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Domestic workers have benefitted from the sharp increase in the minimum wage
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Employment

OECD WARNS THAT WAGES IN SPAIN HAVE NOT RECOVERED FROM THE CORONAVIRUS PANDEMIC

THE ECONOMIC ORGANISATION WITH 38 MEMBER COUNTRIES REPORTS A 2.5% DROP IN
PEOPLE'S PURCHASING POWER

Lucía Palacios

Madrid

Sunday, 14 July 2024, 22:09

Wages in Spain have gained a lot of ground but still not enough to recover what
was lost with the pandemic. This is what the Organisation for Economic
Cooperation and Development (OECD) states in a report published on Tuesday, in
which it warns that Spain is among the countries where real wages have fallen
the most since the start of Covid-19.

Therefore, although nominal wages have risen above inflation in 2023 and early
2024, real wages are still 2.5% lower than before the pandemic broke out, with
data for the first quarter of 2024 relative to the fourth quarter of 2019.

By contrast, almost half of OECD member countries, including neighbouring
Portugal and France, have successfully recovered or even surpassed pre-pandemic
real wage levels, according to this study by the club of the world's most
economically developed countries.

Moreover, the organisation warns that Spain faced higher year-on-year inflation
compared to the rest of the eurozone in May that is a barrier to real wage
growth.

This is not the case for the minimum wage that, with the sharp rise it has
experienced since 2019 under Spain's coalition government, has risen even more
than inflationary increases. This is contrary to what has happened in most OECD
countries, managing to significantly increase the purchasing power of workers
from this wage bracket.

Specifically, the minimum wage has experienced a cumulative, nominal increase of
26% after the pandemic, which translates into a real wage increase of 6.5%.
However, the OECD points out that this is still slightly below the OECD median.
The 6.5% is only almost half the 12.8% increase in real minimum wages in other
developed countries, mainly due to strong rises in other nations such as Mexico
and Turkey.

THERE IS SCOPE FOR FURTHER WAGE INCREASES

What the OECD report does underline is that this sharp rise in the minimum wage
has not impacted negatively on employment in Spain, as some voices and experts
warned, and considers that "it has not posed a significant challenge to
employment growth, which has been solid throughout the period."

However, the OECD sees it as "probable" that, following the sharp rise in the
minimum wage over the last five years, it will register "more moderate"
increases in the future, given that the Spanish government has already met its
target of increasing the minimum wage to 60% of the average wage (achieved last
year).

The OECD believes that "in many countries there is scope for profits to absorb
further wage increases, especially as there are no signs of a wage-price
spiral."

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