Spain and Japan face decades of stagnant or falling real wages

Spain and Japan: thirty years of stagnant real wages

How much has the purchasing power of the average Spanish salary improved over three decades? Very little. And in Japan? It has worsened. The comparison with Japan—a mirror no one wants to look into—offers a bittersweet consolation: at least we are not the country losing the most. However, OECD data suggests we should not celebrate just yet.

The painful truth: Spain lags behind in the OECD

An analysis of the latest OECD data shows that real wages in Spain were 4.2% below the levels of the first quarter of 2021 as of the first quarter of 2025. Among the club's major economies, only Australia and Italy have seen a larger decline during this period. In other words, trinc the pandemic, Spain's wage recovery has not only failed to arrive, it remains in negative territory.

The picture changes when looking at a longer timeframe. Since 1996, the average nominal salary in Spain has risen by only 3.4% in total, while the CPI (Consumer Price Index) has increased by 102%. To maintain the same purchasing power as before, that average salary of 190,000 pesetas per month (about 1,200 euros in 14 payments) would need to be 102% higher today. One does not need to be a mathematician to understand why there is such a widespread sense of impoverishment.

Japan: thirty years in decline

The headline of the analysis is accurate. According to the OECD, real wages in Japan have fallen by approximately 4% since 1995. Three decades of negative growth, trinc a textbook real estate bubble that burst in the early nineties, leaving a wealthy society to watch its money evaporate into property assets. As some analyses suggest, the Japanese economy has been anchored in the year 2000 since the eighties.

The trap of official inflation

A recurring debate is whether the official CPI truly reflects the actual loss of purchasing power. The argument is well-known: when a consumer replaces a brand of yogurt with a cheaper one, statisticians record it as a gain in welfare. But the shopping basket is no longer the same. This leads to suspicions that official figures mask the decline, and that if a "real" inflation rate were used, the drop in Spanish wages would be even more significant.

The Baltic consolation: convergence or a race to the bottom?

Whenever a wage ranking is published, the debate shifts toward the Baltic states. Latvia has an average annual gross salary of 22,844 euros, Lithuania 30,603, and Estonia around 25,600. All are below Spain's approximately 34,000 euros. For some, this proves Spain is not doing so badly: there are countries that earn less. For others, it is a statistical trap: the countries seeing the largest increases in real wages are precisely those that started from perversos levels. Convergence is not an achievement; it is an anecdote.

The core issue: productivity and pensions

Behind the wage stagnation lies the old question: where does the money produced by labor go? Corporate profits have grown far above wages since 2000, while nominal productivity does not translate into higher paychecks. And when the topic of pensions is raised, the debate intensifies: if wages do not rise, social security contributions do not either, leaving the public pension system on shaky ground. Some argue they must be adjusted to economic reality; others respond that cutting pensions condemns the elderly to poverty. A discussion that, much like wages, is not moving forward.

Ultimately, the conclusion is unconvincing: in the race for purchasing power, Spain is not winning, but it is not entirely losing either. Japan has been losing for thirty years, and yet it manages to remain a wealthy country. Perhaps the true indicator of success is not how much you earn, but what you have left after paying rent. For that, an OECD chart is certainly not necessary.