The average salary in Spain loses 4% of its purchasing power in 2022 due to inflation

The average salary in Spain It lost 4% of purchasing power in 2022 Despite the salary increase, the increase in consumer prices was higher that year, according to IX Adecco Monitor on Payroll d’Adico Group Institute –Prepared with data from the INE and Eurostat labor cost surveys-. The study indicates that the increase in salaries in Spain last year was the second highest recorded since 2008, reaching 1,822 euros. However, when discounting the price increase in 2022, the average salary records a loss in purchasing power. If compared to 2008 – the year of the financial crisis – the Spanish salary loses 7% in purchasing power. Thus, over the past five years there has been a cumulative decline in the purchasing power of the average wage by 2.5%. This reduction means a loss of approximately €44 per month or €523 per year compared to 2017.

The results of this report give similar results to other statistical sources. For example, the most recent OECD report on wage taxes (Taxation of wages) concludes that The price hike led to a 5.3% drop in real wages of Spanish workers in 2022. Only eight countries out of the 38 club members have suffered a larger bite: Estonia (-10%), Turkey (-8.8%), Netherlands (-8.3%), Greece (-7.4%), Republic of Czech (-7%), Mexico (-6.8%), Lithuania (-6.3%) and Latvia (-6.2%). In the same vein, the statistics on agreements issued by the Ministry of Labor showed a significant contraction of purchasing power by 5.6 points in 2022.

In the breakdown by sector for 2022, the Adecco Group Institute report reveals that in the three main economic activities, manufacturing, construction and services, the average salary has lost purchasing power. The average construction wage suffered the most, with a 5% drop, which translates to roughly €85 less per month or €1,022 per year. It is followed by industry, which saw real wages fall by 4.6%, meaning a cut of €91 per month or €1,088 less per year. The sector least affected was the services sector, which recorded a loss in purchasing power of 3.8%, which translates to €64 less per month or €772 per year.

The cumulative evolution of purchasing power over the period 2017-2022 shows that the industry is the most affected, with a decline of 6.3%, followed by a loss of 4.4% in purchasing power in construction and 1.4% in services. In current euro terms, the loss in purchasing power of industrial wages over the past five years is equivalent to about €125 per month or €1,504 less per year. For its part, the loss of this in construction is equivalent to approximately 74 euros per month or 885 euros per year, while in services it represents a loss of approximately 24 per month and 285 euros per year.

In terms of salary growth, services were also the sector that grew the most in 2022, up 4.3% (0.3 points above the national average), followed by manufacturing (3.4%) and construction (2.9%). The average industrial salary in 2022 was 2,040 euros per month, which is its historical maximum value. Services amounted to 1,790 euros per month, also a cap for the sector, and construction was 1,751 euros, the highest level since 2008.

Differences by company size

In 2022, the salary difference between the largest and smallest companies was around 578 euros per month or 6,939 per year. This gap, expressed in percentage terms, is 37%. However, the gap in average wages between small and large companies is shrinking, reaching 41% in 2021 and reaching 45% in 2017. The study indicates that the average wages of small companies are developing better than the average wages of large companies. Specifically, last year, compared to an average wage of €1,822 per month, the largest companies (with 200 or more employees) paid an average of €2,127 per month to their workers, €305 more than the national average. On the other hand, small firms (1 to 49 employees) averaged €1,549 per month (273 euros below average), and medium firms (50 to 199 employees) earned €1,919 (97 euros above average).

Comparing salaries between full-time and part-time contracts, in 2022 a full-time worker earned an average of €2,095 per month, always in gross terms, compared to €863 per month earned by a part-time employee. Despite this difference, over the past five years (2017-2022), the purchasing power of the average full-time wage has decreased by 4.3%, while the purchasing power of part-time has increased by 2.4%. For full-time employees, the highest average salary was received in the industry, at €2,134 per month, while part-time workers were paid the highest in construction, at €993 per month. On the other hand, the lowest average wage was recorded for full-time workers in construction, at 1,810 euros per month, while the lowest average was for part-time workers in services, at 856 euros per month. Thus, the relationship between average full-time and part-time wages ranges from 1.8 times in construction to 2.5 times in services.

improvement in the service sector

Each economic sector includes different sections of activity. Therefore, the study categorizes the data from the three sectors into 18 activities. Of the 18 divisions of economic activity, only five show an improvement in their purchasing power in the period 2017-2022. All of them belong to the service sector. Specifically, the real estate activity, which is the most increased activity (+5.4%), followed by other services (+3.8%), public administrations (+1.6%), education (+1.2%) and information and communications (+1%). Regarding the increase in wages, the largest increase in average wages was in the hospitality sector, at 28.4%. This department presented a significant decrease in 2020 of 33.5% with the pandemic, which could not be compensated for by an increase of 26.3% in 2021. However, with this successive increase in 2022, it managed to surpass the average salary for 2019, which was 1099 euros per month and amounts to 1186 euros. However, it is still the lowest paying department.

From 2017 to 2022, all autonomous communities lost purchasing power, with Castilla-La Mancha losing the most, with 6.1%, followed by Cantabria, with 5.9%, Asturias, with 5.6%, and La Rioja, with 5.2%. Among the autonomous regions whose average wages lost purchasing power between 3% and 5% are: Castilla y León (-4.9%), Basque Country (-4.7%), Andalusia (-3.6%), Navarra (-3.6%) and the Murcia region (-3.3%). With the purchasing power of the average salary declining less than 2.5% in this period, Extremadura (-2.4%), Community of Madrid (-2.1%), Canary Islands (-1.9%), Balearic Islands (-1.9%), Aragon (- 1.7%), Valencian Community (-1.4%), Galicia (-1.2%), and Catalonia (-0, 4%) as the least affected communities. Only four autonomous communities in 2022 showed an average salary higher than the average for the entire country (€1,822 per month). In order, they are: Community of Madrid (2139 euros per month), Basque Country (2099 euros per month), Navarre (1971 euros per month) and Catalonia (1954 euros per month). In contrast, Extremadura has the lowest average salary (€1,487 per month), followed by the Canary Islands (€1,568 per month).

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