Spanish government announces minimum wage increase

Tackling income inequality is high on the agenda for Spain’s new government. And because of this, it’s announced a series of new policies to address this issue, including a 5.5%  increase in the minimum wage starting this month.

This is the new left-wing coalition’s third major economic change since it took over and is part of its plans to boost the minimum income of some of the country’s lowest earners. It hopes to boost the net minimum wage to 60% of the average pay of  €1,944 in the next four years.

The minimum wage will be raised to €1,108 per month, which will affect over 2 million people in Spain. In addition, the government says it will increase pensions and the salaries of some civil servants.

This follows a 22% increase in the minimum wage in 2018 which was implemented by Prime Minister Pedro Sánchez. This was the largest increase since the 1970s and Spain went from having one of the lowest minimum wages in Europe to one of the highest.

In a meeting with businesses and union representatives, Minister Yolanda Díaz said, “I want to announce that we are a strong government, that we are heeding the mandate of a social majority that wants us to move forward.”

The move has been welcomed by unions. However, business leaders say it won’t be beneficial as job creation is too slow. According to BBVA bank, it could cost as many as 45,000 jobs in the least developed regions of Spain.

The government and unions disagree, though. “The minimum wage has not destroyed employment in Spain. And the rise in salaries is going to contribute to creating more jobs in Spain,” said CCOO union chief Unai Sordo.

The government now plans to focus on other reforms, as well as rolling back some of the labour reforms from 2012 that made it easier to bring down wages and dismiss workers.

Among the new priorities are preventing employees being fired due to illnesses and bringing back sector-wide collective bargaining arrangements.