By how much should the interprofessional minimum wage (SMI) increase to represent 60% of the average Spanish net salary in 2026? This is the question that the Ministry of Labor asked in October to the team of experts from whom, once again, it commissioned the report which will serve as the basis for future negotiations with unions and employers, when the final figure is finalized. The experts’ proposal, confirmed to EL PAÍS by sources close to the decision, is already defined. It offers two increase scenarios: 3.1%, up to 1,221 euros gross per month in 14 payments if the SMI, as until now, is not imposed (17,094 euros per year); and 4.7% up to 1,240 euros per month (17,360 euros per year) if you start contributing to personal income tax. Both percentages exceed the price movement, 2.7% on the average of the last 12 months.
The current SMI is 1,184 euros gross per month and 16,576 euros per year, a level that it reached after the increase in 2025, of 50 euros per month and 700 euros per year. This is precisely the recommendation of the experts in the upper section of the last report, which denotes the influence of this document on the final decision of the ministry.
In the first option (without taxation), the SMI would increase by 37 euros per month and in the second (with income tax) by 56 euros, but in this tax scenario, the entire increase would not go into the worker’s pocket. A part would be allocated to taxes, but the precise amount will depend on the employee’s situation (whether he has children, whether he has other family responsibilities, the community in which he lives, etc.) and the applicable tax rules. The ministry asked experts for these two options to anticipate a possible budgetary change, after several years of standoff on the subject with the Ministry of Finance.
The debate on the taxation of the SMI is linked to the desire to predominate this level of remuneration in the Spanish payroll. In other words, while the minimum wage has increased significantly in recent years – 61% since 2018, from 736 to 1,184 euros gross per month in 14 payments in 2025 – the number of workers who do not contribute to personal income tax is increasing at the same time.
In a recent report, the Independent Authority for Fiscal Responsibility (Airef) indicated that it noted a “concentration of workers around the new threshold (of the SMI) and at levels directly above”. Thus, while in 2018 3.5% of workers contributed to the minimum base – like those who receive the SMI -, in 2023 there were 7.4%, more than double. And those who earn barely more than the minimum wage are progressing even more strongly: in 2018, 7.9% of workers contributed 125% of the minimum wage and in 2023, they were 22.8%.
In the presentation to the committee of experts, which held its first meeting on October 1, the Minister of Labor declared that in her opinion the SMI should not be taxed, that tax reform should start with “those at the top”, but at the same time recognized that this was not the responsibility of her ministry. He clarified that the decision belonged to María Jesús Montero. “It will be the Treasury that decides,” Díaz said. For the moment, the Ministry of Finance has not specified whether or not it will commit to taxing the SMI this year, even if it has defended itself in recent years.
The unions also support taxation: they believe that the time has come for the SMI to start contributing to personal income tax. Two weeks ago, the UGT and CC OO announced that they would propose an increase in the minimum wage of 7.5%, up to 1,273 euros gross per month divided into 14 payments (89 euros more per month than today). According to union calculations, if the lowest possible remuneration is no longer exempt from personal income tax, to continue to assume 60% of the average net salary, this 7.5% should increase. This percentage far exceeds those proposed by Labor experts.
The employers’ union does not enter into the debate on taxation, but, like the unions, it has specified how much it estimates that the minimum wage should increase in 2026. The executive committee of the CEOE approved this Tuesday an increase of 1.5%, lower than inflation. Employers justify this figure by the fact that, according to their calculations, the minimum wage already represents 60% of the average net salary, according to data published by the INE in the Labor force survey. It is for this reason that they are proposing a moderate increase which, employers point out, is similar to that agreed by the unions and the government for public sector employees.
The Ministry of Labor considers this commercial proposal “lack of rigor” and the unions describe it as “ridiculous”. “A proposal to increase the interprofessional minimum wage that is even lower than inflation, I sincerely believe that it cannot even be considered,” declared the leader of the CC OO, Unai Sordo, this Wednesday in Bilbao. The offer was also rejected by the UGT.
These two unions, the most representative in Spain, have supported the six minimum wage increases promoted by Yolanda Díaz since she became head of the Labor Party. The employers only supported the first, which increased the amount to 950 euros in 2020.
This measure will be implemented despite the parliamentary precariousness of the Government. Not having the force of law, the Executive has the power to increase the salary floor without Congressional approval.
The Department of Labor indicates that it does not need Congress to limit the ability of companies to compensate for increases in the SMI by absorbing supplements. Some companies eliminate bonuses to soften the impact of the minimum wage increase, so that the employee does not notice the increase. The unions declared that they would not accept the increase in the SMI if this possibility was not removed by decree, they even conditioned support on the previous jump towards this modification. The employers are proposing the opposite: they are submitting their proposal for a 1.5% increase on the condition that Labor does not change the current regime.
The experts’ report is almost finished, but there are still some details to be refined. What is 100% decided, according to informed sources, are the increase figures proposed in each scenario. The members of this year’s commission are Begoña Cueto (rapporteur), Elena Bárcena, Javier Muñoz, Luis Ayala, Alberto del Pozo, Libertad González, Rafael Muñoz, José Ignacio Pérez, César Veloso, Luis Zarapuz, Mariña Fernández and Antonio García. Some are university specialists, others come from unions and there are also government representatives.
Businessmen voluntarily do not participate in the expert committee and question its recommendations. This working group also recommended increases in 2025, 2023 and 2022, but not in 2024. This will be the specialists’ fourth report.
The lowest wages increase more
The sharp increase in the minimum wage in Spain since 2018, by 61%, has outpaced the increase in prices by around 40 points. At the same time, and alongside an expansive economic cycle, the unemployment rate has fallen steadily, the employment rate has increased slightly and wage inequality has diminished. There are moderate slowdowns in potential job creation, but most analysts agree that increases in the SMI have had more positive than negative consequences.
According to government estimates, the latest increase in the minimum wage benefited 2.4 million people, including 66% women and 27% young people between 16 and 24 years old. By sector of activity, according to government calculations, 31% of beneficiaries worked in the countryside, while their real weight on the labor market is 3.5%.
A recent study by Fedea, as also shown by data recently published by the INE, indicates that in recent years there has been a greater increase in the lowest salaries and a more moderate increase in intermediate salaries, a phenomenon linked to increases in the SMI. The 2024 LFS figures show that compared to 2023, the lowest deciles (one tenth of employees, classified into ten groups from lowest to highest and for whom their average remuneration is calculated) increased their average remuneration by 10.1%, compared to an increase of 3% in the fifth decile and 6.6% in the tenth, the highest earners.
If we look further, since 2018 the first decile has increased by 48%, the fifth by 22.1% and the tenth by 19.6%.
What will the net increase look like if the SMI is no longer exempt?
Pablo Semperé
For a 35-year-old single worker without children, without taking into account regional variations and with the current tax design, if the increase in personal income tax (17,360 euros gross per year) was imposed, social security contributions would be around 526 euros and social security contributions would be 1,500 euros. The resulting net salary would be around 15,334 euros. In the case of a 35-year-old single woman with two minor children, the net salary would remain around 15,595 euros per year, again without taking into account regional developments and assuming that the current design of personal income tax is not changed.
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