Friday, March 1, 2024

The Government has approved an increase in the minimum wage to 1,134 euros per month

The Council of Ministers approved this Tuesday the increase of the interprofessional minimum wage (SMI) for 2024. This corresponds to an increase of 5%, so that it goes from 1,080 gross euros per month in 14 payments to 1,134 euros. This development, which will be implemented retroactively from January 1 of this year, responds to the agreement reached in mid-January with the Ministry of Labor, CCOO, and UGT. It should be noted that this is an agreement made without the business organizations CEOE and Cepyme, which decided not to support it because their requests to index SMI in public contracts and set bonuses for the rural sector were not fulfilled. The CEOE also did not participate in the increase in SMI for 2022 and 2021 agreed by the Government of Pedro Sánchez with the CCOO and UGT, although it agreed with them in the increase in 2020, when it was raised from 900 to 950 euros per month.

With this increase in the minimum wage, more than 2.5 million people will benefit. This translates into one in seven employees, of which a third are women and young people. So it can be said that the typical profile of the recipient of this minimum income corresponds to a woman who is young, has a temporary contract, and works in sectors such as commerce, hospitality, or the agri-food sector. “Now Spain is a better country,” emphasized the second vice president and Minister of Labor, Yolanda Díaz. Although it insists on continuing to increase the salary in our country to reduce the gap in relation to the European salary average,.

Likewise, in the press conference held after the Council of Ministers, Díaz defended that “Spain currently has a distance of 19 points from the average salaries in Europe, not only the minimum wage, but the wages of the workers in Spain.”

“We will continue to raise SMI.”

The second vice president also clarified that the government will continue to increase the SMI, as well as other salaries, through “one of the most effective measures for this, the reduction of the working day without reducing the salary.” In this sense, he explained that “not reducing the salary every week is what will allow us to continue to increase, pushing the salary in our country.”

On the other hand, Díaz took the opportunity to criticize the “injustices” that exist in Spain in terms of income and once again criticized the salary differences that occur between managers and employees. “There are extreme cases where the distance is 200 times, which shows that we have an important debate in democratic terms in our country about the compensation of boards of directors and, of course, banking, and the distances that affect the income of employees,” he pointed out.

The truth is that since the road began to increase the SMI, it has been revalued by 54% (which is 398 euros more). A factor, according to data from the Ministry directed by Yolanda Díaz, contributed to the reduction of wage poverty by 25%. At the beginning of 2023, the government reached an agreement with the unions only to increase the SMI by 8% during the same year. Now, its commitment to this legislature is to establish by law that this minimum income must always be equal to 60% of the average salary. Because, as the minister emphasized, “earning 398 euros per month more than domestic economies is a big step in a country with a moderate salary income.”

The Treasury has increased the exempt minimum of personal income tax due to the increase in SMI

Likewise, as a result of the increase in SMI this year, the Executive also approved the increase in the minimum exemption of Personal Income Tax (IRPF) in 2024. It goes from 15,000 euros to 15,876 euros, a figure that corresponds to the annual SMI, as explained by the first vice president of the government and Minister of Finance, María Jesús Montero. With this measure, the SMI is not subject to the restriction because the exempt minimum is only the annual amount of the minimum wage. Therefore, the affected taxpayers are prevented from bearing the withholding or payment of the account.

In addition, with the aim of avoiding the “jump error,” the initiative is extended to taxpayers with a net income from work of up to 19,747.5 euros per year. For these taxpayers, the withholding or payment account will be reduced. In this way, salaries close to the established SMI will also be affected by the increase in the reduction available for this purpose, because otherwise “a clear error of jumping” will occur and they will have to pay more high constraints.

World Nation News Desk
World Nation News Desk
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