Podemos Calls for Minimum Wage Hike to €1,800: The Cost of the Measure

Minimum Wage to €1,800: The Increase Podemos Proposes

Raising the interprofessional minimum wage to €1,800 doesn't eliminate the financial strain for those struggling to make ends meet; it merely shifts it. Podemos has put this figure on the table, using France as a benchmark, and the proposal has sparked a discussion that extends far beyond the minimum wage itself. The issue isn't just about how much one earns, but how much the state takes, how much a company can afford, and what happens to the rest of the salary scale when the bottom rung moves.

The Spanish minimum wage is currently around €1,200, a significant leap from the low €600s where its climb began. According to calculations circulating in the debate, reaching the €1,800 net figure demanded by the purple party would require exceeding €30,000 gross per year. In provinces like Badajoz, Jaén, Ávila, or Lugo, some ironically warn that this figure would make hiring more expensive.

"Like in France," the Ill-Fitting Mirror

The demand was framed with an explicit comparison: €1,800 like in France, so people stop living in financial distress. On the other hand, it's argued that salaries are also a primary source of aggregate demand and that increases create pressure on businesses. A detail highlighted in the thread works against the proposal: matching French salaries without matching its industry, multinationals, and productivity is comparing two dissimilar economies. The proposal has been accompanied by narratives of specific workers, such as those in home care services – the kind of testimony that, as noted, can sway votes and is perceived by the opposition as pure marketing.

How Much Does the Treasury Take from Each Minimum Wage Increase?

The personal income tax (IRPF) is not indexed. For much of the analysis, this is the real loophole. When salaries rise to compensate for inflation, workers move into higher tax brackets and pay a larger percentage, meaning the Treasury keeps a portion of the increase without any tax hike being officially approved. This is known as cold pogre, and according to claims in the thread, it's corrected in almost all of Europe with nearly annual indexation; here, it's argued, it doesn't even appear in specialized press.

The result is increases announced in gross terms that arrive at the bank account significantly diminished. Some calculate that an average worker might end up bearing between 65% and 70% of everything their company disburses for them, including social security contributions, VAT, excise taxes, and energy costs. The complete breakdown, item by item, is considerably more complex than a headline suggests.

The Salary Pyramid and the Worker Who Doesn't See the Raise

Company salaries are not a flexible mass. They form a pyramid with few at the top and many at the bottom, and when the lower stratum becomes more expensive, the structure is said to readjust: either staff is cut, or intermediate levels are frozen. The collateral effect pointed out is the frustration of the salaried middle class, who have seen no wage increase for fifteen years while supermarkets, electricity, gasoline, and rent have risen unchecked.

A net salary of €1,300 or €1,400, which was once enough to live on, is no longer sufficient to make ends meet today, while collective bargaining increases and aid are concentrated in the lower brackets. On the other side, one party claims that the ratio between top executives and the average worker has gone from 30 or 40 times in the eighties to hundreds in large multinationals, a point that another participant disputes for SMEs.

Raising the Minimum Wage and Buying a Robot: The 8% Figure

Each time the minimum wage is raised, a recurring argument states, companies react by replacing people with machines. A study on robot adoption in manufacturing quantifies the effect: each 10% increase in the minimum wage raises the probability of automation by about 8%. The conclusion drawn is uncomfortable, as fewer wages imply fewer jobs and, in the long run, fewer customers capable of buying what is produced.

The objection to these types of studies points out that automation responds to many other factors and that curbing wage increases has never stopped robotization. Two narratives about the same data, and neither silences the other.

When the Problem Isn't the Salary, but the Currency

Sometimes the issue isn't the salary, but the currency in which it's paid. An anecdote circulates: exchanging 500 euros for pesos in Cuba and leaving with a wad that doesn't fit in a backpack, only to spend ten minutes counting bills in a restaurant with European prices. The diagnosis drawn is that money is worthless and that raising nominal salaries without affecting the real supply of goods merely moves the goalposts.

It's the old monetary illusion: confusing a higher number with purchasing power. A simple question hovers over the entire discussion and rarely gets an answer: if improving people's lives is as easy as decreeing a raise, why not €6,000 and make the country the richest in the world overnight?

Spanish SMEs Are Not Dutch SMEs

The business fabric also doesn't hold up to comparison. Most SMEs have one or no employees, and the weight of those operating in sectors with low knowledge intensity or low technology is around 74.2%, almost triple that of countries where more than half of small businesses are in technology or advanced services. Hospitality and tourism contribute around 12% of GDP, compared to 15% for industry.

Why does the comparison with France grate? Because raising the wage floor in an economy of bars and bricks doesn't yield the same result as in an economy of engineering and software. It's worth admitting the nuance, which is pointed out in the thread: services aren't just waiters; a consultancy or an industrial design firm are also services.

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With these elements, it's predictable that the €1,800 figure will remain a headline and little more: the real battle lies in personal income tax and social security contributions, which is where it's decided whether the raise reaches the account or falls short. If anyone expects this to be the year the tax is indexed to alleviate cold pogre, they shouldn't bet too heavily. Although it shouldn't be entirely dismissed: when discontent settles among the salaried middle class, governments eventually move, even if late and poorly.