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 translates to an extra 54 euros per month across 14 pay periods, totaling 756 euros per year. Since 2018, the SMI has risen by 54%, and with the current increase, workers receive an additional 5,573 euros per year. Domestic workers earning hourly wages will see a minimum of 8.87 euros per hour.
According to the Ministry, this SMI increase is expected to benefit more than 2.5 million people, with approximately one third comprised of women and young workers.
The SMI expansion has sparked a range of reactions. Unions and labor groups view it as progress toward greater pay equity, while some business sectors express concerns about potential impacts on employment and competitiveness. The conversation reflects the ongoing challenge of balancing economic growth with social protection and fair wages.
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How does the SMI increase affect unemployment benefits?
In a recent video from the labor law channel Laboroteca, hosted by Ignacio Solsona, the discussion centers on how the SMI increase echoes across multiple social security items. The channel, which has grown to more than 125,000 subscribers, emphasizes that the SMI also serves as an indicator for several social security benefits and subsidies. The discussion highlights several points:
- to determine eligibility thresholds for various benefits
- maximum amounts paid by FOGASA
- income limits for self-employment retirees qualifying for a pension
- income limits for unemployment subsidy recipients
- role as an indicator for other pensions, such as orphan benefits or support for other relatives
It raises the question of how the SMI increase affects subsidies for individuals over 52 years old. Unemployment benefit recipients, as defined by SEPE, cannot have income exceeding 75% of the current SMI.
Solsona also notes the historical limit of 810 euros gross per month for 2023, since the excess payments were pro-rated separately. With the 5% SMI increase, the subsidy threshold for 2024 rises to 850.5 euros gross per month.
Put simply, anyone who benefits from or applies for SEPE assistance and is over 52 should know they must not have a monthly gross income above 850.5 euros. This adjustment could represent a meaningful shift for many unemployed individuals over 52 who qualify for support.