Without CEOE and Cepyme
Yolanda Diaz, the second vice president and Minister of Labor, along with Unai Sordo and Pepe Álvarez, who head the CCOO and UGT respectively, are set to sign a previously agreed deal. The interprofessional minimum wage (SMI) will rise by 5% to 1,134 euros per month, distributed over fourteen payments, retroactive to January 1, 2024.
The signing is scheduled for 13:00 at the Ministry of Labor, announced by the department led by Yolanda Díaz in anticipation of the SMI increase. The reform is expected to benefit more than 2.5 million people, with women and young workers representing about one third of those affected.
Government sources told Europa Press that formalizing the agreement is a prerequisite for bringing the SMI increase before the Council of Ministers for approval next week.
The unions and the ministry indicated a willingness to accept a 4% rise if business associations joined a tripartite arrangement. Without that participation, the ministry and unions warned the increase would be even more ambitious than the initial 4% plan.
In fact, the unions pressed for a 5% rise in 2024, aiming to lift the SMI by 54 euros above the 2023 level of 1,080 euros. That target was ultimately adopted. The government argues that salary increases reflected in the Quarterly Labor Cost Survey justify keeping the trajectory, and social dialogue should include clear incentives to reach consensus.
Earlier, the government had agreed with unions to increase the SMI by 8% for 2023. The current agenda includes a law stating that the SMI must always equal 60% of the annual average salary, a commitment for this legislative term. The CCOO and UGT have historically influenced annual SMI adjustments, while CEOE has sometimes diverged from those increases, except for a 2020 rise when the SMI moved from 900 to 950 euros per month. Since 2018, the SMI has risen by 54%, from just over 700 euros to 1,134 euros in 2024.
Following the SMI increase, the Ministry of Finance will boost the personal income tax exemption in 2024 to shield taxpayers from unexpected withholding burdens, a move aligned with prior practices to reduce the tax drag on workers earning the minimum wage.
Government will increase minimum tax exemption from personal income tax in 2024 to prevent further taxation of SMI
The government also plans to adjust the tax exemptions in 2024 to keep the net impact of the SMI change manageable for families and individuals with modest incomes. Officials emphasize that these adjustments help maintain fair tax treatment while supporting wage growth.
Next week’s unemployment benefits table
Negotiations will resume next week among the Ministry, CCOO, UGT, CEOE, and Cepyme to address the unemployment benefit reform. A reform proposal previously rejected by the General Assembly of Congress, with Podemos, PP, and Vox voting against it, prompted a pause in talks. Europa Press notes that the minister had anticipated this sequence, expecting unions and employers to discuss reforms once the SMI agreement was in place, as part of the Recovery Plan linked to the arrival of European funds.
The minister highlighted that social dialogue will drive the reform process now that the SMI agreement is settled. Critics argue the reform should have included broader stakeholder engagement from the start. The reform aims to expand coverage and benefit levels, with attention to how subsidies interact with work incentives and regional labor policies.
Officials say the measure is designed to take effect on June 1, ensuring that regulatory changes do not immediately disrupt the unemployment protection framework. The discussion also touches on regional agreements that govern parental leave extensions and the interaction of sectoral and state accords tied to government support. The aim is to unlock higher subsidies while maintaining fiscal responsibility.
Earlier coverage suggested the reform would also adjust how subsidies phase in for new workers and those returning to work. The plan includes adjustments to eligibility periods and benefit amounts to ensure a smooth transition for the unemployed, with careful attention to long-term sustainability and the broader social safety net.
Another element under debate is the subsidy for workers over 52, with adjustments to contributions during retirement contingencies linked to benefit receipts. The contemplated changes involve gradual shifts in the contribution base over several years to align with broader labor market reforms and financial stability goals.
The reform package also contemplates extending subsidies to certain groups previously excluded, including workers under 45 without dependents and rural laborers, with attention to cross-border workers and regional mobility. Analysts stress that these expansions must be measured against fiscal limits while preserving workers’ protections and opportunities to return to work.
As discussions continue, unions and employers seek a balanced approach that preserves the gains already achieved while ensuring future reforms enjoy broad support and implementable timelines. The overarching goal remains clear: strengthen social protection without overburdening the public finances and keep reforms aligned with the broader economic recovery agenda.