• The Ministry of Labour confirms that the increase will be approved this Tuesday in the Council of Ministers

• The absent employers’ association ‘takes center stage’ at the event: it has not supported the increases since 2020

• The new SMI will be retroactive to January 1 and remains exempt from taxation

The Second Vice President and Minister of Labour, Yolanda Díaz, alongside union representatives Unai Sordo (CCOO) and Pepe Álvarez (UGT), led the signing of the agreement for the 3.1% increase in the minimum interprofessional wage (SMI) for 2026 this Monday. The event was presided over by the Prime Minister, Pedro Sánchez, and while it celebrated the new wage progress among the most precarious workers, the spotlight was on the absence of the employers’ association, to whom the Prime Minister dedicated a stern message for “bowing out” of the agreement.

Today’s formality is the preliminary step before sending the royal decree to the Council of Ministers, to which it will be submitted this Tuesday, fulfilling the agenda planned by Labour, which aimed to have the increase confirmed between the middle and end of this month.

“We have achieved something that seemed impossible, which is that compared to the PP’s management model that took 10 years and 11 months to emerge from the crisis, we managed to recover all employment in less than 15 months despite the 11-point drop in GDP when it seemed like an impossible mission,” Díaz said during her review of the Government’s management. Nevertheless, the second vice president recalled that the progress “is still not enough; much more needs to be done to reduce inequality and poverty.”

Díaz made no explicit mention of the employers’ association, which last took part in the agreement in 2020. The Prime Minister did, centering his speech on a critique of CEOE’s attitude: “The employers’ association is missing, and I believe their absence also speaks volumes about where the fruits of economic growth should go,” Sánchez noted, recalling that “they are indeed present when the Ibex hits record highs, when the economy grows well above the European average, or when corporate profits break records year after year.” In this context, he urged “let no one be fooled because good numbers do not fall from the sky; they are possible thanks to the daily work of millions of people and also of the individuals themselves.”

The primary focus of Sánchez’s speech was on the CEOE led by Antonio Garamendi: “It is the employers’ association that decides to bow out of this agreement, unlike many companies in this country that understand that workers are their greatest asset and deserve a decent wage,” and he urged business representatives to sit down with the unions to agree on an improvement in wage conditions: “Pay more,” he urged them, asking them to cast aside the message that it is impossible to raise wages when profits are growing.

Before Sánchez, the unions spoke. “Today is the culmination of a 65% increase in the SMI in just over half a decade,” Sordo highlighted, recalling that the narratives of job destruction and blows to the self-employed “have collapsed.” In a message countering the business owners’ narrative, the leader of CCOO stressed that “the economy’s productivity can be improved with wage increases; in fact, it incentivizes it.”

After highlighting the benefits it has brought to the social sectors and regions most affected by precarious work (women and youth, services and agricultural sectors, and the autonomous communities of the Canary Islands, Andalusia, Extremadura, and Murcia), Sordo urged addressing other variables, especially to close the wage gap, such as “part-time work, which is entirely feminized in Spain,” and to seek through collective bargaining an end to the discontent of around 10 million workers for whom the economic improvement remains invisible.

“If the employers’ association were here, they would have to explain why the SMI is eating up a large portion of the wages in collective bargaining agreements”

In the same vein, Pepe Álvarez celebrated the new SMI increase due to its “top-level importance” and denied that the SMI increase hinders productivity. The general secretary of UGT also sent a message to the employers’ association: “If they were here, they would have to explain why the SMI is eating up a large portion of the wages in collective bargaining agreements, and it is not because the minimum wage is rising significantly” but because average wages are falling behind and are “very far” from reaching the European average. Furthermore, he recalled that the most difficult situations “are found in agreements where there are fewer union organizations and fewer possibilities to fight to improve them,” he remarked.

Nonetheless, he warned the CEOE that more topics will be addressed that the employers’ association would prefer not to have on the table, such as the cost of dismissal. “Very important commitments remain to be developed, which seem to be completed but are not,” such as the absorption and compensation rules that have been under evaluation for three years: “Now it must be done so that the SMI is not eaten up by personal bonuses. No one would think that a hazard pay or seniority bonus is going to be swallowed by the minimum wage increase.”

THE KEYS TO THE SMI IMPROVEMENT

The increase, which will be retroactive to January 1 and will remain exempt from personal income tax (IRPF), will represent a monthly rise of 37 euros (518 euros per year) annually and will bring the total gross amount to 1,221 euros across 14 payments.

The revaluation, which follows the proposal of the committee of experts, will benefit 2,470,000 workers, who will generally see their salary move to 17,094 gross euros per year (40.70 gross euros per day). In the case of casual and seasonal workers, the SMI is set per legal working day in the activity at 57.82 euros, and domestic workers cannot be paid less than 9.55 euros per hour worked.

As in previous years, the update of the SMI—the eighth since the Government entered Moncloa in 2018—does not affect the structure or the amount of professional salaries that workers were already receiving when, as a whole and in annual terms, they are higher than the SMI. However, salaries established in private contracts or pacts that are lower as a whole and in annual terms than the 2026 SMI must be modified by the necessary amount to ensure they reach it, in accordance with the current absorption and compensation rules.

As part of their pact to raise the 2026 SMI, the Government and the unions have agreed to reform the absorption and compensation rules so that the SMI increase is not diluted by altering the bonuses (“accounting tricks,” Díaz defined them during her speech) that workers can receive (hazard pay, night shifts); however, this reform will be carried out in a separate Royal Decree, taking advantage of the transposition into Spanish law of the European directive on minimum wages. According to Labour, issuing two separate Royal Decrees—one with the SMI increase and another that will include the reform of the compensation rules—prevents delaying the minimum wage increase over time.

Source: elEconomista