Spain Raises the Interprofessional Minimum Wage (SMI) to 1,080 Euros Gross in 14 Payments
On Tuesday, the Council of Ministers approved a royal decree that increases the interprofessional minimum wage to 1,080 euros gross per month, distributed in 14 payments. This rise follows negotiations with labor unions and represents another step in aligning wages with living costs across the country.
In a process lasting over a month and without the support of the CEOE employers association, the government announced the measure, led by the head of government, Pedro Sanchez. He highlighted that the minimum wage has climbed by 47 percent over the past five years, climbing from 736 euros in 2018 to the new level. The administration emphasized that this reflects a sustained effort to improve earnings for workers and reduce income inequality.
The wage increase will affect around 2.5 million workers and will apply retroactively from January 1, ensuring that the higher wage is reflected in paychecks for the early part of the year. The adjustment places the SMI at 60 percent of the country’s average salary, a benchmark used in comparisons with EU peers.
Unions Push for a Higher Increase
Representatives from labor unions pressed for a larger raise, seeking a 10 percent boost that would take the SMI to 1,100 euros. Yolanda Diaz, the second vice president and minister of labor, defended the higher end of the expert committee’s report, which recommended increases in the range of 4.6 to 8.2 percent for 2023. The discussion underscored ongoing tensions between social partners as governments balance fiscal considerations with workers’ cost of living pressures.
From the employers’ side, the CEOE advocated a more modest 4 percent increase. They argued that any enhancement should be supported by mechanisms that tie the new SMI to existing contracts, include a targeted deduction framework for the agricultural sector, and prompt a broader review of public-sector rules and price indexing within contracts. The debate reflected the need to harmonize wage policy with broader economic policies and sectoral realities.
Impact analyses accompanying the regulation suggest that the wage raise could contribute around 568.32 million euros in Social Security contributions, supporting pension systems and social protections. The assessment also notes that after recent SMI adjustments, Spain stands among the EU leaders in the middle tier for minimum wages relative to GDP per capita. This positioning signals the country’s commitment to living standards aligned with its economic output.
The new minimum wage translates to roughly 36 euros per day, 1,080 euros per month, and about 15,120 euros per year, marking a tangible improvement for workers across various industries. The measure is designed not only to lift immediate earnings but also to influence wage-setting in long-term contracts and collective agreements, contributing to a broader pattern of wage growth in the Spanish economy.
Observers note that retroactive application from January has practical implications for payroll planning and fiscal considerations for employers, especially those with contracted workers across multiple sectors. The government frames the move as part of a broader strategy to strengthen social cohesion and support a fairer distribution of economic gains, while policymakers remain attentive to inflation dynamics and the resilience of public finances.
As the SMI progresses through implementation, analysts will monitor its impact on employment quality, worker morale, and purchasing power. While the exact effects on job creation and wage competitiveness vary by region and sector, the consensus is that a higher baseline wage can contribute to more stable consumer spending and reduced poverty risk among low-income households. The policy also reinforces Spain’s ambition to maintain a robust social safety net while fostering sustainable growth across the economy. Source: Ministerio de Trabajo and Ayuntamiento de Madrid, economic briefings on wage policy.