Interprofessional Minimum Wage for 2020 in Spain

6 February 2020 - Monika Bertram

On 5 February, Royal Decree 231/2020, of 4 February, was published in the Official State Gazette (BOE). This royal decree establishes the interprofessional minimum wage for 2020.

As announced in the meeting in January of the Government, the Business Association and the Unions, the interprofessional minimum wage (“SMI”) for 2020 was established at EUR 31.66/gross per day, which is equivalent to EUR 950.00/gross per month and, thus, EUR 13,300.00/gross per year.

It must be noted that the SMI regulated here refers to retribution in cash and not in kind, so that retribution in kind could in no case imply a reduction of the SMI established by the Royal Decree.

In terms of the validity and effects of the Royal Decree, the provisions set forth in Final Clause Three establish that the Royal Decree shall be effective throughout 2020 and, consequently, from 1 January. Consequently, in cases in which the SMI is being paid in accordance with Royal Decree 1462/2018, of 21 December, the payment of the difference should be made in the salary payment corresponding to February 2020.

Although the measure adopted is positive from a salary and social standpoint, it must be taken into account that the majority of the collective bargaining agreements already include minimum salaries above the SMI. This implies that not many employees will be affected by this increase since, fortunately, the majority of workers are paid more than this minimum.

Furthermore, it should be noted that the measure is published at a time not free of controversy, not only due to the unemployment data published on 4 February by the labour force survey, which included that in January 2020, unemployment rose in Spain by more than 90,200 persons and affiliation with the Social Security System dropped by more than 240,000 persons, but also due to the recession in the agriculture sector. This sector has announced that the business cost implied in this increase, under current conditions, is practically impossible for them to bear.

In any case, the situation of the current labour market, which is not only affected by the recession in the agriculture sector, but also by the drop in the automotive sector, the increase in labour regulation cases and the measures announced by the new government, will require that we remain alert. This is due not only to the increase in the SMI but also to the previously announced “repeal of the 2012 labour reform” or the increase in tax pressure. These circumstances have, above all, small- and medium-sized company owners throughout Spain under siege. So, are we facing a new crisis in the Spanish labour market? Only time will tell.

More information: Monika Bertram