Minimum interprofessional wage: Spain and the European Union

Business start-up in Spain, Finance, Living in Spain Leave a comment   Published on par Jonatan Carbonell

Knowing the Minimum Interprofessional Wage in Spain is an essential point to understand how the labor world has evolved and how workers and employers adapt to the changes that have occurred over the years. Do you want to know what the salary will be in 2022? Do you have any idea of this figure in other European countries? Stay with us to find out!

What is the Minimum Interprofessional Wage (SMI)?

The minimum interprofessional wage, known by its acronym SMI, is the minimum salary or amount that a worker must receive for his or her work, and can be fixed by days or months.

Thus, the decision to establish an amount for the salary of employees in a country is made by the corresponding government, and to do so it must take into account variables such as:

  • Inflation, its current state compared to previous years, and how it affects society

  • The Consumer Price Index

  • The level of productivity in the country’s labor market

  • Labor share of state income

  • Present collective bargaining agreements usually have a positive impact when setting the SMI.

  • Remuneration or benefits offered cannot be considered as part of the SMI. In the event that you offer food or transportation, it will not be taken into account as part of the payment to the workers.

  • At the time of payroll, certain withholdings are applied to the minimum wage, such as personal income tax, social security, among others.

 

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Minimum Interprofessional Wage in Spain

Did you know that this 2022 the Spanish Government fixed an increase in the SMI? According to Royal Decree 152/2022, dated February 22, a 3.63% increase was established.

Therefore, the Official State Gazette agrees that the minimum wage for employees in the agricultural, industrial, or service sectors, without distinction of sex or age, corresponds to 33.33 euros per day or 1,000 euros per month, divided into 14 annual payments.

Likewise, despite the fact that this agreement was agreed in February, since it is retroactive, the measure became effective as of January 1, 2022, which obliged the companies to pay the aforementioned amount regardless of the type of contract.

Evolution of the Minimum Interprofessional Wage in Spain

Over the years, the SMI of workers in Spain has shown an exponential increase, and history proves it:

By January 1963, the salary corresponded to 1,800 pesetas, equivalent to only 10.8 euros. And for the last stage of Franco’s regime, the figure rose to about 50.5 euros.

Subsequently, before the arrival of Felipe González, the SMI was 170 euros, and continued to increase, reaching 390.18 euros in 1996.

Similarly, before leaving government, José María Aznar raised the minimum wage to 490 euros, and during José Luis Rodríguez Zapatero’s term of office, Spain already had a wage of 641 euros.

For its part, during the government of Mariano Rajoy, the salary was maintained for two years in a row at 641 euros and it is in 2016 that an increase to 655 euros is generated.

For 2017, we are talking about an SMI of €707.7, and in 2018 of €735. From there, we witness a more remarkable increase:

In 2019 the SMI went to €900, in 2020 it was set at €950, and last year it was increased to €965.

Finally, as mentioned above, this year 2022 will begin with an increase of 1,000 euros, marking the highest minimum interprofessional wage so far in the country.

 

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Minimum Interprofessional Wage: European countries

Now that you know how much the SMI is currently in Spain, do you know what position it occupies within the European ranking? Do you have any idea what the salary is like in some other European countries?

Spain ranks eighth in comparison with other European countries. Here are the countries that lead the SMI today:

  • The first place goes to Luxembourg, with an SMI of 2,257 euros per month.

  • Second place goes to Ireland, with an SMI of 1,774.50 euros per month.

  • Third place goes to the Netherlands, with an SMI of 1,725 euros per month.

  • Fourth place goes to the United Kingdom, with an SMI of 1,708.70 euros per month.

  • Fifth place goes to Belgium, with an SMI of 1,658.20 euros per month.

  • Sixth place goes to Germany, with an SMI of 1,621 euros per month.

  • Seventh place goes to France, with an SMI of 1,603.10 euros per month.

However, there are certain countries in the European Union that do not have a minimum wage set by the government, and it is through collective bargaining agreements that a minimum amount to be paid to workers is fixed; such is the case in Italy, Denmark and Sweden.

On the other hand, we can locate other European Union countries with a minimum wage considered low; such is the case of Bulgaria (with 332.30 euros per month), Latvia (with 500 euros per month), Romania (with 515 euros per month), and Hungary (with 541.70 euros per month).

With respect to countries with an average SMI we can mention Slovakia (with 646 euros per month), Poland (with 654.80 euros per month), Estonia (with 654 euros per month), and Lithuania (with 730 euros per month).

 

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If you have a business, or you are simply interested in starting your own company in Spain, being up to date with labor, tax, legal and accounting regulations is what you need to make your project a success. Do you want to keep up to date? Be sure to visit our blog and contact our consultants!

 

Published on par Jonatan Carbonell

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