Salaries begin to recover purchasing power after the largest increase in 15 years

Salaries are finally taking off. And like never before. You have to go back to 2008 to see a greater increase. Workers are beginning to gain purchasing power, but it is still clearly insufficient to recover what has been lost since the price crisis broke out. The strong increase of more than 3.3% that the payrolls of the more than 9.2 million employees covered by a collective agreement have experienced does not compensate for the strong devaluation they have suffered in the last three years, according to data published up to August. this Friday by the Ministry of Labor.

Yes, so far in 2023, workers have gained almost one point of purchasing power. Their salaries have risen by 3.38%, the largest increase in the last 15 years, while inflation stands at 2.6%. But only last year the rise in the CPI made such a dent in the pockets of Spaniards that it suddenly took away almost 5.5 points of purchasing power. And we must also add the slightly more than a point and a half lost in 2021. That is, today and despite this historic increase, workers who are covered by an agreement have a loss of purchasing capacity of more than 6 points. And for those who are not lucky enough to be protected under this umbrella the cut will presumably be greater.

The agreement signed last May by the unions and employers (AENC) is largely behind this rise in wages. What’s more, since then the signing of agreements has skyrocketed – practically as many have been signed in these eight months as in all of 2022: almost 3,000 – and even the 700 that have been signed this year, which are a minority, have achieved increases of 4 .25%, even higher than the level recommended by social agents.

Specifically, this agreement urges companies to make salary increases of 4% in 2023 and 3% for both 2024 and 2025, with a salary review clause that, in the event of deviation from inflation, could imply additional increases of up to 1% for each of the years of the agreement (2023-2025).

Workers who have some type of shielding of their salaries from fluctuations in prices are also taking off. Thus, the agreements that include a review clause affect 2.18 million workers of the slightly more than 9.28 million protected by the agreements registered until August, the equivalent of 23.5% of the total, an amount well above of the 1.7 million covered by this fine print a year ago.

Labor costs increase

However, the majority of employees (almost three out of four) lack these clauses in their agreements to avoid losses of purchasing power, a level far removed from those three quarters who were protected against inflation in 2008.

But this increase in salaries, in addition to the AENC, is due to the 8% increase that the minimum wage experienced this year, which also drives up the rest of the salaries, as well as the sharp rise in social contributions. For this reason, the cost per hour worked increased by 6.5% in the second quarter compared to the same period in 2022, its largest increase in three years, according to data published this Friday by the INE. And companies have already been enduring strong labor increases for seven consecutive quarters.

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