Spain's Ministry of Labour has ruled out any extraordinary revision of the minimum interprofessional wage (SMI) before the end of the year, just four months after Deputy Prime Minister and Labour Minister Yolanda Díaz threatened a second increase in 2026 if inflation kept climbing because of the war in Iran.
Joaquín Pérez Rey, Secretary of State for Labour, closed the door on Tuesday during a press conference presenting July's registered unemployment and Social Security affiliation figures. He said the circumstances for that extraordinary six-monthly review do not exist.
Pérez Rey said he shares unions' concern about preventing workers from losing purchasing power because of inflation, but he argued the recent uptick is not high enough relative to the SMI increase already approved for 2026 to justify a new revision.
Díaz's April warning
Díaz had struck a firmer tone in April, saying that having just raised the minimum wage, the government would review it again in six months if the law allowed and circumstances required it. A further increase would have added pressure on Spanish businesses, most of them small companies already facing higher costs from the war and a fresh rise in labor costs. Díaz said at the time this did not worry her much, arguing that Spanish companies have brutal margins to absorb a wage increase despite the crisis.
In the end, the increase has been shelved because the rise in inflation, though real, does not reach the threshold needed to justify a second revision.
Talks on 2027 wage set to begin after summer
The government will now focus its efforts on negotiating the 2027 minimum wage increase, which Pérez Rey said will start after the summer. He said the evolution of prices will obviously have to be taken into account in the next SMI negotiation for 2027.
As a result, the lowest wages will remain frozen for the rest of this year while prices keep rising.
Inflation climbs to 3.5% in July
According to the latest data from Spain's National Statistics Institute (INE), inflation rose in July to 3.5%, driven by fuel and electricity, one tenth of a point higher than the March figure that Díaz cited when she first raised the possibility of an extraordinary SMI increase. Rising fuel and electricity costs are also dragging up the price of other household goods, continuing to erode Spaniards' purchasing power.
Where the minimum wage stands now
The SMI currently stands at 1,221 euros gross per month over 14 payments, after rising 3.1% this year with the backing of unions but not employers. Business associations withdrew from the wage agreement for the sixth consecutive year in a row, calculating that even before the increase the SMI was already 4.9% above what it should be. Employers argue the SMI is now oversized and that successive increases are penalizing employment.
Since Pedro Sánchez became Prime Minister in 2018, the SMI has risen 66%. It stood at 735.9 euros a month when he took office.
