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Published on Monday, February 21, 2022

Spain | So the minimum wage has gone up. Now what?

Now that the minimum wage approaches the target level of 60% of the average salary, we need to rethink employment and training policies. If we don’t, the unemployment rate, investment and productivity growth could all take a hit.

Key points

  • Key points:
  • Leaving aside the question of whether increases in recent years in the minimum wage have had a net effect on job creation, the measure hurts some SMEs and low-skilled workers.
  • We need to remember, however, that the level reached by the minimum wage and the environment in which the most recent hikes took place may mean the effects on vulnerable groups are not linear.
  • Moreover, the Government's proposal to raise the minimum wage by a further 3.6% arises in a context of uncertainty about how demand will behave given the increase in COVID-19 infections and the rising costs of power and fuel.
  • We need to ask ourselves what we should do so that the adverse impact on certain groups, companies and industries does not hold back long-term growth.

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