MADRID – Taking into account the current euro value, the average annual salary in Spain last year was lower than in 2000. The OECD makes it clear that the purchasing power of Spaniards has declined over the past twenty years.
The most recent publication of the OECD figures compares different annual incomes. When taking into account the value of the euro today, the annual salary in Spain is now 1.1% lower than 20 years ago. Based on the current euro value, €26,836 was the average annual salary in 2000 and in 2020 this amount fell to €26,537 per year.
When the value of the euro in 2000 is compared with the value of the euro at the moment, the annual salary in Spain has naturally increased: In 2000 the average annual salary was €18,528 compared to €26,537 in 2020.
Declining trend since the 2008 crisis
In 2009, the average annual salary in Spain peaked at €29,308 per year. Then the financial crisis broke out and the value dropped significantly until 2012. Since that year, the average annual salary in Spain has seen its ups and downs but has been on a downward trend since 2015 to date, a trend exacerbated by the pandemic.
Of all the OECD countries, only three countries have seen workers wages fall over the past 20 years: Greece (-0.14%), Spain (-1.1%), and Italy (-3.5%). These three southern European countries suffered the most from the 2008 crisis and have struggled to recover since then.
Spain trend opposite to OECD average trend
The trend Spanish salaries does not resemble the upward trend shown by the average of the OECD countries. Since 2000, the average annual salary within the OECD has increased by 16.6% (from €36,394 in 2000 to €42,325 in 2020).
Wages lag behind consumer price index in Spain
Average wages have not increased proportionally with another important factor, the consumer price index. The average annual salary has increased by 43% in 20 years, while the price index increased by 49.9%. If wages in Spain increased in proportion to purchasing power, the average salary in 2020 should be €27,773.
The conclusion is that the Spaniards have lost purchasing power in 20 years. Despite the fact that 2021 is not yet over, the OECD expects that the situation will not improve in 2021 given the unforeseen rise in inflation.
The European Central Bank and the Spanish Bank and Government assure that the price increases are transient and will fall again in November. Economists have their doubts about this and fear that the tide will not turn soon due to a lack of energy supplies and recent developments in the electricity price.