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Date Published: 05/11/2025

Spain's wage gap shrinks as salaries stagnate and costs rise

Spain’s wage divide is closing - yet the middle class is paying the price

The gap between Spain’s minimum wage and the country’s most common salary has narrowed to just 3%, according to new research from the Juan de Mariana Institute (IJM). The report, titled Wage Egalitarianism and Economic Impoverishment, paints a stark picture of how pay levels in Spain have converged since 2018 but largely for the wrong reasons.

Between 2018 and 2023, the minimum interprofessional wage (SMI) rose sharply while the modal wage, the most common salary earned in Spain, fell in real terms. The difference, which once stood at more than €8,000, is now barely €400. In real euros, the minimum wage has climbed from around €10,000 to €13,370, while the typical salary has dropped from nearly €18,000 to just €13,800.

The Institute attributes this convergence to the loss of purchasing power among Spain’s middle and working classes, rather than an improvement in living standards. “What has happened is that wages in the middle segment of the distribution have lost purchasing power, essentially stagnating in a context of low productivity, high inflation and little economic dynamism,” the authors wrote. “All this while the minimum wage has risen sharply by decree.”

The finding links back to previous analysis showing that Spain’s salary gap continues to widen despite official increases in the minimum wage.

Regional impact

The study also highlights how the effects vary across Spain. In 42 of the country’s 50 provinces, the minimum wage now exceeds 60% of the average salary, and in 34 of them it surpasses 75%. The provinces most affected include Ávila, Zamora, Badajoz, Murcia and Alicante, where wages are already among the lowest in the country.

At regional level, Extremadura is the most affected, with the minimum wage representing nearly 73% of the average local salary. High ratios are also recorded in the Canary Islands, Murcia, Andalucía and Castile and León. These figures underline the growing geographical divide between Spain’s wealthier regions and those with persistently lower incomes.

Job losses and wage “flattening”

According to the Juan de Mariana Institute, the rapid rise in the minimum wage has had significant side effects. It estimates that up to 210,000 jobs were lost between 2019 and 2023 as a result of the policy, and the total could reach 270,000 by the end of 2024.

The Institute argues that these increases have been particularly damaging for labour-intensive sectors such as hospitality, retail, cleaning and auxiliary services, where businesses already struggle with tight margins and lower local income levels.

Researchers describe the current situation as an “impoverishing ceiling”, where raising the minimum wage no longer serves as a lever for progress but instead flattens the overall wage structure. When the lowest and most common salaries become almost identical, the incentive to train, advance or take on higher responsibility weakens.

“Spain needs to improve its wages, but trying to achieve this through decrees is a profound mistake,” the report concludes. “The only viable alternative is a model that rewards productivity, facilitating an environment of increasing activity and income.”

Images: Chatgpt

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