Spanish Government Proposes 3.1% Minimum Wage Hike to €1221 for 2026
The Spanish government has proposed to unions and employer organizations a 3.1% increase in the national minimum wage for 2026, reaching a gross monthly salary of €1221 (in 14 payments). This adjustment will be retroactive to January 1, 2026, and will benefit about 2.5 million workers. Minimum wage earners will continue to be exempt from personal income tax.
Details of the Proposal
Spain’s current minimum wage is €1184 gross per month (in 14 payments). The government proposes a 3.1% increase, an additional €37 per month, bringing it to €1221, for a total annual sum of €17,094. This increase is at the lower end of the range recommended by an expert committee, which had suggested a 3.1% raise if the tax exemption was maintained, or up to 4.7% (to €1240) if it were to be taxed.
Effective Date and Beneficiaries
Once supported by unions and employers, the increase will be swiftly approved by the Council of Ministers and will apply retroactively to all payrolls from January 1, 2026. Approximately 2.5 million workers earning the minimum wage will directly benefit. This measure aims to keep the minimum wage at 60% of the national average salary.
Tax Policy Arrangements
The Secretary of State for Employment, Joaquín Pérez Rey, confirmed that minimum wage beneficiaries will remain exempt from personal income tax (IRPF). The government, in coordination with the Ministry of Finance, intends to apply a tax-free mechanism to the €1221 amount, likely following a similar structure to previous years, despite the Ministry of Finance’s repeated calls for it to be taxed.
Initial Reactions
The main unions, CCOO and UGT, are expected to approve the proposal next week. The unions had previously called for a 7.5% increase, while employer organizations initially proposed only 1.5%. The Secretary of State for Employment has indicated that employer representatives may also support the 3.1% raise. Representatives from both sides will formally state their positions in the coming days.
Decision Background
The government’s choice of a 3.1% increase is primarily due to its commitment to keeping the minimum wage tax-free. This decision reflects the coordination between the Ministry of Labour and the Ministry of Finance, and it also adheres to the expert committee’s recommendation to ensure that the real income of minimum wage workers is not affected by taxes.
