Overcome the assault of the labor reform, andThe Government begins to negotiate this Monday the increase in the minimum wage for 2022. It does so in a scenario in which inflation reaches levels that have not been exceeded for 30 years, with supplies such as electricity or fuel leading this rise. Unions and employers come to the table with diametrically opposed positions and in DatosRTVE we give context to the political debate: how much do we earn in Spain? What do the top earners do? Are the salaries of Spaniards at the level of other countries around us?
1. How much do we earn in Spain?
For the experts consulted, this is a difficult question to answer, both because the statistics are lagging and because the data sources differ between each of them. The most frequent salary in Spain is around 1,321 euros per month (18,490 euros per year), according to the latest Annual Survey of Salary Structure of the National Institute of Statistics (INE). They are data from 2019, the last available, which estimated the increase in the average annual earnings per worker by 1.6%.
Although this index will not be updated until mid-2021, the wage decile of the main job of the 2020 Active Population Survey (EPA) advances that the salaries of most of the workers ranged between 1,337 and 2,295 euros.
The average monthly salary of the first year of the pandemic was 2,038.6 euros, according to the expression in gross terms that includes this same statistic and that is based on information from the Tax Agency and Social Security. Thus, the average 14-month pay grew by 2.8% compared to the previous year, taking into account the income from ERTE caused by the coronavirus. For his part, the median salary -which divides the number of workers into two equal parts above and below it- stood at 1,706.4 euros, with an increase of 1.3%.
As for the Interprofessional minimum wage (SMI), the Government set its 2020 rise at 5.6%. In this way, the minimum monthly amount that an employer is obliged to pay its employees when they work full time, and which aspires to represent 60% of the average salary at the end of this legislature, went from 900 to 950 euros.
The graph above shows the evolution of the minimum, average and median wages in the last five years, according to data from the EPA and the Ministry of Labor and Social Economy (MITES). While the bottom is up 46.5% in this time, especially buoyed by the 22.3% increase from 2018 to 2019, the growth in five years of average and median wages has been around 7%.
The average salary has gone from 1,893.7 euros in 2015 to 2,038.6 euros in 2020 (+7.6%) and the median has increased by just under 110 euros (+6.8%).
2. Do men earn more than women?
The gender gap it is an existing and persistent phenomenon in the Spanish labor market. During 2020, men earned an average of 16.2% more per month than women, with a difference of 358 euros in favor of the male sex in the average monthly salary: 2,210 euros for men, compared to 1,852 for women, according to the latest EPA.
This divergence does not include types of working hours either, and is almost identical for full-time and part-time work. Women who worked full time in 2020 were paid on average 5.7% less per month than their male colleagues, and those who opted for the part-time job received an average monthly salary 42 euros lower than them.
Although the differences are reduced when comparing work under equal conditions, the same educational level or the same sector, “the fact that women have greater partiality, greater temporality, that there is horizontal segregation in sectors of activity or that there is more men in certain careers are variables that explain the gap,” explains the research economist at EsadeEcPol, Carlos Victoria.
Beyond the mean values, more men than women with high salaries appear in the data, while they are more represented in the lowest paid third.
Only 26.6% of female workers received monthly salaries above the upper limit of the most common salary range (2,295 euros), compared to 33.1% of men. The figures are inverted when they refer to people earning less than 1,337 euros per month: 38.8% of them and 21.8% of them received less than this figure.
3. Who earns more?
Younger workers are concentrated in the lowest wages, and the older ones have more weight in the taller ones. The average monthly salary grows progressively throughout working life, especially when working full-time. The salary of those over 54 is almost double that of those under 24, and is 1.7 times higher if only those who work full time are taken into account.
According to the INE, the higher salary level of older workers is determined by a higher proportion of permanent contracts, more seniority in the job and more work experience. However, this progression that does occur in full-time contracts breaks from the age of 45 when employment is part-time.
The latter, analyst Carlos Victoria values, may occur due to a composition effect of the type of people who have part-time jobs at an advanced age. “If a person who reaches the age of 45 continues to have elements of bias in his career, it may be due to the type of work he performs and not to the evolution of his salary profile,” he says.
The economic activity with the highest proportion of high wages in the 2020 EPA data (above 2,295 euros gross per month) was that related to finance and insurance, while hotel and catering workers and domestic staff are the most represented in the group that earns salaries below 1,337 euros. This difference is explained, in part, by the higher proportion of part-time jobs and higher temporary employment in some sectors.
Regarding the occupation, the highest average monthly salary was that of directors and managers, 4,128 euros, despite the fact that it fell by 3.4% compared to 2019. Workers in manufacturing industries, plant and machinery operators, employees in the agricultural sector, restaurants and commerce also saw their average monthly salary decrease in 2020.
Conversely, that of scientific and intellectual technicians and professionals was the one that increased the most: 4.2%. And this growth helped them to position themselves as the second best paid group, according to INE data.
At the opposite pole, those in charge of elementary occupations continue to be the ones who earn the least, despite the fact that his average monthly remuneration rose by 1.5%.
4. How much has the minimum wage increased?
The minimum interprofessional salary experienced the highest annual increase in its history in 2019, when it went from 735.9 to 900 euros per month. An increase of 22.3% that tried to reduce some social inequalities, but that stopped the creation of up to 140,000 jobs that year, according to a report by the Bank of Spain.
According to the entity, this brake on growth was concentrated in the group with the lowest salaries, especially in those located below 1,250 euros per month, and in older workers. Likewise, the Bank of Spain continues in its conclusions, the increase in the minimum wage produced “a more pronounced reduction in the hours worked and in the flow of job creation for young people.”
Although academic models are inclined to affirm that the existence of a minimum wage above the equilibrium wage – the one that finds the midpoint between labor supply and demand – generates unemployment, for EsadeEcPol analyst Carlos Victoria “the reality It’s much more complex.” If there are fixing powers that depress wages downwards, a minimum threshold can raise them to their equilibrium point, he illustrates.
Since 2019, the SMI has grown by 7.2% and has stood at 965 euros in 2021. At the same time and after the stoppage of the pandemic, job creation has registered record figures until last January. “We are in a period of growth and employment has been generated”, but “we do not know a priori if in the absence of the minimum wage more would have been generated”, explains the expert, who calls for a broader and more exhaustive analysis than that carried out by the Bank of Spain in order to analyze the role of the minimum wage in the Spanish labor market.
In conversation with DatosRTVE, the economist and president of the Government’s advisory commission on the minimum wage agrees on the need for a more in-depth study, but acknowledges that she was happy to read said report. Inmaculada Cebrián believes that the document supported the thesis of the recommendations that her group had transferred to the Government, despite pointing out an impact “reduced in percentage terms”, with a net loss of employment of the affected workers of between 6 and 11 %.
“It gave us even more guarantees that the increase was necessary,” explains Cebrián, for whom the marginal loss of some jobs should be offset by the other instruments provided by the labor market and the economy, such as increased productivity or improved quality of employment. At the end of the day, he adds, the minimum wage aims to ensure that everyone has access to employment with a decent wage, and for this reason it must adapt to the behavior of the average wage.
5. Should the minimum wage be linked to the CPI?
With the rise in 2019, Spain caught up with other countries in its environment, but now it faces another dilemma, since the rise in 2022 must take into account the skyrocketing growth in prices.
Although the debate has just begun, the unions have already expressed themselves in favor of the SMI reaching 1,000 euros per month, while in September the employers’ association showed their position against more increases.
Workers gain purchasing power when wages grow above the CPI, but the experts consulted agree in ruling out a direct link between the growth of the minimum wage and prices. If price rises are transferred as they are to wages, purchasing power would be maintained, but “a spiral of transfers from price levels to wage levels could be generated, with second-round effects for inflation” Victoria explains.
However, Cebrián recalls, the increase in prices is one of the reasons included in the law for the review of the minimum wage, since “it is to be expected that the rest of the wages will be adjusted so as not to lose purchasing power”. Beyond this aspect, the expert defends that “the commitment to the growth agenda has to be maintained regardless of everything else”.
How is the minimum wage in other countries?
The minimum wage in Spain is 13th highest of OECD countries They have fees stipulated by law. Our country grants its workers a purchasing power capacity of 1,401.7 euros per month expressed in 12 payments and in purchasing power parity, an artificial currency that equalizes the amount of goods and services that can be purchased in each country regardless of changes currency or inflation.
Spain is placed in the second group of countries with the highest minimum wage together with Japan, the United States, Portugal or Israel, among others. However, it is far from other countries in its environment, such as France, the United Kingdom, Germany or the Netherlands, whose monthly minimum wage gives its workers the greatest purchasing power among the countries that provide data: 1,903.3 euros per month.
If the comparison is made only in the context of the European Union, the Eurostat data show the minimum wage in Spain as the seventh highest of the countries that apply it, behind France, Germany, Belgium, the Netherlands, Ireland and Luxembourg. On the other hand, Spain falls to eighth place when applying the purchasing power standard, surpassed by Slovenia.
George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.