Spain’s Minimum Wage Hike May Have Backfired, Says Bank of Spain

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British expats
Minimum wage may have cost Spain 180,000 jobs.

Spain’s minimum wage hike may have backfired and cost the country 180,000 jobs, the Bank of Spain said today. The hike impacted young people the most but barely workers over the age of 45. However, young workers on the minimum wage now face reduced chances of getting a permanent contract and have probably seen their hours per month cut back.

THE Bank estimates that the 22 per cent rise in the minimum interprofessional wage (SMI) launched by the current government caused the labour market to slow down.

“Following the increase, the employment of low-wage workers grew more slowly,” the bank said on June 8.

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“A larger adverse impact on the job losses of older workers and a sharper reduction in hours worked and in job creation for younger workers,” it added.

The bank speculates that there may be two reasons for this. It could be that workers with lower wages lost their jobs more often after the increase, but since there was no increase in the number of lay-offs the bank believes what happened was that employers were disincentivised to create higher paying jobs.

“Estimating these effects for particular groups based on individual data would indicate that both margins could have contributed to the net destruction of contracts observed,” he added.


The hike impacted young people the most but barely workers over the age of 45. However, young workers on the minimum wage now face reduced chances of getting a permanent contract and have probably seen their hours per month cut back.


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Deirdre Tynan is an award-winning journalist who enjoys bringing the best in news reporting to Spain’s largest English-language newspaper, Euro Weekly News. She has previously worked at The Mirror, Ireland on Sunday and for news agencies, media outlets and international organisations in America, Europe and Asia. A huge fan of British politics and newspapers, Deirdre is equally fascinated by the political scene in Madrid and Sevilla. She moved to Spain in 2018 and is based in Jaen.

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