The Government of Spain approved a new increase in the national minimum wage, which rises by 37 euros per month and will continue to be exempt from personal income tax, equivalent to the IRS in Portugal. The decision has retroactive effect to January 2026 and will be formalized by the Council of Ministers, without the need for parliamentary approval. The new value increases to R$1,221 monthly paid 14 times a year.
The update is the result of an agreement with the unions and is part of the strategy of the executive led by Pedro Sánchez to set the minimum wage at 60% of the country’s average salary, a goal that has guided the revisions since 2018.
The decision and the new value
According to the Lusa news agency, the increase in the minimum wage is a prerogative of the Spanish Government, after consultation with social partners, and consensus between unions and employers’ associations is not required.
According to the same source, the updated value maintains the exemption from personal income tax, ensuring that the workers covered do not pay this tax on the amount of the minimum wage.
Bosses disagree, unions sign
The news agency writes that employers’ associations spoke out against the now formalized increase, criticizing the terms of the agreement and the way in which the negotiations took place. Business representatives warned of the accumulated impact of successive increases since 2018, highlighting effects on small and medium-sized companies.
Since the coming to power of a left-wing coalition led by Pedro Sánchez, in 2018, the minimum wage in Spain has increased by 66%, from 735.6 euros registered that year. The same source states that the objective assumed by the Government was to bring the minimum wage closer to 60% of the national average wage, aligning it with international recommendations on minimum income.
Government arguments
At the signing of the agreement with the CCOO and UGT unions, in Madrid, Pedro Sánchez stated that these updates represent a matter of “social justice, dignification of work” and also of “economic intelligence”.
According to the same source, the Prime Minister maintained that the growth of the Spanish economy, above the European average and that of large countries in the Union, contradicts “the predictions of disaster” associated with increases of this size.
Impact on employment and inequality
Around 2.5 million people receive the minimum wage in Spain, the majority of whom are women employed in the services sector, according to data cited by the news agency.
At the end of 2025, the number of people in work reached 22,463,300, the highest figure ever in the country, while the unemployment rate fell to 9.93% in the last quarter of the year, falling below 10% for the first time since the beginning of 2008.
Spain in the European context
The Spanish economy grew 2.8% last year. Still, Spain continues to have the second highest unemployment rate in the European Union, behind Finland, according to the most recent official European data.
According to Eurostat, cited by , the minimum wage in the European Union varies between 2,704 euros in Luxembourg and 620 euros in Bulgaria. In Portugal, the amount is set at 920 euros paid 14 times a year, which corresponds to 1,073 euros when spread over 12 months for statistical purposes.
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