Spanish pensions up 72% since 1995, wages just 4%

Pensions up 72%, wages 4%: the imbalance nobody fixes

Retirement pensions in Spain have accumulated a 72% increase since 1995; wages, barely 4%. The figure, which looks like a rounding error, is backed by official data and places our country in a unique position: according to the Financial Times, Spain is the only country among the ten largest EU economies where the median income of people over 65 exceeds that of the working-age population.

The mechanics of the divergence

Pensions are uprated by law, linked to the CPI or to pension spending, while wages depend on productivity and collective bargaining. The difference is brutal. In 1995, the average salary was around 15,000 euros a year; in 2025, about 28,000 euros. But once real inflation is deducted – not the officially massaged figure – workers' purchasing power has stagnated. Meanwhile, the average pension has gone from around 600 euros a month to more than 1,100, with automatic upratings that have shielded retirees from loss of purchasing power.

The elephant in the room: the civil-servant bias

Some point out that 95% of maximum pensions are collected by civil servants, and that this group's average pension (2,250 euros) is double that of the general scheme (1,450 euros). This distorts the averages: the overall picture hides the fact that the average private-sector worker has lost ground even against real inflation. Moreover, the aggregate average salary is inflated by public-sector pay, and if the private sector were isolated, the 4% rise would turn negative.

Sustainability on a tightrope

The Spanish pension system rests on the contributions of active workers. With an ageing population and depressed wages, the equation is unsustainable in the medium term. Some already warn that the solution is not to cut pensions but to raise wages structurally – something we have failed to achieve for three decades. Meanwhile, the debate remains trapped in a misleading confrontation: pitting the young against retirees, when the real problem is a productive model that generates no added value.

The open question is: how much longer can this divergence be sustained before the system blows up, or before social conflict leads to a traumatic adjustment?