Latest news with #SalarioMínimoInterprofesional
Local Spain
4 days ago
- Business
- Local Spain
Salaries close to the minimum wage are now the most common in Spain
Spain's Socialist-led coalition government has repeatedly increased the minimum wage since 2019. Most recently, back in February Spain's minimum wage or SMI (Salario Mínimo Interprofesional) was increased by €50 per month, up to €1,184 across 14 payments. This created some controversy as it means that many of these low-income workers will now earn enough to pay income tax (IRPF in Spanish) for the first time, as well as creating tension between the coalition partners in the Spanish government. Spain's leftist government has prioritised increasing the minimum wage and state benefits more widely, but new data now shows that this could have had consequences for the overall pay scales in the country. This is seemingly having an impact on wages in Spain, which have also grown but not been able to keep pace with the SMI. The consequence of this is that the minimum wage has in practice become, according to one Spanish outlet: 'the most common wage in Spain.' Sensationalist though that is, it's not entirely unfair. Let's unpick it. In 2018, the year before the current cycle of SMI rises began, the most frequent or commonly earned salary in Spain amounted to €18,469 gross per year. This was €8,200 less than the minimum wage at that time, when the SMI was just €10,303. Only five years later, these two salaries had practically aligned. According to the 2023 Wage Structure Survey, published by Spain's national stats institute INE, the most frequent full-time wage has fallen to €15,575 gross a year, just €450 more than the SMI. In other words, the minimum wage has gone from 56 percent of the most frequent wage to 97 percent in a period of just five years. It's also worth noting that Spain's average and median annual salaries are considerably higher: €28,050 gross and €23,349 gross respectively. The average is the sum of all salaries divided by the number of workers, while the median is the middle value in the ordered salary data set. Calculating the average is generally useful when data is normally distributed or free of outliers, while using the median is better when the data is skewed or contains outliers. In this case, given the huge salary disparities that can exist in Spain, the median salary - €23,349 gross per year - is a truer reflection of wages in Spain as at least half of the working population earnt this. But this doesn't change the fact that the most frequent salary in Spain in 2023 was €15,575 gross a year. Increasing the minimum wage has undoubtedly helped many Spaniards move away from lives of poverty, however if the minimum wage has been outpacing normal wages, it raises questions about pay in Spain more broadly. This is particularly worrying in the context of the cost of living and housing crises the country is currently experiencing.
Local Spain
11-02-2025
- Business
- Local Spain
Spain's minimum wagers to pay income tax for first time due to salary rise
On Tuesday February 11th, Spain's minimum wage or SMI (Salario Mínimo Interprofesional) was increased by €50 per month, up to €1,184 across 14 payments. However, this also means many of these low-income workers will now earn enough to pay income tax (IRPF in Spanish). Up until now, the Treasury had been changing the threshold in line with the minimum wage increase, so that these workers would be exempt from paying income tax. But this time it has decided not to. According to a report of the commission of experts studying the effects of the increase in minimum wage, this discrepancy will affect approximately 20 percent of those who earn the SMI. Out of the almost two and half million people in Spain who earn minimum wage, approximately half a million will now have to pay income tax. The majority of these are single people without children to care for. Many are also young and in their first jobs. Without applicable tax deductions for caring for relatives for example, they will end up paying €300.05 per year in tax or €21.40 per month, across 14 payments. This means their personal income tax withholding rate would be around two percent. So, for the extra €700 they'd earn per year, they would have to pay approximately €301 in taxes, leaving them with only a rise of €399 instead. However, this income tax novelty will not affect everyone equally. For example, someone who earns the minimum wage, has a partner and one child over three years old will have a withholding of €99 per year. But a taxpayer with a partner and a child under three years of age will not have any income tax withholding because of the deductibles. The remaining 80 percent of those who earn minimum wage are still free from having to file income tax returns, because their exempt minimum increases due to deductions for caring for other people such as children or elderly parents. Not everyone in the government is happy about the decision and it has been causing a rift between the coalition parties in power. Hard-left Sumar, headed up by Spain's Minister of Labour Yolanda Díaz, is disappointed by Treasury Minister María Jesús Montero's reluctance to adjust the income tax threshold. 'Tax justice starts at the top, not at the bottom,' Díaz said. She accused Pedro Sánchez's Socialists of 'having just given a tax gift to the financial experts in Spain', alluding to the fact that minimum earners will need the help of accountants, tax advisors and law firms to file their income tax return. Sumar's parliamentary spokesperson Verónica Martínez has already said that they will appeal the bill in Congress so that minimum wage earners won't have to pay any income tax as has been the case until now. 'For our part, we will exercise our parliamentary autonomy to present a bill that guarantees that the SMI is exempt from personal income taxation,' she confirmed. Since Pedro Sánchez gained power in 2018, the SMI has increased by 61 percent. After these successive increases, the minimum wage has been reaching more and more people, now around 2.5 million workers, according to calculations by Spain's Ministry of Labour. This adds up to almost 13 percent of the country's workforce, and one of the reasons the ruling PSOE now want these people to start paying income tax.
