The context of slowing inflation and strong labour markets is allowing real wages to rise in most countries of the Organisation for Economic Co-operation and Development (OECD), which warns that Spain is among those members where wages “have fallen the most since the start of the pandemic”.
“Despite positive trends in the labour market, Spain is among the OECD countries where real wages have fallen the most since the start of the pandemic,” summarises the think tank of advanced economies in its report ‘Employment Outlook 2024’.
The OECD recalls that, despite nominal wages in Spain having risen above inflation in 2023 and early 2024, real wages, discounting inflation, were still 2.5% lower in the first quarter of 2024 compared to the fourth quarter of 2019.
By contrast, the OECD adds, almost half of the 38 member countries, including neighbouring Portugal and France, have successfully recovered or surpassed pre-crisis real wage levels.
Regarding this different evolution, in the case of Spain it warns that the country faces higher year-on-year inflation compared to the euro area, with a reading of 3.8% and 2.6%, respectively, in May, “which is a barrier to real wage growth”.
On the other hand, contrary to what has happened in the case of wages in general, the OECD highlights that the minimum wage in Spain has grown above inflation. Specifically, the accumulated increase in the minimum wage in Spain since 2019 after the successive increases undertaken is 26% in nominal terms since before the pandemic. However, due to the effect of inflation, this translates into a real increase of 6.5%, slightly below the OECD median. The international organisation considers that the increase in the minimum wage in Spain “has not posed a significant challenge to employment growth”, which has been solid throughout the period.
