The pay gap between Spain and the eurozone is growing

by Lorraine Williamson
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MADRID – Salaries in Spain are getting further and further away from the European average. The pay gap is widening, and is half of that in Belgium and 42% lower than in Germany. Employees in Spain earned an average of €17.50 per hour worked in 2022. 

To earn the same as in Belgium (€33.4 euros) you would have to work twice the number of hours in Spain. And with regard to the euro area as a whole, salaries in Spain are 31% lower. This is according to data published this week by Eurostat. 

It is relevant, writes El Diario, that the difference has been widening in recent years due to lower increases, especially since the pandemic and the current inflation crisis. With Germany, the difference was 34% in 2008, eight percentage points less than now, according to the same statistics. And with the eurozone as a whole, 23%, down another eight points. 

Larger loss of purchasing power in Spain 

Every year the pay gap widens and now also in the middle of a crisis of price increases. With an average inflation of 8.3% over the past year, again according to Eurostat, hourly wages in Spain rose by 3%. In other words, the real evolution shows a loss of purchasing power of 5.3 points. 

In the euro area, prices generally increased by 8.4% and wages by 4%. Although the damage has not been completely absorbed, with one point more than in Spain. The same was seen in 2021 when inflation in all economies of the Old Continent was around 3% and wages stagnated in Spain, while in Germany they rose by almost 2%. 

On average, Spain always lags behind the EU in terms of wage increases. In 2022, with a 3% increase, the country was only ahead of Sweden (-1.6%), Denmark (2.2%), Malta (2.3%), Finland (2.3%) and Italy (2 .3%). 

Also read: Spain increases minimum wage to €1080

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More unemployment and less bargaining power 

Recently, the European Central Bank (ECB) justified the lower increase in wages of workers in Spain by pointing to the highest unemployment rate compared to most European partners. “In the countries with the highest unemployment, wage growth has been the most subdued throughout the post-pandemic period,” economists Katalin Bodnár and Julien Le Roux of the institution explain in a report. 

Lower unemployment provides more bargaining power for employees, who start from situations of greater economic stability and security. And so wage growth in Germany or France, which suffer from lower unemployment rates, is above or in line with the eurozone average. 

Different production structures 

Other reasons explaining the greater uncertainty are the different production structures. The weight of SMEs in employment is greater in Spain than in the major euro economies. In these types of companies, working conditions are generally more difficult to improve, partly because there are fewer union members. 

On the other hand, activity in Spain is mainly focused on the service sector, and specifically on tourism, which is strongly characterised by transience, low added value and little specialisation in general. 

Pay raises 

While the major Spanish unions CCOO and UGT, together with other regional unions, have achieved wage increases in public administration and also in specific companies in the sector, an agreement at the national level is more difficult to reach. 

On Thursday, the CCOO and UGT organisations themselves warned employers that they must present a state pact to raise wages and advance negotiations before May 1, or many mobilisations will follow from the second half of the year. 

Most common salary is €1,540 gross per month 

According to Eurostat statistics that include gross hourly wages, the average salary in Spain is €2,800 (in 12 payments per year). This salary is the result of the large disparity between the highest and the latest salaries, so it is much higher than the most common salary. According to INE, the salary received by the largest number of employees was €1,540 gross per month (in 12 payments). 

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