‘Wage developments 2007-2017’ by EADA and ICSA Grupo
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espite three years of economic growth and job creation, wages remain stagnant. This is the conclusion of the Wage Development 2007-2017 report by EADA and the consultancy ICSA Grupo, which was compiled using salary data from more than 80,000 employed workers in Spain. Their findings show that in 2017 Spanish workers received a gross average salary of 22,793 euros, middle-level managers received 40,435 euros and top-level managers received 79,097 euros. Compared to 2016, workers saw a 0.21% decrease in their earnings whereas middle and top managers saw a 2.72% and 0.28% increase respectively. However, the report also states that workers and top managers have consequently lost purchasing power due to inflation sitting at 1.5%.
Over the last decade wage increases have been insignificant in all job categories. Spanish workers have seen pay increases of 16.36% (3205 euros), middle managers have received an increase of 16.18% (5632 euros) and top managers have seen an increase of 15.13% (10,392 euros).
The causes of wage stagnation
Wages have stagnated due to various factors. According to Jordi Costa, professor of Labour Relations, Negotiation and Compensation Policy at EADA, one of the main causes is that “wage increases are still linked to the Consumer Price Index (CPI) instead of being based on the productivity index and company results”.
Another reason lies in the fact that “many companies are still opting out of variable remuneration and work-life balance measures permitted by Spanish fiscal legislation”. Ernesto Poveda, CEO of ICSA Grupo, adds that “now is the time to reform the remuneration system. Companies should be replacing the fixed remuneration models for variable ones which support a worker’s personal and professional development.” Among his recommendations are flexible working schedules to allow for work-life balance and training. He also recommends that companies should motivate teams by asking them which tasks they like doing the most or by setting project based objectives which help workers to develop.“These are all measures which help to retain talent, which is one of the biggest challenges facing companies today".
Costa adds that “the consequences of the Labour reform paved the way for company redundancies and salary devaluation.” Poveda also highlights the fact that, “salary devaluation means that new recruits now receive lower salaries than the people who were hired before them.”
Wage development by sector
By sector of activity, banks and insurance companies pay the highest salaries in all of the job categories whereas tourism and commerce pay the lowest. This is surprising given that the tourist and commerce sectors contribute the most to GDP. According to the report, bank and insurance company workers earn an average of 38% more than their peers in tourism and commerce. At top level, the difference between the two sectors is 22%.
Poveda notes that “in 2014 the pay gap between top-level management in banking and commerce was 6.7%. This percentage has now increased by more than 15 percent".
The CEO of ICSA Grupo also highlights a trend which has appeared in all sectors and in all job categories which is “a strong demand for candidates with a clear understanding of market trends and new technology.” In his opinion, companies are looking for highly qualified candidates who can optimise company investments, adapt to continuous change and the current working environment of uncertainty and volatility.
Wage development by Autonomous Community
Workers in Navarra have been named the highest paid workers for another year running. The average gross annual salary in Navarra is 25,659 euros, which is 12.6% more than the national average and 36.9% more than the lowest paid workers in Extremadura.
Top-level managers, on the other hand, receive the highest salaries in Madrid. They are paid 83,903 euros a year which is 6.1% higher than the national average. Catalonia is in second place with salaries of 80,916 euros. According to Jordi Costa, this is due to the fact that “there are more multinationals in Madrid and more SME’s in Catalonia.” He also refers to the privileged tax situation in Navarra whereby “its fiscal agreement allows it to spend more money on salaries.”
