Is It Time To Raise Salaries In Spain?

salaries-spain

The PP and Ciudadanos reached an agreement to incorporate a “guaranteed wage supplement” in the package of measures which allowed Albert Rivera’s party to support Rajoy’s bid for a second term in office. (This measure would mean an increase in spending of more than 7.5 bilion euros over the next legislature). Meanwhile, Pablo Iglesias continues to fight for a rise in the minimum wage to 950 euros a month in 2020 – currently it stands at 655,20 euros. But there are more and more voices from Spain’s banking and business world calling for an increase in salaries, as a way of accelerating growth, although always linking wage hikes to productivity.

Ever since last October when Banco Popular Angel Ron advocated for salary increases to accelerate growth, many business representatives have talked up the idea, while also criticising the guaranteed wage supplement. They consider it to be a formula which fuels fraud, depresses salaries, subsidises non-productive companies and is a disincentive for workers.

People like Gas Natural’s Villaseca, Sacyr’s Aguirre Gonzalo or the Chairman of Adecco Iberia, Enrique Sánchez, amongst others, have joined forces with Ron to call for an upward revision to salaries in Spain. Trade unions like UGT and CCOO, particularly silent and disciplined during the tough years of the crisis, have also come on board.

The argument is as wide-ranging as it is sound: from the negative trend in the CPI which reflects, according to the unions, “the lack of households’ capacity to buy,” to the need for salaries which are much higher than the current ones because the existing level of contributions is an incentive for people not to look for work. There are also structural reasons in the mix – for example, the last labour reform needs adjustments to recover the competitiveness salaries have lost, while also ensuring that indefinite contracts gain more weight than temporary ones. Adecco Iberia chairman Sánchez has said the average wage has fallen about 6% in the last few years. He has also flagged the virtuous cycle of “greater purchasing power means more consumption, more growth, more jobs and more money to earmark for social spending.”

According to a recent private study, the gross average salary in Spain is 1,640 euros per month,  17.8% lower than the average gross salary in the EU, which stands at 1,995 euros per month. The level in Spain is the same as it was four years ago. In spite of the disadvantage compared with the average salary in Europe, Spain is at an intermediate level. There are 15 countries in the EU where the average salary is lower than in Spain, while the remaining 12 have higher salaries. For example, wages in Spain are over four times higher than in Bulgaria, although they are 40.2% lower than in the UK.

*Image: Pixabay

 

About the Author

Carlos Díaz Guell
Editor at consensodelmercado.com and innovaspain.com, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.