The Spanish minimum wage has increased by 1,5% on the 1st of January.

The amount, bitterly denounced by unions as “useless”, is 0,5% more than was expected, and, indeed, announced two weeks ago. Meanwhile, state pensions have gone up by an average of 8,6%.

633,30 euros a month but “promises broken”

This means that the minimum monthly wage for a full time contract is now 633.30€.

The amount means President Zapatero is now in danger of breaking one of his key election promises, in which he promised the minimum wage would be 800€ a month by 2012.

To reach that figure, the minimum wage would have had to increase by 8% annually. Last year it went up just 4%. However, Minister for the Economy Elena Salgada promised this morning that the target was still achievable – however, this means it will have to increase by 13% for the next two years, a figure derided by most economists.

Toni Ferrer of the UGT union says the raise is a serious mistake for Zapatero’s government. “1,8% of Spain’s workers (237.000 people) are on minimum wage and affected by this decision. This is a political decision taken to project the image of “austerity”, which, as always, affects the poorest of society the most”.

However, it’s still more than government advisers wanted. The Ministry of Work officially suggested just 1%. Hacienda, the tax office, suggested 0%. The Council of Ministers ignored both suggestions and hinted at 3,5%, later increased to 4%.

Minimum and average salary gap increases

Unions have pointed out that the raise is less than the increase in average salary across Spain.

This year the minimum salary is just 40% of the average salary – in 2007 the minimum salary was 41% of the average salary, leaving the poorest workers 1% worse off than in 2007.

The EU has set a figure of 60%.

CCOO, another union, said that the increase just meant less money being pumped back into the economy. “If the poorest people are earning even less now than last year, they will find it more difficult to spend money and restart our economy” said their spokesman.

However, economists have pointed out that with Spain expected to announce negative inflation for 2009 in a few days time the low figure should not be as harmful as expected. (Via Original Source)

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