Wages for essential workers rose significantly in 2023, lifting some purchasing power as prices stayed volatile. Yet, just as Rome wasn’t built in a day, the gains in salaries could not fully offset the decline in buying power experienced by many workers during the previous crises.
A new report from Icsa consultancy and Eada business school, released this week, tracks wage trends since 2007. It concludes that today’s purchasing power for employees remains lower than it was when the brick and financial crises hit. “We’re presenting a study that isn’t encouraging,” said David Suárez, managing partner of Icsa’s practice.
Based on 80,000 salary references gathered between July 2022 and July 2023, the Icsa-Eada analysis predicts that 2023 will be more favorable for lower-level workers than for senior staff. The pattern echoes findings from other research outfits, including Ceinsa’s recent work.
The report notes that wages for essential workers rose by 8.8% in 2023 versus 2022, the largest jump in the historical series and well above other estimates, such as the hourly pay actually worked at 5% according to INE, or real-time payroll data from CaixaBank Research at 3.6% in the most recent quarter.
The authors attribute this strong rise to a triple combination: a substantial 8% increase in the interprofessional minimum wage, wage increases negotiated through collective agreements above the 4.6% inflation pace, and growing difficulty for some firms to fill certain roles.
Challenges for mid-level managers
There was a sharp rise for ordinary workers, while managers saw a more modest gain of about 3.3%. The Icsa-Eada analysis attributes this to achievement of targets and to the dynamics shown in early 2023 data from the Bank of Spain’s Quarterly Balance Sheet Center, where operating profits rose 17.7% year over year.
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For many households, 2023 was not kind to middle managers, with salaries edging down roughly 3.8%. The study points to a bleak short-term outlook due to prevailing uncertainty in business conditions. “In good times, salaries rise first; in uncertain times, they fall first,” commented an Eada professor, articulating the pressure felt in the sector.
Looking ahead, artificial intelligence is expected to further reshape workplace structures, potentially widening the gap between rank-and-file workers and executives while reducing mid-level staffing, according to the analysis.
Unknowns around shorter work hours
Negotiations are set to begin on reducing the standard workweek from 40 hours to 38.5 hours. Officials have signaled that any wage protections must accompany such an adjustment. Therefore, hourly pay could rise as a result of the move.
Questions remain about whether shorter hours will lead to slower wage growth in the near term. Some observers suggest that profitability could improve in trading, which may not translate into higher salaries immediately. The goal is to reach 38.5 hours in 2024 and move toward 37.5 hours in 2025, with the biggest occupational impacts expected in later stages of collective agreements. In the initial phase, effects on wages may be uneven across industries, while some sectors could experience less disruption.