The rise will be retroactive from September 1st 2021, so that workers who receive the minimum wage will see it reflected in the next payroll.
The agreement was finalised at 9pm Thursday night, when the Ministry of Labor reported in a statement that the minimum wage would rise by 1.6 percent. This means unfreezing the SMI, which had been set at €950 since January 1st, 2020.
The rise of €15 however, is lower than the rate of inflation, which so far exceeds three percent, meaning that those on minimum wage have already lost purchasing power.
The increase is in the middle of the range that the government’s committee of experts recommended for 2021.
Although the amount of €965 was finally agreed upon by both the government and the unions, the pact was held up throughout the day on Thursday because unions demanded that the government also specify future increases in 2022 and 2023.
Earlier on Thursday general secretary of Workers’ Commissions (CCOO), Unai Sordo, said that the government should commit to increasing the SMI to €1,000 in January 2022 and that there should be another increase in January 2023.
The statement issued by the Ministry of Labour only said that this rise means “advancing in the commitment” shared by the government and unions so that the SMI reaches €1,049 euros in 2023, but did not specify when the next increases would be.
“[The agreement] is positive, despite the moderate increase of €15 euros for 2021. The government has taken the average of the proposal of the commission of experts. It’s less than we expected, but we consider that the position of the Executive to increase the minimum wage is on the right track,” Mariano Hoya, deputy secretary of union policy at Unión General de Trabajadores (UGT) said.
The employers’ associations are not part of the agreement and rejected any increase outright. Antonio Garamendi, president of the Confederación Española de Organizaciones Empresariales (CEOE), insisted that raising the SMI will cause “less employment” and “more underground economy.” He also criticised the plan for more increases in the next few years.
The rise in the minimum wage has caused issues within the government coalition in recent months. Both Prime Minister Sánchez and Deputy Prime Minister Calviño opted to freeze SMI, while Deputy Prime Minister Díaz was in favour of increasing it.