Real wages, that is, once adjusted for inflation to determine their true purchasing power, have only grown 2.76% in the last three decades, from 32,157 euros per year in 1994 (with the value of the euro in 2024) to 33,044 euros last year, according to the latest data from the OECD.
This represents the fourth worst performance among the 38 countries in this Organization, where on average wages have grown by 30.8% in the same period, eleven times more. Only Mexico, Japan, and Italy have experienced a worse evolution than ours: in the first two, wages have fallen by 7.2% and 0.9% in real terms, respectively, while in Italy, they have only increased by 0.5%.
In the two largest economies in the EU, the increases are much more significant: in Germany, they have grown by 24.1% in the period, while in France, they have risen by 28.4%, but they are also stronger in southern Mediterranean economies like Portugal, with an advance of 21.2%, or Greece, by 22.5%, and in developing countries like Colombia (31%), Costa Rica (70.5%), or Chile (88.5%). However, the highest wage increases are led by Eastern European countries, former Soviet republics, which have undergone a conversion and upgrade process: in Lithuania, they have increased by 290.3%; in Latvia, by 245.2%; in Estonia, by 236.2%, and in Slovakia, by 133%, among others.
When analyzing the evolution of real wages in Spain compared to the OECD average, in dollars at purchasing power parity (PPP), it is observed that wages in Spain have only been above the average in the 90s and in the first two years after the financial crisis outbreak in 2008, due to the boost of higher wages. Throughout the rest of the period, they have always been below, and in recent years, the gap with the average has increased, now standing 11% below, equivalent to 6,583 dollars at PPP per year.
According to José Emilio Boscá and Javier Ferri, researchers at Fedea, the evolution varies depending on the wage level: "In the two years following the financial crisis, where we observed a sharp increase in average real wages, wages increased monotonically from the third decile onwards, with workers receiving higher wages seeing the most significant increases (almost 15%). In contrast, workers in the first two deciles experienced declines in their real wages, with those in the first decile experiencing a 3% decrease. Between 2009 and 2019 (the year before the COVID pandemic), real wages fell in all deciles except the first two. Thus, while real wages decreased by almost 5% for the second-highest wage decile, they increased by 5% for the lowest wage decile. In the pandemic years and beyond, until 2023, wages fell in all deciles except the three lowest. Once again, the ninth decile was the most affected, with cumulative declines exceeding 3%."
"In terms of distribution, since 2009 and after the pandemic, lower deciles have experienced some relative improvements, while higher deciles have suffered greater declines in purchasing power. These results highlight a social perception that the expansion phases have not translated into better labor incomes for the majority of workers," they point out.
The big question behind these data is why wages in Spain have remained virtually stagnant for the past 30 years. "The quick answer is that it has to do with the lack of growth in productivity: remuneration per employee has shown little advancement in real terms between 1995 and 2024," says Miguel Cardoso, Chief Economist for Spain at BBVA Research, who notes that although the destruction of employment during the global financial crisis increased (due to a composition effect) both remuneration per employee and productivity, "the subsequent recovery has come with a decline and subsequent stagnation - since 2017 - of the same."
"Part of the poor performance has to do with the sectoral composition, as the weight of the industry has decreased from 22% of total employment to 12.5%. In any case, this is a trend in developed economies towards tertiarization. The problem arises from the specialization in low-productivity service activities," he adds.
The reality is that the stagnation of productivity is the major pending issue for the Spanish economy, a point on which up to six economists interviewed by EL MUNDO in the last month agree, including María Jesús Fernández, from Funcas, who argues that "productivity is at the root of everything" and that, as measures have not been taken with the aim of increasing it in the long term, "the standard of living of citizens is unlikely to improve."
The wage increase since 1994, "is a ridiculous growth in 30 years," considers Javier Martínez, a collaborator of EsadeEcPol, who agrees that the clearest and most evident cause is "the stagnation of total factor productivity, which has been stagnant since the 90s, passing through the wage restructuring post-financial crisis, until the arrival of working-age migration during the last ten years covering job vacancies not filled by nationals, which could lead to stagnation in that wage bracket."
"Although the Minimum Interprofessional Wage (SMI) has been raised by more than 50% since 2018, what these increases have done is compress the wage distribution on the left side, when what we are interested in as a country in our labor market is to shift the entire distribution or at least the area close to the median," he points out in conversation with this medium, also referring to the increase in the average rate of Personal Income Tax (IRPF) and social security contributions, as well as the small size of companies.