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Increase In Minimum Wage May Affect At Least 6-7% Of Full Time Employees
The Spanish Government and labour unions have agreed to raise the national interprofessional minimum wage (IMW) by 5% in 2024, to a monthly minimum of E1,134pm, implying annual earnings (in 14x instalments) of E15,876pa.
- Data from Spain's latest wage structure survey (released in June '23 but containing data to 2021 only) indicates that 4% of full-time workers had earnings below the IMW (which was E13,370 at the time), with an additional 52% of workers with earnings between 1-2x the IMW.
- The chart below (from the June '23 survey), suggests just over 500,000 people had annual earnings just above the minimum wage threshold in 2021 (around 2.5% of the ~20.2mln people employed in Spain in Q4 '21).
- A back-of the envelope calculation (noting that around 86% of employed persons were in full-time roles in Q4 '21) suggests that a minimum wage increase should therefore affect around 6-7% of full-time employees in Spain (assuming proportions have remained roughly stable). This estimate excludes any spillover effects further up the pay distribution.
- Bloomberg reports that "the government has said it aims to increase the floor until it equals 60% of average salaries, in line with EU recommendations".
- The 2022 Economically Active Population Survey estimated that average wages for full-time workers were E2,341pm. This implies an 24% gap between the current minimum wage and the assumed target. Including part-time workers, average wages were E2,128, indicating a 13% gap.
- Note that PM Sanchez has just begun his latest 4-year term. Thus far, he has raised minimum wages by over 50% in the 5.5 years in office.
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Why MNI
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