Minimum Wage Exceeds 60% of Average Salary in 42 Spanish Provinces

Minimum Wage Exceeds 60% of Average Salary in 42 Spanish Provinces

The gap between the minimum wage and the most frequent salary has plummeted from 8,000 to just over 400 euros. Between 2018 and 2023, the minimum wage in Spain rose by 26% in real terms, while the modal salary fell from nearly 16,000 to less than 14,000 euros. The result is a labor market where the wage floor pushes up and the ceiling collapses: the gap between the two passed from 40% to 3%, according to the latest report from the Juan de Mariana Institute.

The liberal think tank, chaired by Manuel Llamas, puts figures to what many had been intuiting in the payslip. In 42 of the 50 Spanish provinces, the minimum wage now represents more than 60% of the average salary, and in 34 territories, it exceeds 75%. Ávila leads the table with 78.7%, trinc by Zamora (77.3%), Badajoz (75.8%), Murcia (75.7%), and Alicante (74.2%). On the opposite side, Madrid (52.3%), the Basque Country (54%), Navarre (56%), and Catalonia (56.7%) are the only regions that maintain some distance between the legal minimum and average remuneration.

The Impact of the Minimum Wage on SMEs and Employment

The report, titled Wage Egalitarianism and Economic Impoverishment, goes beyond the gross percentage and measures the weight of the minimum wage on the average salary paid by small and medium-sized enterprises. There, the numbers become suffocating: in Ávila, the legal minimum represents 90.8% of what an average SME pays, in Zamora 89.1%, and in Badajoz 87.3%. For a hospitality, cleaning, or retail company in these provinces, wage flexibility is practically non-existent.

The Bank of Spain, during the tenure of Pablo Hernández de Cos as governor, already warned of job destruction associated with these increases. The 22% increase applied in 2019 would have caused the loss of up to 174,000 jobs, according to the estimates collected. By incorporating the years 2020 to 2023, the calculation rises to about 210,000 jobs destroyed, with a projection of 270,000 for 2024. Cepyme, for its part, maintains that the increase in the minimum wage has caused smaller companies to generate 350,000 fewer jobs.

Why Does the Modal Salary Fall While the Minimum Wage Rises?

The divergence has an uncomfortable explanation. When the wage floor rises by decree, companies adjust up and down: they compress pay scales, freeze bonuses, and resort to more precarious contracting to compensate. The most frequent salary—the one earned by the majority—falls because middle-tier jobs are emptied or converted into lower-skilled, lower-cost positions. It is not that everyone earns less: it is that the center of the distribution collapses.

Some argue that the minimum wage is still a meager amount and that the real problem is that companies do not distribute profits. Record profit data in some sectors fuel this argument. Countering this is the fact that the minimum wage is no longer a distant floor: in most of the country, it has become the effective ceiling for an increasingly large portion of the working population.

The Impact on Agriculture and Domestic Employment

The sectors most intensive in labor are the first to feel the blow. Between 2019 and 2023, for every seven jobs generated in the rest of the market, agriculture contributed barely one new job. Since Pedro Sánchez arrived at La Moncloa until mid-2024, domestic employment decreased by 20,000 people, and the number of farmers who became unemployed was around 14,000, according to the figures handled.

The logic is simple: when the minimum labor cost rises faster than the sector's productivity, employment that cannot absorb that cost disappears or becomes informalized. In provinces like Ávila, Zamora, or Badajoz, where the minimum wage already approaches 90% of the salary paid by an SME, the margin for hiring is almost non-existent.

The Trap of Wage Egalitarianism

The Juan de Mariana Institute's report does not limit itself to noting the flattening. Its thesis is that massive increases in the minimum wage, combined with other redistributive policies, do not raise everyone's floor but rather equalize downwards: they compress the wage scale until the difference between an engineer and a stock clerk becomes anecdotal. The consequence is a loss of incentives for qualification and a flight of talent to markets where the wage gap still exists.

The debate is not closed. Defenders of a high minimum wage argue that without it, lower wages would be even more perversos. Critics respond that a minimum that consumes 90% of SME salaries protects no one: it simply shifts the problem from the worker's pocket to that of the employer, and from there to the final price or dismissal. With these differentials, pressure on housing and the cost of living only worsens. And the middle class, that which no one defines but everyone invokes, continues to shrink.