The government has decided to negotiate solely with the UGT and CCOO unions on the 2026 minimum wage (SMI) increase, after realizing it cannot count on the CEOE and Cepyme employers' associations. Experts propose a 3.1% rise if it remains exempt from IRPF tax, raising it to 1,221 euros monthly in 14 payments, above 60% of the average salary. This deal aims to cover inflation and prevent companies from offsetting the increase through salary supplements.
Government gives up on employers and will agree with unions on SMI increase without IRPF taxation
The Spanish government confirmed on Tuesday, during a meeting with social agents, that it will not secure agreement from the CEOE and Cepyme employers' associations for the 2026 minimum wage (SMI) increase. Instead, it will negotiate only with the UGT and CCOO unions. Labor State Secretary Joaquín Pérez-Rey did not specify the government's stance after receiving the Ministry of Labor's expert commission report, a 48-page document.
The experts recommend a 3.1% increase if the SMI remains exempt from IRPF tax, raising it to 1,221 euros monthly in 14 payments, or 4.7% if taxation begins, up to 1,240 euros. Sources from the Ministry of Finance confirm they will expand the IRPF deduction for SMI recipients from 340 to 600 euros, allowing workers to fully benefit from the rise. This would share the burden between the public sector and companies, and the SMI is likely to stay exempt, placing it above 60% of the average salary.
Spain is the only EU country using 60% of the average salary as the SMI reference, aligning with the European Social Charter, though the pending EU directive on minimum wages recommends 60% of the median salary or 50% of the average, as in Ireland, France, Germany, Greece, or Bulgaria. To strictly meet 60%, a 1.8% rise would suffice if exempt, but experts advocate 3.1% to cover October 2025's 3.1% inflation and preserve purchasing power. As the report states: «The first of the estimates presented records, for the first time, an SMI growth below price growth [...] This means that [...] it would not maintain the purchasing power of the same».
The government will soon reconvene the negotiation table to finalize the increase. Simultaneously, it will prepare a regulation to ban companies from offsetting or absorbing the SMI rise with salary supplements for the first time, a practice allowed under the Workers' Statute. This union demand will be handled separately—possibly as a law—to avoid delaying the SMI decree's approval before January 1, 2026. Employers argue this change requires legislation, as it alters the current framework. For instance, a company could raise a base salary from 1,050 euros to 1,134 euros but cut a 200-euro supplement to 116 euros, neutralizing the worker's gain.
