Spain: minimum wage to rise by 8% in 2023

Spain has approved an 8% increase in the interprofessional minimum wage (SMI) for the year 2023, raising the minimum wage from 1,000 euros to 1,080 euros paid fourteen months, or 1,260 euros over twelve months. This increase, which is retroactive to January 1, 2023, was negotiated with the unions and is designed to offset inflation and bring the SMI up to 60% of the Spanish median wage.

Reasons for raising the minimum wage in Spain

The left-wing coalition government, led by Pedro Sanchez, has approved an increase in Spain's interprofessional minimum wage for several reasons. Firstly, the increase offsets inflation, which ended 2022 at 5.7% year-on-year and 8.4% annual average. Secondly, the measure aims to raise the SMI to 60% of the Spanish median wage, in line with the target set at the start of the legislature. Lastly, the government considers that this increase is the best way to combat the impoverishment of workers and promote gender equality, since women and young people are the first to be affected by this increase.

Reactions from unions and employers

The unions welcomed the increase in Spain's interprofessional minimum wage, but also stressed that it was insufficient to enable workers to live in dignity. They called for a higher minimum wage and improved working conditions for precarious workers. The unions also denounced the position of employers, who regularly oppose any increase in the minimum wage.

Indeed, the Spanish Confederation of Business Organizations (CEOE) has proposed a contained increase in the SMI, of 4%, and warned of the risks of too rapid an increase in the SMI for small businesses, farmers and public administration subcontractors. In agriculture, the SMI already represents 90% of the median wage, according to the National Statistics Institute (INE), and nearly 80% in the hotel industry. In 24 Spanish provinces, mainly in Extremadura and Andalusia, the SMI represents more than 70% of the median wage, all activities included.

The effects of minimum wage increases on the Spanish economy

Raising the interprofessional minimum wage in Spain will have significant economic and social effects. Firstly, it will enable many workers to live more decently, as they will have higher wages. It could also stimulate domestic demand, as workers will have more money to spend. On the other hand, some experts fear that an increase in the SMI could lead to higher prices for products and services, as companies could raise their prices to compensate for higher costs.

Raising the minimum wage could also have an impact on the competitiveness of Spanish companies, particularly small and medium-sized enterprises (SMEs). Indeed, these companies could find it difficult to bear the additional costs associated with an increase in the MIS, especially in a context of heightened international competition. However, some experts believe that an increase in the SMI could also boost productivity and innovation within companies, as it would encourage them to adopt new technologies and invest in training their workers.