Spain began 2024 with new discussions around the minimum wage. After a year of austerity in 2023, during which workers saw their purchasing power dip for a second consecutive year, there is cautious optimism that 2024 could restore some of the ground lost to price increases. Inflation stayed moderate in 2023, and researchers forecast a similar path for the coming year.
Alongside this, social agreements between employers and unions urged companies to keep real wage levels sufficient to help most workers improve their situation. At the same time, hiring projections suggested some growth, though at a slower pace than in 2023. What developments are expected in 2024 regarding wages and employment?
How is the minimum wage changing?
Spain starts 2024 with a new interprofessional minimum wage. The rate remained frozen while the government extended the existing level of 1,080 euros gross per month in 14 installments, unable to reach a broad agreement with social actors or within the governing coalition. The Ministry of Labor is considering a 4 percent increase, lifting the reference to 1,123 euros per month. This 4 percent rate sits between the employer offer of 3 percent and the union demand of 5 percent, awaiting a consensus in a three-party negotiation.
Yet the government faces internal disputes. The tax authorities plan to provide support for public tenders that are deeply affected by the wage rise. Right now, roughly three million workers, including domestic workers, delivery drivers, cleaners, and seasonal staff, are awaiting details on their salaries. The government has pledged a retroactive application of the increase from January 1.
How much will salaries rise through collective agreements?
For the first time in years, employers and unions are following through on collective bargaining agreements. In spring, the CEOE reached an agreement with CCOO and UGT on salary increases for 2023-2025. Leaders urged sectoral negotiators to secure wage hikes of at least 10 percent within three years, with 4 percent planned for 2023 and 3 percent for 2024 and 2025 respectively.
Recent collective agreements signed in 2023 show a 4.1 percent wage revaluation, according to the latest Ministry of Labor data. Later agreements and those in force in the current period reduce the overall wage change to about 3.5 percent. By the end of 2023, many workers had not fully recovered purchasing power.
Overall, wage growth is expected to stay above current inflation, allowing a portion of lost purchasing power to return. Inflation is forecast to follow a moderate trajectory in the coming year, and wage increases are likely to mirror or be only slightly above recent patterns.
How much will civil servant salaries rise?
Civil servants saw their purchasing power shrink in 2023 as salaries rose by 3 percent while inflation finished the year around 3.5 percent. As with the minimum wage, 2024 is expected to begin with a freeze for civil servants. The government did not include a public employee revaluation in the last omnibus decree, though an agreement with two of the three major civil service unions exists. The salary rise could be around 2 percent, with a potential extra 0.5 percent if the CPI between 2022 and 2024 is higher than the increases already accounted for.
Officials say the government will honor the agreement. If there is any delay, a January retroactive adjustment could occur through a royal decree or through the General State Budget for 2024, which is still moving through parliamentary procedures. A special provision to compensate for the pending increases may be approved in the near term.
What are companies’ hiring forecasts?
The labor market closed 2023 with surprising resilience, exceeding many expectations. Some sectors did not see the feared downturn, and hiring reached unprecedented levels. Ongoing data from the EPA indicated more than 21 million people were employed during the summer, a historic milestone.
As the year progressed, employment gains slowed from their early pace, but job growth remained positive. Seasonal fluctuations and slower momentum in the second half of the year were noticeable in official data. Forecasts for 2024 anticipate a cooler but still positive hiring environment, with fewer new positions than in 2023 but not a broad jobs collapse according to most experts.
How will self-employed wages evolve?
About three million self-employed workers will see changes to social contributions starting January 1. Wages for the self-employed will increase for higher earners and decrease for those with more modest profits. The changes will be automatic, with SGK collecting payments in the final week of January each month. Organizations representing self-employed workers advise regular reviews of income and expenses to avoid unexpected tax adjustments later on.
The reform features a phased plan. Contributions for 2023 to 2025 are managed through a 15-section system that adjusts annually. Those with higher returns pay more; those with lower returns pay less. In 2024, the minimum wage will drop modestly by 5 euros, while the top incomes will rise by about 30 euros.