Minimum wage to rise by 50 euros a month to 1,184 euros in Spain

It is now official: the minimum wage for all workers (SMI) will rise by 50 euros a month in 2025 to 1,184 euros gross in 14 payments, 700 euros more per year. This was announced on Wednesday by Second Deputy PM and Minister for Labour Yolanda Díaz, who was very clear about how much she wanted to achieve this increase. The SMI is paid to around 2.5 million workers, the most vulnerable in Spain. Díaz has not had to have her arm sorely twisted as employers, on this occasion, have shown themselves willing to negotiate.

The employers' association would have accepted a rise of 34 euros per month for this year, the lower end of the range recommended by the committee of experts that looked at the minimum wage proposals. At Wednesday's meeting they went a step further and raised their proposal from the 3% they initially offered to 3.4%, which is already within the price margins set by the Spanish government.

However, Díaz as labour minister could not lose this battle as well, given that the reduction in working hours - her star measure of the current term of office - is unlikely to see the light of day. The latter is unlikely to proceed due to the complexity of reaching the necessary agreements for its approval in Congress. This Tuesday the Junts party announced that it will vote No, although there are still several months to go before the shorter working week proposal reaches the lower house for MPs to vote.

For this reason Díaz has preferred to reach an agreement alone with the trade unions for the maximum recommended by the experts, an increase of 4.4% that raises the minimum wage for a full-time job to 16,576 euros gross per year, which allows it to be maintained at 60% of the average net salary as laid down by the European Social Charter. Since Pedro Sánchez came into power the SMI has shot up by more than 60%: from the 735.90 euros paid monthly in 2018 to 1,184, which is almost 6,300 euros more per year.

"Today we take a step forward. This is good news for our country. We can say that workers are going to be a little better off today", said Díaz. She further pointed out that 50 euros is "the difference between a family being able to feed itself better than before."

To reach this bipartite agreement, the main trade unions UGT and CC OO have lowered their expectations, since their original proposal was to raise it by 66 euros per month to 1,200 euros gross over 14 payments. "We asked for more, but it seems more important to us to reach an agreement," acknowledged UGT's deputy secretary-general for trade union policy, Fernando Luján.

However, Díaz has agreed with them to incorporate another of their demands: a posteriori modification of the regulation governing the minimum wage in Spain. To this end, she has undertaken to set up a new table of talks with all interested parties within a maximum period of two months to analyse this complete adaptation of the minimum wage directive, which will incorporate elements such as guaranteeing compliance with the minimum wage in the affected industry and business sectors.

In addition, measures will be studied to improve its implementation, such as the obligation to apply the SMI automatically in collective agreements, the absorption and compensation of bonuses as a result of the increase or the updating of daily and hourly amounts if the working day is reduced.

"It is a new agreement because it incorporates new aspects that the trade unions had been demanding and which are now going to become a reality", said Díaz, who also announced that she will launch specific campaigns by Spain's labour inspectorate to "guarantee compliance with the new minimum wage in all affected sectors."

The new increase, which cannot be approved at the next cabinet meeting, will be backdated to 1 January 2025 to compensate for the legal vacuum left following expiry of the omnibus decree and, with it, the extension of the minimum wage in 2024. Thus, as of today, there is no legal minimum wage in Spain.

In addition, it remains to be seen whether the more than 2.5 million workers who will benefit from this measure will continue to be exempt from paying personal income tax (IRPF), a decision to be taken by the Ministry of Finance but a move that is being called for jointly by Díaz's own Ministry and the trade unions.