Inflation and purchasing power in 2022 and the outlook for 2023
Inflation hit households hard as restrictions faded and the Ukraine conflict began. While price increases climbed higher in 2022 than in previous years, the pressure on prices soon outpaced wage growth. The majority of workers saw their purchasing power shrink. 2022 closed as a challenging year for employee pay. Through 2023, forecasts suggested a gradual easing as inflation cooled, allowing the gap to narrow. Still, a renewed price surge could push many workers into renewed hardship in the coming year. On the labor side, the job market was expected to grow, often outpacing the overall economy. Wages were forecast to rise, but with the pace likely slower than the previous year.
Wages stood out as a key driver in the inflationary pressures facing Western economies. The latest collective bargaining data indicated salary growth of about 2.96 percent, compared with a consumer price index around 5.85 percent in December. The predicted loss of purchasing power was expected to ease, driven more by a decline in inflation than by a sharp rise in wages.
How much will transportation cost in 2023?
Preliminary SSI figures for private sector salaries suggested around a 3.5 percent rise, with civil servants receiving a similar bump as agreed with unions for the next year. Other analyses, including a study from Ceinsa, pointed to an average wage increase of roughly 3.1 percent for all workers, with higher gains among core staff and comparatively smaller gains for middle and managerial roles.
How high will the shopping cart go in 2023?
The interprofessional minimum wage had not yet been defined for the next year. In the dialogue between government, employers, and unions, executives pressed for an increase that would raise the monthly gross wage from 1,000 euros to 1,040 euros in 14 payments, with subsidies for agricultural firms and allowances enabling contract-level adjustments. Unions argued for a higher minimum, with some demanding 1,100 euros and linking increases to pensions plus a strong rise of 8.5 percent. The government faced internal divisions between ministries and had not issued a final statement. A plan to retroactively approve a minimum wage increase by January 1, 2023, was hinted at by a high-ranking official, signaling ongoing negotiations.
The government was navigating another year of internal disagreements between ministries, with no formal announcement yet. Meanwhile, the vice president hinted at potential retroactive adjustment to the minimum wage as soon as practical.
What will 2023 mean for mortgage holders?
The labor market in Spain showed a year of resilience in early 2023, following 2022’s price pressures. The country saw a substantial increase in employment and a rebound across most sectors, aided by labor reforms that improved job security and contract quality. Unemployment remained high by European standards, but the trend was steadily downward as the year progressed. By the close of the period, several sectors had returned to pre-pandemic employment levels while wage earners on permanent contracts grew in number.
Unemployment remained a concern, with Spain continuing to carry the highest unemployment rate in the EU. Yet expectations for the year ahead looked more positive. Growth projections suggested a healthier economy, with a rising number of people employed and consistent improvements in hiring across industries. An external market view from Randstad suggested that employment would keep rising, though at a slower pace than earlier estimates. Projections indicated that two out of three businesses would expand their workforce, potentially ending the year with a larger total payroll and a lower unemployment rate than the year before.