[Spain] 5.5 percent Minimum Wage Increase Announced To Redress Inequality

On January 22 Spain’s new government announced a 5.5 percent minimum wage rise. The increase will be retroactive to January 1, EURACTIV.com reports.

The wage raise forms part of the left-wing coalition's initiative to see the net minimum wage grow to 60 percent of the €1,944 average monthly wage by the end of its four-year term. One of three major economic initiatives the government has announced since taking office this month.

Following a meeting with business and union representatives, Yolanda Díaz - Labour Minister - 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.'

Ms Diaz said increasing the minimum wage to €1,108 per month was a 'small tool' for tackling inequality. Spain’s Labour Ministry said more than 2 million people would be impacted.

Pensions and civil servant salary increases were also announced by the new government.

In late 2018 Prime Minister Pedro Sánchez increased the minimum wage by 22 percent. It was reportedly the biggest leap since 1977 and took Spain from paying one of the lowest minimum wages in Europe relative to the average wage) to among the highest.

Unions welcomed the announcement but business leaders responded less favourably.

BBVA bank said minimum wage hikes so far had a 'limited' beneficial impact while slowing job creation. It said increases had cost a potential 45,000 jobs in Spain’s least developed regions such as Andalusia and the Canary Islands.

The government and unions maintained that wage hikes have not hurt employment.

Unai Sordo - CCOO union chief - said, 'The minimum wage has not destroyed employment in Spain. And the rise in salaries is going to contribute to creating more jobs in Spain.'

The government is also expected to fulfil a promise to roll back parts of a 2012 labour reform which made it easier for companies to dismiss workers and drove down wages.

Ms Díaz said the government’s plan is to roll back the reform in two phases, the first being done 'very quickly'.

Key priorities for the government as it rolls back the reform are: securing a move back towards sector-wide collective bargaining agreements and away from individual company deals, and preventing companies from dismissing employees due to illness-related absence for a specified period of time.