More and more workers in Spain are earning close to the minimum wage
Spain's minimum wage (SMI) has risen 47% since 2018, but wage compression is dragging engineers down to labourers' pay. An analysis of the tax trap and workplace absenteeism.
English · Original discussion in Spanish · Published
The minimum wage is now closing in on professional salaries: wage compression as a deliberate policy
Spain's Interprofessional Minimum Wage (SMI, the national minimum wage) has risen 47% since 2018, yet the purchasing power of the middle classes has kept falling. In this scenario, the gap between a junior engineer's salary and that of a supermarket cashier has shrunk to insulting levels. It is no accident: it is a policy designed to equalise downwards.
The tax trap of pay rises
Minimum wage increases never reach the worker's pocket in full. Real inflation (the kind you pay at the supermarket, not the official CPI) and an income tax (IRPF) that has not been adjusted for inflation eat up much of the increase. One user summed it up like this: "of the €300 my pay has gone up over 4 years, I'm not even seeing 100". The result is that working more brings less purchasing power. Add to this the "inflation tax" borne by all salaried workers whose collective agreements are not updated in line with prices.
Wage compression: engineers and labourers at the same price
If the SMI keeps growing at its current pace, projections suggest that by 2028 it will account for 60% of the total wage bill. This is already creating a situation in which qualified professionals (engineers, lawyers, architects) see their earnings levelled with those of unskilled jobs. The message to the market is clear: education, effort and specialisation are no longer rewarded. Sick leave is soaring as a rational response to a system that does not reward working harder: on 70% sick pay, you are better off than striving for 100%.
The question nobody answers is how far the SMI will be allowed to compress professional salaries, and whether the Spanish economy can afford a society where meritocracy is definitively buried. The debate remains open, but the data do not lie.
Related debates in the forum
Spain's Interprofessional Minimum Wage (SMI, the national minimum wage) has risen 47% since 2018, yet the purchasing power of the middle classes has kept falling. In this scenario, the gap between a junior engineer's salary and that of a supermarket cashier has shrunk to insulting levels. It is no accident: it is a policy designed to equalise downwards.
The tax trap of pay rises
Minimum wage increases never reach the worker's pocket in full. Real inflation (the kind you pay at the supermarket, not the official CPI) and an income tax (IRPF) that has not been adjusted for inflation eat up much of the increase. One user summed it up like this: "of the €300 my pay has gone up over 4 years, I'm not even seeing 100". The result is that working more brings less purchasing power. Add to this the "inflation tax" borne by all salaried workers whose collective agreements are not updated in line with prices.
Wage compression: engineers and labourers at the same price
If the SMI keeps growing at its current pace, projections suggest that by 2028 it will account for 60% of the total wage bill. This is already creating a situation in which qualified professionals (engineers, lawyers, architects) see their earnings levelled with those of unskilled jobs. The message to the market is clear: education, effort and specialisation are no longer rewarded. Sick leave is soaring as a rational response to a system that does not reward working harder: on 70% sick pay, you are better off than striving for 100%.
The question nobody answers is how far the SMI will be allowed to compress professional salaries, and whether the Spanish economy can afford a society where meritocracy is definitively buried. The debate remains open, but the data do not lie.
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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 (40 replies).
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