- The minimum wage is now €735.90 a month (€24.53 a day) and applies from 1 January.
- The 4% rise means roughly €28 more a month for each full-time employee and feeds through to collective agreements and contributions.
- It is worth reviewing pay scales, household contracts and contribution bases to make sure none falls below the minimum.
On 30 December 2017 the Official State Gazette published Royal Decree 1077/2017 of 29 December, which sets the minimum interprofessional wage (SMI) for 2018. The figure is €735.90 a month, or €24.53 a day for those paid by the day, effective from 1 January. Over the usual fourteen payments, the annual minimum comes to €10,302.60.
In 2017 the minimum wage was €707.70 a month, so the increase is 4%. It follows the sharp rise of 2017, when the minimum went from €655.20 to €707.70. For many companies, and for households that employ domestic staff, the new amount means updating payroll from the first month of the year.
What the minimum wage is
The SMI is the lowest pay the law guarantees to any employee for a full legal working week, regardless of sector or applicable agreement. The Government approves it each year after consulting unions and employers’ organisations, taking into account inflation, productivity and the general economic situation. Those who work fewer hours are paid a proportional share.
Its role is that of a floor: no contract or agreement can set pay below it. If a pay scale falls short, the legal minimum prevails and the company must make up the difference from 1 January, even if the agreement has not yet been renegotiated. Bear in mind that the minimum wage is compared with total annual pay, and that this comparison has its own rules on which items are included; your labour adviser can clarify each case.
Effects on agreements and contributions
The impact is not limited to those who earn exactly the minimum. Collective agreements with entry-level categories close to that figure may become outdated, and the gaps between neighbouring pay levels narrow. In addition, the minimum contribution base for work accidents and occupational diseases is calculated from the SMI, so social security costs adjust too.
It is worth distinguishing the SMI from the IPREM, the indicator used by many grants, subsidies and benefit eligibility tests. That role has belonged to the IPREM for years, and this rule does not move it. The rise in the minimum wage therefore mainly affects payroll and labour costs, not public aid automatically. In small companies the effect is felt most in labour-intensive activities with pay close to the minimum, such as retail, hospitality or domestic service, where labour cost weighs more heavily on the income statement.
What to review
In the company, a first check is to sort payroll by amount and confirm that no category, part-time contract or paid internship falls below the proportional minimum. It can also help to estimate the annual cost of the increase, including contributions, and compare it with the staff budget.
In the household, those who employ domestic help should review the hourly rate, which the royal decree also updates: €5.76 an hour for domestic work paid by the hour. For casual and seasonal workers with engagements of up to 120 days, the minimum is €34.85 per day worked. Your labour adviser can confirm each case. Once the review is done, it is advisable to keep a record of the check and the amounts applied, in case the update later has to be justified to the Labour Inspectorate or to an employee.
A good start to the working year is making sure the first January payslip respects the minimum.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
