The labor market in Spain didn't effect by an increase in the minimum wage

The historic increase in the minimum wage in Spain in 2019 by 22% has led to a drop in employment of only around 1%. This is significantly less than analysts expected. This was stated in the latest report by the Spanish central bank. Its report thus provides further support for the growing view of economists that rising minimum wages do not automatically jeopardize jobs, contrary to popular belief in the 1990s. The 22% increase in the minimum wage two years ago by the socialist government of Prime Minister Pedro Sánchez was one of the steepest in industrialized economies at the time. At the same time, Spain had high unemployment and a labor market known for low wages. Many therefore feared that such an increase in the minimum wage would have a dramatic effect on employment. However, according to a report published by the central bank this week, reported by Reuters, the increase in the minimum wage led to a reduction in the number of low-wage jobs by only 0.6 to 1.1% in that year. This represents approximately 90,000 to 145,000 positions. The report does not indicate whether the jobs were directly canceled, relocated or merely created as a result of the changes. Comparing 2019 and 2020 is problematic, as in 2020 Spain, like other countries in the world, was hit by a new coronavirus pandemic. Overall, however, unemployment in the pandemic year rose only slightly, from 14.1% in 2019 to 16.1% by the end of 2020. After a sharp increase in the minimum wage two years ago, the government of Pedro Sánchez approved its further growth in 2020 by 5.5%. After this increase, the minimum wage in Spain reaches the level of 1108 euros per month. This increase did not occur after the onset of the pandemic, but growth should continue in the coming years. Within the European Union, the Spanish minimum wage is around half the ranking. The highest is in Luxembourg, where it reaches 2202 euros per month. The lowest is in Bulgaria, at 332 euros.