The minimum wage increase is the largest rise since 1977, increasing salaries by 22% to a minimum of €900 per month.
The decree sets out a minimum salary of €12,600 per year and applies to both permanent and temporary workers. The rise will benefit 2.6 million people, representing around 15% wage earners, according to Spanish union UGT.
Spanish Prime Minister Pedro Sanchez and his cabinet supported the wage increase in December 2018, which was then approved by royal decree – meaning the legislation could be passed without needing to go through the long process of getting it validated by Congress – the rise came into force on 1st January and will benefit many low-paid workers.
The decree will also help to reduce the gender pay gap in Spain, which currently stands at around 14.2%, according to Eurostat; 74% of temporary and part-time work in Spain is occupied by women, according to the National Statistics Institute; the rise will benefit just over 56% of lower paid women workers.
“The rise in the minimum wage is a decisive factor for the creation of employment and economic recovery to be translated into a progressive real reduction of poverty and of wage inequality,” states the royal decree. It also goes on to say that the rise will “serve to improve the general conditions of the economy” and “promote a more dynamic general salary growth.”
The government has also approved a pay rise of 2.25% to employees in the public sector (currently around 2.5 million people) – this increase could possibly rise by an additional 0.25% depending of GDP and another 0.25% depending on each administration, reports Forbes.
“Public employees have endured freezes and salary reductions due to the economic crisis, it seems logical that in the new economic context we can advance in the increase of private and public salaries,” the Minister of Public Function, Meritxel Batet said.
There has been some concern from opposition parties, especially Party Popular who consider the minimum wage increase to be too high which could lead to an increase in unemployment levels.
There has been a “decrease in real wages” and “there is a serious problem of precariousness in the labor market” in Spain, Nadia Calviño, the Spanish Minister of Economy and Business told American tv channel CNBC last October.
“Lots of people are actually poor workers, they cannot meet the end of the month and they cannot pay their bills, but our expectation is that there should not be a negative impact on the labor market in the short run, in particular, thanks to the growth rate that we are having right now,” she reassured.
The wage increases have also been justified by the Spanish Prime Minister who said “a rich country cannot have poor workers.”
Source: ForbesTags: Employment Matters, Spanish Economic Recovery, Spanish Minimum Wage, Wages Spain