Proposed €60 monthly rise aims to protect workers against inflation, although disagreements remain, with the UGT union demanding changes to the report before supporting its recommendations.
The Spanish government is aiming to approve an increase in the national minimum wage for 2027 before the next elections. Second Deputy Prime Minister Yolanda Díaz has asked for the report outlining the proposed adjustment to be completed ahead of the November public holiday weekend.
Although the recent railway accident in Urda has disrupted the government’s timetable, the Ministry of Labour has already received an initial report recommending a 4.9% increase in the minimum wage. This would raise monthly gross earnings from €1,221 to €1,281, paid over 14 instalments each year.
The recommendation is intended to achieve two main objectives: ensuring that the minimum wage remains at least 60% of the average net salary and protecting workers’ purchasing power against rising living costs.
However, the proposal has not received unanimous support. The UGT trade union has requested amendments to the report before agreeing to endorse it. Its main concern relates to a section suggesting that adjustments to income tax deductions would allow minimum-wage earners to receive a net salary slightly above 60% of the average net wage in 2026. According to union representatives, this statement must be revised before they will support the document.
The recommended 4.9% increase would add approximately €60 to workers’ monthly gross earnings. It would also increase the annual gross minimum wage by €840, taking it to €17,934. The proposal comes as annual inflation reached 4.9% in October.
Three possible approaches to increasing the minimum wage
The committee’s preliminary 45-page report examines three different options for adjusting the minimum wage, depending on the government’s objectives and the tax arrangements applied to these earnings.
The preferred option assumes that the minimum wage will continue to benefit from personal income tax exemptions. These have been maintained over the previous two tax years through government tax relief measures designed to support people on lower incomes. Both the current administration and the Partido Popular (PP), should it form the next government, have indicated their intention to maintain this arrangement.
Under these circumstances, the experts recommend a 4.9% increase to compensate for inflation and prevent workers from experiencing a reduction in their purchasing power.
A second possibility would involve a smaller increase of 2.7%, bringing the monthly gross minimum wage to €1,254 across 14 annual payments. According to the committee’s calculations, this adjustment would be sufficient to ensure that the net minimum wage represents 60% of the projected average net salary for 2026.
The reference figure used by the experts is an annual net income of €16,409, equivalent to €1,172 per month when divided into 14 payments.
Nevertheless, this lower increase would not fully compensate workers for rising prices. For this reason, the committee favours the 4.9% option, as it would both meet the 60% wage benchmark and help preserve purchasing power.
The report also highlights a potential limitation in its calculations. These are based on forecasts of the average net salary for 2026 rather than actual earnings in 2027. Consequently, if average wages increase further during 2027, the minimum wage could once again fall below the 60% threshold.
The third scenario considers what would happen if minimum-wage earnings became subject to personal income tax without any compensatory tax relief being introduced. Although experts consider this situation unlikely, their calculations suggest that an increase of approximately 11% would be necessary.
Under this alternative, the gross monthly minimum wage would rise to €1,356, paid over 14 instalments annually. This would allow workers to maintain the same net income used as the reference point in the other calculations.
The estimate is based on an individual with no dependent children or parents, no recognised disability and an average income tax withholding rate of 7.03%, in addition to the applicable Social Security contributions.
Experts call for better employment and wage statistics
The committee has also highlighted the difficulties involved in accurately assessing the minimum wage’s impact on employment and determining how many workers are affected by it.
Experts believe that more comprehensive and reliable statistical information is needed. In particular, they recommend improving the available data and combining information held by the Social Security system and the Spanish tax authorities.
According to the committee, increases in the national minimum wage have contributed to reducing wage inequality. However, its effect on household poverty is influenced by other circumstances, including the number of employed people within each household and the overall composition of families.
The experts therefore stress that the minimum wage should not be assessed in isolation, as its wider impact on living standards depends on several economic and social factors.
