IN DETAIL: Why are wages in Spain so low?

Local Spain

04-04-2025

According to the latest data available from Spain's national stats body, INE, the average annual salary in Spain is €26,948.87.
However, there's some nuance to these numbers. There's a big difference between the average, the 'most frequent' salary (the mode average) and the median salary.
The data shows that the median wage in Spain was €22,383.11, while the modal salary (the most frequent, with 4.2 percent of total earners) was around €14,586.44, although salaries of €16,495.84 (4.2 percent of the total) and €18,494.32 (4.1 percent) were also common.
That is to say, the headline 'average salary' figures aren't really representative of how things are on the ground in Spain. In reality, wages are low and have been for many years.
This salary trend is reflected even at the upper end of the job market and economy. Managers and company directors in Spain with decades of experience might earn €50 or €60,000 per year, a salary that would be considered an early-career or even graduate-level salary in countries such as the United States.
In recent years, these pressures have been amplified by the cost of living crisis, namely inflation on things like rent and food prices. But salaries in Spain are failing to match these increases.
Put simply: Spanish salaries have been low for a long time — why is that?
Lower cost of living
Some have argued that Spain's lower wages are a result of, or reflection, rather, of the lower cost of living.
It's true that the cost of living in Spain is cheaper than in many other countries. However, this has changed, as noted above, particularly in the post-pandemic period, and as economist Ignacio De La Torre has noted, Spanish salaries are still low even with the cost of living taken into account.
Compared to Spain, average annual salaries in 2023/4 were 56 percent higher in Germany, 43 percent higher in France and 8 percent higher in Italy, according to OECD figures.
"It could be argued that salaries in Spain are lower because of the lower cost of living," De La Torre argues. "This can be calculated by analysing purchasing power parity (PPP), and we can see that the cost of living is 38 percent higher in Germany, 23 percent higher in France and 5 percent higher in Italy.
'From this it can be deduced that the difference in the cost of living is less than the difference in salaries," he says, concluding: "Spanish salaries are low even when adjusted for the differential in the cost of living."
For many business owners who are aware of how life in Spain is comparatively cheaper, there's little incentive to offer higher wages.
Unemployment
Unemployment could also play a role here. Spain has long had one of the highest unemployment rates in Europe. In fact, in recent years it has consistently had the highest among EU countries. Eurostat data shows that unemployment in Spain was 10.4 percent in February 2025, compared to an EU average of 6.1 percent.
In some parts of Spain, such as the Andalucia and Extremadura regions, the rate is far higher than this, especially among young people.
The theory, then, is that a shortage of jobs and high unemployment makes people more likely to accept any job they can get and, therefore, lower pay.
It's one of the reasons that stable, well-paid work is so sought after in Spain, whether it be in the supermarket chain Mercadona or realising the so-called 'Spanish dream' of being a civil servant funcionario.
High immigration
Immigration could also link to this. Spain has welcomed record numbers of migrants in recent years, with the foreign population now accounting for almost 14 percent of the total population, according to new data from the Funcas think tank's annual ' Dato del año ' report.
Looking at the figures, the foreign population in Spain has gone from representing 11.6 percent of the total population in 2022 to 13.8 percent as of late-2024.
The largest migrant groups tend to be from countries such as Romania and Morocco or Latin American countries like Colombia and Venezuela. These are often poorer countries where, despite the fact Spanish salaries are low on a European level, for migrants arriving in Spain could be comparatively good.
In short, why would employers and business owners hire Spaniards when they can keep costs down and pay immigrants less?
Decline of union power
The declining power of trade unions in Spain is also worth considering.
Of course, the waning power of organised labour is far from a uniquely Spanish phenomenon. The rise of the trade unions in Spain reached its peak after the death of Franco. During the Suárez presidency membership reached 44.6 percent, according to OECD data.
Over one in three Spanish workers were still union members in 1981, according to Sociological Research Team (EDIS) data.
These figures reflected the influence of unions in the workplace, working for better pay and working conditions. something that has been waning over the years. There are many reasons for this.
However, by 2023 only 14 percent of the working population in Spain was affiliated to a trade union, meaning the majority of workers in Spain have lost their ability to easily bargain or go on strike, in essence pitting them individually against the boss or company.
It's no coincidence that the Basque Country, the region with the highest average salaries, is also known as the 'strike capital' of Spain.