The government insists that price increases are necessary to protect workers. Photo credit: OSCAR GONZALEZ FUENTES/Shutterstock
Spain’s Second Deputy Prime Minister and Minister of Labor Yolanda Díaz has proposed raising the national minimum wage by 3.1% to 1,221 euros per month. The proposal is part of ongoing negotiations between the Ministry of Labour, trade unions and employers’ organizations and, if approved, would be retroactive to the start of the year.
This figure corresponds to 1,221 euros paid in 14 installments, maintaining Spain’s traditional salary structure. On an annual basis, this increase brings the minimum wage to a total of 17,094 euros per year. The government says the increase is necessary to protect workers’ purchasing power as living cost pressures continue, particularly on housing, energy and food.
The proposal is in line with Spain’s commitment to ensure that the minimum wage amounts to at least 60% of the national average salary, in line with European social policy guidelines.
Negotiations with labor unions and employers
Social dialogue remains central
The proposals have been widely welcomed by unions, who see them as a continuation of recent efforts to strengthen protections for low-income workers. Union leaders say the increases are modest but necessary, especially for workers in sectors such as hospitality, retail, agriculture and domestic services.
However, employers’ associations are reluctant. Business groups have warned that further wage increases could put further strain on small and medium-sized businesses, especially in regions where productivity growth remains limited. Some employers are seeking additional flexibility and complementary measures to offset rising labor costs.
Despite these differences, the government emphasizes that the increase is the result of a technical analysis by an expert committee that assesses inflation, wage growth and the employment situation.
What the increase in foreign workers means
Impact on expatriate and non-Spanish employees
Foreign residents and expatriates legally employed in Spain benefit from the minimum wage in the same way as Spanish nationals. The proposed increase would apply regardless of nationality, but only if the worker is employed under a Spanish contract.
The increase would mean higher guaranteed incomes, especially for foreigners in low-wage jobs such as tourism, caregiving, cleaning, agriculture and entry-level service jobs. This is particularly relevant for foreign workers raising families abroad or managing rising rents in cities such as Madrid, Barcelona, Valencia and Malaga.
The increase could also affect eligibility criteria for foreign workers’ visa renewal, family reunification, and social security. This is because these standards often refer to minimum income levels associated with legal wages.
Broader economic and fiscal impact
Contributions, benefits and tax effects
When the minimum wage is raised, the basis for calculating social insurance premiums will also be raised automatically. This affects both employers and employees, resulting in increased contributions as well as future entitlements related to pensions, unemployment benefits and sick pay.
For some workers, this increase could bring their income closer to the income tax threshold, but most minimum wage workers are still exempt from income tax or pay only a very limited amount. The government has previously adjusted tax credits to prevent an increase in the tax burden from raising the minimum wage.
Economists say that Spain’s previous minimum wage hikes have not led to significant job losses, although rising labor costs may pose challenges for certain sectors.
Summary of proposal
- Spain’s minimum wage rises by 3.1% to €1,221 per month
- The salary is paid in 14 installments, totaling 17,094 euros per year.
- This increase applies equally to Spanish nationals and foreign workers.
- Affects calculation of social security contributions and benefits
- Final approval depends on completion of social dialogue and cabinet approval
Outlook for workers and employers
A decision is expected in the coming weeks
Once negotiations are concluded, the increase will be approved by the Council of Ministers and formally enacted. As with previous increases, this change will be applied retroactively to the start of the year, and employers will need to adjust back payments as necessary.
For workers, including expatriates and expatriates, the proposed increases provide additional protection against rising costs of living. For employers, especially small and medium-sized enterprises, the focus in the coming months will be on adapting to higher wage floors while remaining competitive.
The minimum wage remains a central pillar of Spain’s labor policy, reflecting the government’s broader aim to reduce inequality while preserving jobs in a changing economic environment.
