Spanish minimum wages are applicable regardless of an employee’s age, gender, or contract of employment. Domestic work, casual work, and temporary work are included.
Adjusting the minimum wage takes several factors into account, such as national productivity and employment levels. According to the Spanish Ministry of Employment and Social Security, minimum wages are set daily, monthly, and annually.
In Spain, workers are protected by a variety of legal provisions. Consequently, contracts, working hours, paid leave, and wages are among the many areas of Spanish employment that are highly regulated. Employees can receive monetary or in-kind salaries, but in-kind salaries cannot exceed 30% of the total wage under Spanish labor law. This guide is all about the average salary in Spain and factors affecting the living standard in Spain.
The average salary in Spain
Spanish incomes are lower than many other countries in the EU, with an average of around €27,500. As well as being cheaper than most western European neighbors, the cost of living in Spain is also lower. Full-time employees are permitted to take up to 22 working days (30 calendar days) of paid holidays per year. A total of nine national holidays will be observed in Spain in 2021, in addition to two or three times as many local and regional holidays.
You will be required to pay contributions to the state social security system if you are employed. In addition to accessing public healthcare and 16 weeks of maternity and paternity leave, you will also be entitled to a state pension and unemployment benefits by paying into the system.
Spain pays lips should clearly illustrate the name of the company, the name of the worker, the salary, and any deductions (such as social security contributions, IRPF (tax on income of individuals), and personal income tax. In order to determine the amount of IRPF to deduct from a worker’s pay, the worker must also consider their family circumstances (children and dependents). It is the worker’s responsibility to provide their employers with the required information so that deductions can be calculated correctly.
Why are salaries lower in Spain than in northern Europe?
Several factors contribute to the lower salaries in Spain compared to Northern Europe: As a first point, Spain has a meager cost of living compared to countries like Sweden or Norway.
Against that, we find the country’s unemployment rate (around 20%, with a significant seasonal component) to be relatively high. Labor markets are therefore uncompetitive, resulting in downward pressure on wages (supply exceeds demand).
An hourly wage is strongly correlated with productivity. In the same way, Spain is in the middle regarding productivity, and its wages follow the same pattern. It is costly to hire and pay for labor in terms of social security payments.
The area doesn’t have many large companies. Ninety percent of the companies are micro-SMEs with fewer than 200 employees. It is impossible for them to pay their employees high salaries because they do not generate large profit margins.
Management and directors (who represent very few observations for calculating the average wage) have a much more significant wage gap than the rest of the company workers (who represent the vast majority of words). In some cases, managers earn more than 50,000 euros per year.
Lastly, the country is located close to countries with even lower incomes in the South. In consequence, many foreigners from these countries decide to emigrate to Spain in order to receive a better salary (which is true in comparison to their country, but it lowers the Spanish average because it pays less than the nationals within the Spanish territory).
Factors that affect the living standard in Spain
Cost of housing in Spain
There is a significant difference in property costs throughout Spain. It is relatively more expensive to live in Madrid, Barcelona, and other coastal cities than in rural areas and less popular cities.
Madrid is a popular destination for foreigners looking to rent property in Spain, with an average rent of €660–880 for a one-bedroom apartment and €1055–€1530 for a three-bedroom apartment, depending on your proximity to the city center. A one-bedroom apartment in Barcelona costs between €710 and €890, and a three-bedroom apartment costs between €1105 and 1540. Renting a home in Sevilla, Valencia, and other coastal cities is cheaper.
Barcelona and Madrid are the two most expensive cities in Spain regarding property prices per square meter (a 50 square meter apartment costs between €150,000 and €250,000). Larger family homes can cost as much as €600,000–€700,000 in the more exclusive neighborhoods of both cities.
The prices for ex-pats in Spain near the coast are typically higher than those in other parts of the country, but there are exceptions.
There are four areas in Spain where housing is least expensive: Extremadura, Aragon, Navarre, and Castile-La Mancha. Living costs are highest in Spain on the Balearic Islands, namely Ibiza, Mallorca, and Menorca.
Spain’s utilities and communications costs
While some Spanish utilities are reasonably affordable compared to other European countries, electricity and natural gas are among the most expensive.
The average monthly electric bill is around €113, although air conditioning in the summer and heating in the winter may affect this number. It is possible, however, for temperatures to fall below zero in some regions during the winter months. However, the mild climate tends to keep electricity costs low.
Cost of education in Spain
Taxpayer funding is the primary source of funding for Spanish state schools. Except for books and small donations, foreigners registered as Spanish residents can send their children to Spanish primary schools or secondary schools without paying tuition.
Spanish is the language of instruction, and classes are sometimes taught in the local dialect in Catalonia, the Basque Country, Galicia, and Valencia.
When sending your children to bilingual or private schools in Spain, school fees vary significantly by city and school reputation. However, some schools are partially subsidized and cost between €700 and €800 per year.
Furthermore, there are many international primary and secondary schools in Spain, which range in price from €2,000 to €10,000 or more. In international schools, curriculum models are similar to those in the United States, the United Kingdom, France, and other countries.
FAQs (Frequently Asked Questions)
How expensive is it to live in Spain?
One can understand why prices are relatively low with a lower average salary and a higher unemployment rate than in other European countries. Therefore, as a foreigner, you will find Spain quite affordable.
Is Spain’s healthcare system sound?
Spanish health care is ranked seventh in the world by the World Health Organization due to its single-payer system. In addition to prescription drugs, there are no out-of-pocket costs associated with the system. It is a constitutionally guaranteed right.
What is the cost of living in England versus Spain?
It has always been well known that the cost of living in Spain is much lower than it is in the UK. There is an 18.2% difference in living costs between Spain and the United Kingdom. This is because the average rent in Spain is 33.19% lower than the average rent in Britain.
