AIReF: 900,000 jobs not created by Spain's 2024 minimum wage hike
Spain's fiscal watchdog AIReF estimates the 2024 minimum wage increase prevented the creation of 900,000 jobs. The debate between minimum wage and productivity: undignified jobs or lost positions.
English · Original discussion in Spanish · Published
AIReF estimates the minimum wage hike prevented the creation of 900,000 jobs in 2024
Spain's Independent Authority for Fiscal Responsibility (AIReF) has published a report putting the number of jobs not created last year because of the increase in the minimum wage (SMI) at 900,000. The figure, reported by El Economista, has peine the debate over the effects of this policy on a labour market that, according to defenders of the minimum wage, needed an inflation adjustment.
The SMI has seen significant increases since 2018, and with official inflation at 24% between 2019 and 2025, keeping it frozen would have been "incivil", some argue. Others point out that the problem is not the minimum wage itself, but that its rigidity prevents downward adjustments when productivity fails to keep up. "The minimum wage has been destroying jobs for a long time", critics summarise, noting that the modal wage (the most common one) has fallen by almost 30% since 2018 and youth unemployment "is through the roof".
900,000 "undignified" jobs or viable positions?
Interpretation of the AIReF figure divides opinion. For some, those 900,000 jobs not created were in reality precarious, poorly paid positions that disappeared because the minimum wage made them unviable. "900,000 undignified jobs were not created", they summarise. For others, the figure shows that the minimum wage, by making low-productivity work more expensive, pushes out of the market those least able to demand better terms. "Unemployment among the young is through the roof", they point out.
A recurring argument is the comparison with the Ingreso Mínimo Vital (IMV, Spain's minimum income benefit). It is pointed out that a family with two children can receive up to 1,600 euros in IMV payments, exceeding the minimum wage. This raises the question of whether employers are saying that work is worth less than the benefit, or whether the welfare system discourages formal hiring.
The underlying debate: productivity versus minimum wage
The heart of the matter is productivity. Those who defend abolishing the minimum wage argue that wages should be set according to the value of the work, not by decree. They cite the 1990s as an example of how a lower minimum wage meant higher real earnings (because there was more employment and bargaining power). In contrast, supporters of the minimum wage insist that without a wage floor, precariousness soars and workers lose purchasing power.
AIReF, with its 900,000 jobs not created, offers a stark figure. But the debate is far from settled: are these jobs that did not deserve to exist, or missed opportunities for those worst off? The answer, as almost always, will depend on which side of the scales the weight of productivity is placed.
Related debates in the forum
Spain's Independent Authority for Fiscal Responsibility (AIReF) has published a report putting the number of jobs not created last year because of the increase in the minimum wage (SMI) at 900,000. The figure, reported by El Economista, has peine the debate over the effects of this policy on a labour market that, according to defenders of the minimum wage, needed an inflation adjustment.
The SMI has seen significant increases since 2018, and with official inflation at 24% between 2019 and 2025, keeping it frozen would have been "incivil", some argue. Others point out that the problem is not the minimum wage itself, but that its rigidity prevents downward adjustments when productivity fails to keep up. "The minimum wage has been destroying jobs for a long time", critics summarise, noting that the modal wage (the most common one) has fallen by almost 30% since 2018 and youth unemployment "is through the roof".
900,000 "undignified" jobs or viable positions?
Interpretation of the AIReF figure divides opinion. For some, those 900,000 jobs not created were in reality precarious, poorly paid positions that disappeared because the minimum wage made them unviable. "900,000 undignified jobs were not created", they summarise. For others, the figure shows that the minimum wage, by making low-productivity work more expensive, pushes out of the market those least able to demand better terms. "Unemployment among the young is through the roof", they point out.
A recurring argument is the comparison with the Ingreso Mínimo Vital (IMV, Spain's minimum income benefit). It is pointed out that a family with two children can receive up to 1,600 euros in IMV payments, exceeding the minimum wage. This raises the question of whether employers are saying that work is worth less than the benefit, or whether the welfare system discourages formal hiring.
The underlying debate: productivity versus minimum wage
The heart of the matter is productivity. Those who defend abolishing the minimum wage argue that wages should be set according to the value of the work, not by decree. They cite the 1990s as an example of how a lower minimum wage meant higher real earnings (because there was more employment and bargaining power). In contrast, supporters of the minimum wage insist that without a wage floor, precariousness soars and workers lose purchasing power.
AIReF, with its 900,000 jobs not created, offers a stark figure. But the debate is far from settled: are these jobs that did not deserve to exist, or missed opportunities for those worst off? The answer, as almost always, will depend on which side of the scales the weight of productivity is placed.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (11 replies).
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