The interprofessional minimum wage increase approved by the government in early February brings a double win for workers who rely on the base pay. On one hand, the Ministry of Labor reached an agreement with unions to implement a percentage rise for 2024, aimed at further lifting the quality of jobs and living standards.
On the other hand, this measure will be applied retroactively to January 1, 2024, which means companies must pay workers the retroactive sums they are owed.
How the SMI Increase Was Approved
The government confirmed in the Council of Ministers the raise of the Salario Mínimo Interprofesional to 1,134 euros in 14 payments for 2024, representing a 5% increase from the previous year. The move intends to boost the purchasing power of the most vulnerable workers and stimulate economic activity.
Labor unions welcomed the raise, calling it a victory for workers and a tool to reduce inequality. The General Union of Workers (UGT) emphasized that the measure will benefit 2.5 million workers, while Workers’ Commissions (CCOO) described it as “a step in the right direction.”
Nevertheless, some business groups expressed concerns about possible negative effects on employment. The Spanish Confederation of Employers’ Organizations (CEOE) warned that the increase could lead to the loss of up to 100,000 jobs, and the Autonomous Workers Association (ATA) criticized the measure for lacking social partners’ consensus.
The government responded by defending the policy as compatible with job creation. Yolanda Díaz, Minister of Labor, stated that the increase “will not destroy jobs” and described it as a tool for social justice.
Initial reactions from workers have been positive, especially after learning that arrears caused by the retroactive approval will appear on their next payrolls.
How Companies Will Pay the Backdated Amounts
All employers must promptly include the arrears corresponding to the new SMI, which will significantly benefit the recipients. However, the retroactive sums vary by salary type, leading to different totals for different workers. Wages are paid in either 12 or 14 annual installments, reflecting two distinct payment structures.
Firstly, those paid in 14 installments receive 12 regular monthly salaries plus two extra payments, one in June and one in December. In this arrangement, workers will now receive 1,134 euros per month, excluding the extra pay periods. Secondly, employees under a 12-payroll contract receive 1,323 euros per month, and in both setups the annual total remains 15,876 euros.
Comparing the new salary to the old one, workers will see the familiar backdated payment called the retroactive “back pay,” amounting to 54 or 63 euros more in the next payroll, depending on the payment schedule.