In the Spanish market, midsize companies—those with between 50 and 250 employees—continue to anticipate price increases throughout the year. This trend follows a broad rise in costs across Europe, with Spain feeling the impact more acutely than many peers. The domino effect is clear: more midsize firms in Spain are likely to raise prices compared with the EU average, even as the momentum of price growth remains the dominant thread. Yet it is not a universal story of rising wages. Only a minority expect payroll increases this year.
That snapshot comes from Grant Thornton, which published its findings on a recent Monday. The report highlights an inflationary spiral driven by global uncertainties and persistent demand pressures, leading many human resources departments to hold back on aggressive hiring forecasts even as other investments continue.
Grant Thornton’s conclusions are grounded in a survey of 10,000 executives across 29 countries, including 400 respondents from Spain. The firm constructs an index to gauge the health of midsize firms, using a scale from minus 50 to plus 50. A score of 50 signals an ideal operating climate, while minus 50 signals the most troubling conditions. For the dates surveyed, Spain’s score stood at 0.3, with a year-over-year change of 1.3 points. The sense of limited growth was reflected across most research bodies that monitor the sector, such as Funcas from the Bank of Spain and evaluations by the European Commission, all aligning with the impressions shared by mid-sized company leaders in the Grant Thornton survey.
Energy costs emerged as a top constraint for many Spanish firms, with 62% identifying them as a key barrier to growth over the coming year. This level of concern marks the highest in a decade and stands well above the European average and global figures, which hover around 50% and 56% respectively.
Only 26% of companies plan to increase their salaries
Even as growth expectations soften, companies keep moving on their investment agendas. About four in ten midsize executives say they will raise investments in the next 12 months, a figure that mirrors earlier data from a comparable period. These investments are most often earmarked for expanding capacity, upgrading facilities and machinery, and strengthening infrastructure. The objective is clear: to safeguard returns in a volatile environment while maintaining competitiveness in a broader, uncertain global landscape.
However, the push to invest more physically does not translate into a parallel surge in payroll growth. In the context of current inflation, the CPI in March was reported near 9.8%. Within Grant Thornton’s interviews, only 26% of mid-sized company leaders expect to raise salaries this year. This stands in contrast to the general price level increase and the recent minimum wage uplift to 1,000 euros, which has influenced more firms to consider improving compensation in some way. In the prior period, 18% of companies anticipated salary hikes in the next 12 months, signaling a gradual shift but not a rapid one.
As price levels rise and purchasing power for workers erodes, the emphasis on wage growth remains modest. Salaries have increased by about 2.4% against an inflation rate of 9.8%, according to the latest readings, creating a gap that contributes to a perceived loss of real earnings for many employees. This dynamic underscores a broader tension: firms face the pressure to maintain margins by adjusting prices while balancing the cost of labor against constrained consumer purchasing power.
From a labor market perspective, hiring plans are still a focal point for many employers. The Ukraine conflict, variable supply chains, and energy market volatility have not slowed job growth to date. In March, employment rose by 140,231 positions compared with February, and the forward outlook suggests continued hiring momentum in the months ahead. Nearly half of employers, about 47%, report intentions to increase hiring, a figure that surpasses earlier readings by several percentage points. This hiring optimism reflects ongoing demand in many sectors and a belief that additional personnel will be required to sustain operational expansion and new business ventures.
Overall, the Grant Thornton study paints a nuanced picture: while price increases are likely to persist and investment activity remains robust, wage growth is more restrained. For policymakers and business leaders in North America facing parallel inflationary challenges, the Spanish experience offers a reminder that price dynamics and labor costs do not always move in lockstep. Firms may continue to pursue capital expenditure and efficiency improvements while adopting a cautious stance on compensation, especially in a climate where workers seek to preserve purchasing power amid elevated living costs.