How the SMI Increase Was Approved
The recent rise in the National Minimum Interprofessional Salary (SMI) approved by the Government in early February brings good news for all workers earning the base wage. On one side, the Labor Minister reached an agreement with the unions to raise the rate for 2024, a move aimed at sustaining better working conditions. On the other side, the measure applies retroactively to January 1, 2024, meaning companies must compensate all employees for the money owed up to now.
How the SMI Increase Was Implemented
The government confirmed in the Council of Ministers the lift of the SMI to 1,134 euros in 14 payments for 2024, a 5% increase over the previous year. This change targets improving the purchasing power of the most vulnerable workers and reviving the economy. Unions applaud the raise, calling it a win for workers and a tool to reduce inequality. The Unión General de Trabajadores (UGT) notes that the measure will benefit 2.5 million workers, while the Confederación Sindical de Comisiones Obreras (CCOO) calls it a step in the right direction.
Nevertheless, not all feedback is positive because business groups express caution about potential negative effects on employment. The Employers’ Confederation of Spanish Organisations (CEOE) warns that the increase could lead to the loss of up to 100,000 jobs, while the Autonomous Workers Association (ATA) criticizes the decision as having been made without sufficient social partner consensus. [Source: Government communications, official briefings].
The government responded to these concerns by defending the measure as compatible with job creation. Yolanda Díaz, the Minister of Labor, insists that the change “will not destroy employment” and that it is “an instrument of social justice”. For now, initial worker reactions are positive and more so upon learning that arrears linked to the retroactive approval will be reflected in the next payrolls. [Source: Official statements, updated summaries].
How Employers Will Pay the Arrears
All businesses are urged to include the arrears from the new SMI as soon as possible, recognizing their value for the beneficiaries. The exact amount will vary with the type of salary, as some workers are paid in 14 installments and others in 12, leading to different payment structures. The two distinct payroll systems mean two different payment approaches will be required. [Cited from labor market analyses, 2024].
First, those earning salaries in 14 installments receive 12 regular monthly payments plus two extra payments, one in June and another in December. In this setup, the monthly wage rises to 1,134 euros, except during the extra pay periods. Conversely, employees under a 12-payment contract receive 1,323 euros per month, and in both cases, the annual total remains the same at 15,876 euros. [Cited: wage structure summaries, 2024].
By calculating the difference between the new and old salaries, workers will see the well-known “arrears boost” on their next paycheques, amounting to 54 or 63 euros more per period depending on the payment schedule. This adjustment ensures that the retroactive component is distributed clearly across affected payrolls. [Official payroll guidance, 2024].
In practical terms, these changes translate to real gains across households. The retroactive effect means a one-time catch-up for the period from January 1, 2024, forward, followed by the standard annual increases. Employers will need to align their payroll systems quickly to reflect the higher base pay for eligible workers and to incorporate the two extra payments where applicable. [Policy summaries, 2024].
The net impact is a visible improvement in take-home pay for many workers, reinforcing the government’s aim of boosting consumption and supporting economic resilience. While debates about employment effects continue, the emphasis remains on fair compensation and timely payment of owed wages. [Analytical briefings, 2024].