November 27, 2020

The lowest wages rose by 11% and the gender gap was cut in 2019 after the large increase in the SMI to 900 euros

The big increase in the interprofessional minimum wage (SMI) of 2019 up to 900 euros per month It seems that it begins to show its effects. Last year, the average salaries that increased the most were those of the workers who earned the least, up to 11%, compared to the 1.95% increase in the average gross salary of all wage earners. In the absence of more precise data to measure these repercussions, it is observed that there are numerous groups among the recipients of the SMI – such as women and young people – that registered significant average salary increases last year, according to the salary data of the Population Survey Activa (EPA) published by the INE this Friday.

Commerce, cleaning and hospitality: the sectors with the most workers benefited by the SMI of 900 euros

Commerce, cleaning and hospitality: the sectors with the most workers benefited by the SMI of 900 euros

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The figures released this morning correspond to the average gross wages of the workers. It should be remembered that this indicator is affected by two important effects: the rise or fall in wages, but also the change in the composition of employment. For example, we could observe a 1% rise in the average salary in a situation in which workers have not actually seen their payrolls increase, but in which there are more employees in better-paid sectors than in others with lower salaries. “In crises it is something that can be seen by the departure of temporary workers, who tend to have lower salaries than permanent ones: the average salary may increase, but not due to a real salary increase,” explains Carlos Martín Urriza, head of the Cabinet economic from CCOO.

A more adjusted indicator to check the evolution of wages is the Labor Price Index (IPT), but it is not yet updated to 2019. Like the CPI regarding prices, the IPT selects a kind of “basket” of jobs to measure the average gross hourly wage for performing the same job over time.

Prudently and waiting for more data, Martín Urriza considers that “it seems clear that there is an effect” of the increase in the SMI on the figures published today by the EPA, but also “of the AENC collective bargaining agreement that agreed to a minimum wage of 1,000 euros“in its period of validity.” We cannot see how much the composition effect is, but there are sufficiently significant increases “in groups with a high incidence of low wages that” allow us to think that we already see an effect, “considers the economist.

The average gross salary in 2019 reached 1,982.3 euros per month, 1.9% compared to 2018. An interesting piece of data to observe how the lowest salaries have increased more is that provided by the salary deciles. In other words, all wage earners are ordered according to the amount of the monthly salary received and then divided into 10 equal groups, that is, with 10% of the workers in each group. In decile 1 are the workers who earn the least and in decile 10 those with the highest wages.

What does this data tell us? The average increase was located at 1.9%, but it was mainly achieved by the great push from lower wages. The increase in the average salary of decile 1 (the wage earners who earn the least) was 11% in 2019. That of the second decile, 9.91%. The data for the last decile, workers with higher wages, fell: it fell by 1.54%.

It is also noteworthy that average wages rose more in the sectors with the lowest wages. The largest increase occurred in the average salary of domestic workers, which climbed 16%, to 872.45 euros per month. Domestic workers remain, by far, the lowest average wage workers in Spain. The next most relevant increase occurred in the salary of real estate activities, from 17% to 1,833.57 euros per month. In “agriculture, livestock, forestry and fishing” the increase was 7%, to 1,336.05 euros per month on average, and in the hotel business – the second sector with the lowest salaries – the average remuneration climbed 6% (to 1,312.14 euros per month).

The difference between men and women is reduced

In recent years, the average salary was increasing, but in the last two years it was observed that the jump was greater in the average salary of men than in that of women, so that the gender gap was widening in this variable. Among the reasons that the INE alleges as the cause of these salary differences by sex are that women work more “part-time, with temporary contracts and in less paid branches of activity” than men. Looking at the aforementioned deciles, women are much more numerous in the low-wage deciles, while they are the majority in the high-wage deciles.

In 2019, on the other hand, the gap between the average salary earned by men (2,173.62 euros per month) and women (1,773.31 euros per month) has been cut: it falls by two and a half points, from 21% to 18% ,4%. This percentage represents what what men charge on average is not charged by women.

When observing the data by deciles and by sex, it is observed that both the lowest salaries of men and women obtained a significant average increase last year, but the average salary of employees hardly reflects it (+ 0.6%) while it is more visible in the average salary of all wage earners (+ 3.8%). This is partly explained by the fact that women are much more numerous in low-wage jobs than men, most of whom are in higher-paying echelons.

The average salary in part-time employment, mostly held by women, increased last year by 8%, compared to the 1.4% increase in the average salary of full-time workers.

A higher increase for youth

Another interesting derivative of the data is the evolution of the average salary by age group. The average salary that rose the most was that of young people: 8.52% in the case of 16 and 24-year-old wage earners, up to 1,184.65 euros per month, and 3.5% among 25-year-old workers at 34 years, up to 1,671.54 euros per month. A long way off is the increase in the average salary of the rest of the groups: -0.24% for workers between 35 and 44 years old; 0.76% between 45 and 54 years; and 4.57% for employees over 55 years of age.

Again, the average salary of all young people did not experience the same increase. If we look at the deciles, the lowest salaries of young people are the ones that grew the most: the average remuneration of decile 1 of workers up to 24 years increased by 9.58% (up to 522.05 euros per month) and 12% the average salary of workers between 25 and 35 years of age with lower salaries (up to the average of 560.48 euros per month). On the other hand, the average salary of young people with the highest salaries, who are in decile 10, fell: -13.5% among salaried employees up to 24 years old and 5% among those between 25 and 35 years old. .

Workers with temporary contracts tend to have lower wages, as indicated by Martín Urriza. Excessive temporary employment is a problem in the Spanish labor market, but it especially affects young people. In 2019, the average salary of workers with a temporary contract increased much more than those of permanent contracts: 6% in the first case, to 1,479.38 euros per month, and 0.9% in the second, reaching the average of 2,162.53 euros per month.


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