Saturday, December 27, 2008

Minimum Wage Spain = Salario Mínimo España

Some years ago I asked a Spanish colleague what the minimum wage was here and was met with a puzzled look. When I explained what I meant further, he said he didn't think there was such a thing -- an average, perhaps, but nothing guaranteed. This person was a professional with a post graduate degree, so I thought if he did not know, then there must not be such a thing in Spain.

Eventually, I learned that there is indeed such a thing, but that it is not a guaranteed hourly wage, but a monthly salary. The Spanish minimum wage is called the Salario Mínimo Interprofesional or the SMI and has existed since 1963. It supposedly pertains to all occupations, businesses and economic sectors. It is adjusted at regular intervals, usually each year, although the law allows for bi-annual adjustments. It is based on "normal working hours" (whatever that means), and is established according to various economic indices such as productivity, retail-price index, etc., and is protected from seizure by creditors.

I've read that since the SMI is so low, only about 0.7% of the employed population is affected by adjustments to it -- or 140,000 people. However, it is said to have an important indirect impact because the SMI is used as a reference point for establishing pensions and for collective pay negotiations. Spanish unions claim that it effects the remuneration of one million employees. That leaves about 18,860,000 people who are not affected.

In addition, before moving here and since living here, I have continuously heard and read that employers are supposed to pay their contracted employees 14 monthly payments a year, not 12. In the 9 years I have lived here, I have never received the two extra payments.

Anyway, I write all of this as background to the news that Prime Minister Zapatero announced yesterday that the SMI would go up 4%, to 624 euros a month. It is the lowest increase in the past five years. It is also much lower than the 7.5% a year that would be necessary for Zapatero to reach his campaign promise of a monthly SMI of 800 euros by 2012. So, now he's promised to raise it by 8.6% a over the next 3 years.

Yesterday the Government also approved a 2.4% raise in pensions for 2009. The average pension will be 741.62 euros a month.

It is estimated that the cost of living in 2008 went up 5.3%.

I suppose many Spaniards will be counting their pennies as well as their grapes when the clock strikes midnight next Wednesday.

Let's hope that 2009 is a better year in Spain and everywhere!

Saludos amig@s,

Carloz

Main sources: European Employment and Industrial Relations Glossaries and El País (Un final de ciclo amargo and El Gobierno eleva un 4% el salario mínimo, a 624 euros.)

1 comment:

Anonymous said...

The spanish mínimum monthly salary is higher than florida's mínimum wage after taxes. A spanish worker who makes mínimum monthly salary does not have to pay income taxes by law. A floridian u.s. American who makes mínimum wage has to pay income taxes. Besides, all the spanish nationals have universal healthcare and do not have to own a vehicle because their mass transit system is súper fast and efficient, cheap. On the other hand, the u.s american floridian who makes mínimum wage has to pay for his/her medical insurance and have to pay for a vehicle, insurance, and gas because the mass transit system in the usa is horrible. In europe people work to live and in the usa people live to work.