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( Spanish) — The Council of Ministers of Spain agreed on Tuesday to set the Minimum Interprofessional Wage (SMI) at 1,080 euros gross per month, equivalent to US$ 1,158, divided into 14 payments. The measure will be retroactive to January 1, 2023 and represents an increase of 47% compared to the SMI set five years ago, in 2018, when it stood at 735.90 euros, about US$ 789 at the current exchange rate.
Despite the fact that the increase has been celebrated by the Government and the main union organizations in the country that supported the measure, such as the Workers’ Commissions (CCOO) and the General Union of Workers (UGT), this salary will not pay the same for everyone.
According to the latest Family Budget Survey prepared by the National Statistics Institute (INE) in 2021, the average annual expense for a household in which a single person under the age of 65 lives amounted to 19,460 euros, equivalent to US$ 20,854. Being that the minimum interprofessional salary reaches 15,120 euros gross per year, there is a difference of 4,340 euros with the estimated average expenses. Difference that would be greater once the taxes and quotas for Social Security are subtracted from the salary.
In the case of a couple without children, the same survey estimates that their average annual spending in 2021 amounted to 29,545 euros (US$31,646), while the sum of their salaries, if both adjusted to the current SMI, would be of 30,240 euros (US$32,391).
How does the SMI perform in the different regions of Spain?
The differences can be quite large since, as recognized by the Bank of Spain in a report published in August 2021, the cost of living in Madrid and Barcelona in 2020 was almost 20% higher than the average for the rest of the urban areas. Differences that, to a large extent, are produced by the cost of housing, according to the same organization.
In this sense, the Bank of Spain pointed out that the cost of renting a home in the urban areas of Madrid and Barcelona in 2020 was “82% higher than the average for the rest of the urban areas”.
Regarding the average annual expenses per person and by Autonomous Community of residence, the National Institute of Statistics estimated in 2021 that the Basque Country, Madrid and Catalonia were the autonomies where the highest disbursement was made. Specifically, the data from this organization suggest that in 2021 the figure amounted to 13,982 euros (US$14,958) per person and year in the Basque Country, 13,541 euros (US$14,486) in the Community of Madrid and 12,856 euros (US$ 13,753) in Catalonia.
On the contrary, in 2021, the average annual expenditure per person was lower in the Autonomous City of Melilla, with an average expenditure of 8,337 euros (US$8,902), Castilla La Mancha, with an average expenditure of 9,587 euros (US$10,237 ) and the Canary Islands, where the average cost amounted to 9,690 euros (US$ 10,347).
How has the SMI evolved in Spain?
The interprofessional minimum wage has experienced an increase of 47% since 2018.
Five years ago, the minimum gross monthly amount that a worker could receive was 735.9 euros (US$789). In 2019, this figure rose to 900 euros gross per month. In 2020, it rose to 950 euros and, the following year, it reached 965 euros gross per month. Already in 2022, the figure reached 1,000 gross euros per month.
How many workers receive the SMI?
In 2020, the National Institute of Statistics published the latest salary structure survey where it estimated that 19.36% of the country’s workers earned an annual salary equal to or less than the SMI. That year, the minimum wage was set at 950 euros gross per month.
