Government Offers Civil Servants 10% Raise Until 2028, Unions Call It an "Insult"

10% Raise for Civil Servants by 2028 Averages 2.4% Annually

A 10% salary increase over four years might sound generous, but when broken down annually, it amounts to just 2.4% per year, which begins to strain the narrative. The government has presented its proposed salary increase for public employees between 2025 and 2028 to unions, including a 5% allocation for 2027. This offer has been branded an insult by employee representatives. The proposal comes amid discussions on inflation, personal income tax (IRPF), and private sector agreements, and the response has been far from unified.

What the Government Offers Civil Servants Until 2028

The framework spans four years, from 2025 to 2028. The offer distributes the increase across these years, reserving a 5% for 2027, according to the negotiation timeline. Some analyses suggest that 2025 might be a year with no increase, further diminishing the proposal's real impact. Concurrently, the projected spending ceiling for 2026 is set at 2%, a constraint that limits any additional raises and is interpreted by some as a sign that budgetary margins are exhausted.

Unions have rejected the offer, calling it unacceptable and an insult to public employees. The ball is now in the Ministry's court to decide whether to increase the offer or stand firm on the 10%.

The 2.4% Annual Raise Fails to Keep Pace with Inflation

Dividing the 10% increase over four years results in 2.4% per year, a figure that falls below the official inflation rate and is even further from the inflation perceived by the average citizen. Some analyses argue that any raise that doesn't match the price index effectively amounts to a pay cut, as purchasing power erodes even if the gross salary increases. Four years is a long time.

With inflation rates that some analyses place in the double digits, the calculation of purchasing power loss escalates. Some estimate a potential loss of purchasing power close to 25% over the entire period if prices continue at this pace. While such projections are rarely formalized in agreements, they significantly influence the perception of any multi-year raise.

The detailed calculation also involves personal income tax (IRPF). According to calculations circulating in the debate, between 30% and 40% of any gross increase is returned to the tax authorities through withholdings, meaning a nominal 10% raise could result in a net gain of only 6% or 7% in hand. With the cost of living rising faster than this, the gain quickly dissolves.

Why Is Tax Bracket Indexation (Deflactación del IRPF) Being Demanded?

Tax bracket indexation is central to the entire discussion. If tax brackets are not adjusted for inflation, a nominally rising salary can push individuals into higher tax brackets, causing them to lose a portion of their raise to taxes. Some describe this as a trick: increasing salaries without adjusting tax rates to recoup funds later through income tax.

This criticism is not new or exclusive to public employees, but it has become the focal point in this case. The argument is that tax bracket indexation should be automatic, and without it, any salary agreement is fundamentally flawed. The debate over whether collective agreements and minimum wage should cover inflation clashes with a spending ceiling that doesn't accommodate it.

Private Sector Agreements: 3.5% Annual Raise vs. 3.1% Inflation

The most frequent comparison comes from collective agreements. The average salary increase agreed upon in the private sector stood at 3.5% in October, exceeding the 3.1% inflation rate for the same month. Sectors like building and cleaning services in Spain alone saw increases of 4.2% in 2024, just for one year.

Extrapolated over the same four-year period, a 3.5% annual raise would amount to a cumulative 14%, four points higher than the 10% offered to civil servants. This highlights the core issue of comparative grievance: the private sector negotiates annual adjustments above the cost of living, while the public sector agrees to a fixed percentage over four years, without a clause to correct for runaway inflation.

It's important to note that this comparison has limitations, as not all agreements and sectors move at the same pace. However, the average figure, commonly used in negotiations, is the one currently under discussion.

Vacancies That Go Unfilled

The issue extends beyond the percentage. According to testimony in the debate, in the General State Administration and particularly in major cities, positions are filled using existing employment lists because few are willing to prepare for civil service exams for a job that doesn't offer adequate compensation over time. This phenomenon, according to reports, also affects doctors and healthcare personnel, where higher pay is needed to avoid vacant positions in certain areas.

The discussion has broadened to encompass the overall model. Some question which public services have improved in the last decade to justify the effort, while others argue that comparing with the private sector ignores subsidies, bailouts, and companies reliant on public funds. A dispute that began over a 10% raise has evolved into a discussion about the size of the state. A comprehensive analysis, considering collective agreements, inflation, and income tax, reveals a surprising disparity.

If the agreement is finalized as proposed, the 10% will be paid incrementally, with taxes deducted along the way. Whether this is sufficient to halt the erosion of purchasing power for public employees depends on a factor beyond anyone's control over a four-year horizon: inflation. And on that front, any forecast is merely a gamble.