In the opening quarter of 2025, wages in Spain surged by 3.8% compared to the previous year, according to data released by the National Institute of Statistics. This significant rise mirrors the escalation observed during the same period last year, reinforcing trends seen in other wage-related statistics: Spanish payrolls are outpacing inflation, currently hovering around 2% annually.

Further supporting this analysis are statistics from the Ministry of Labor's collective agreements, which show an average wage increase of 3.35%, climbing to 4.07% for agreements finalized so far in 2025. This exceeds the path set by unions and employers in 2023. Despite this favorable wage scenario, the inflation shock following Russia's invasion of Ukraine means purchasing power is still struggling to recover, compounded by soaring housing costs not reflected in the Consumer Price Index.

The Quarterly Labor Cost Survey by INE highlights that employers now spend an average of €3,125 in gross monthly costs per worker, a 3.8% increase from the first quarter of 2024. This includes salaries, social security contributions, and non-wage benefits. The key measure of salary cost per worker stands at €2,290, also marking a 3.8% rise from a year earlier.

These figures represent a record for any first quarter since records began. The pace, at 3.8%, aligns closely with the interannual growth seen in the final quarter of 2024—3.6% for labor costs and 3.5% for salaries. Eurostat's labor cost index, released Monday, indicates a 3.6% rise in Spain for the first quarter of 2025, showing a moderation from the 4% to 5.7% growth observed between 2023 and mid-2024, mirroring trends in other Eurozone countries.

The most immediate indicator of wage evolution is collective agreements, wherein negotiated wages rose 3.35% by May. This average stems from 2,517 collective agreements, affecting 804,000 companies and 7.93 million workers, reflecting collective bargaining trends rather than the entire wage landscape. In early 2025, 183 agreements covering 743,000 employees saw a 4.07% increase.

These wage statistics—from INE, Eurostat, and the Ministry of Labor—consistently surpass price growth. The interannual inflation rate was 2.3% in March, examined by the Quarterly Labor Cost Survey, and settled at 2% in May, matching the collective agreement statistics.

The 2023 Employment and Collective Bargaining Agreement (AENC) aimed to address the price crisis, recommending wage increases of 4% in 2023, 3% in 2024, and 3% in 2025. Employers are raising wages above 3% this year, continuing the trend from 2024, while 2023 fell short by half a percentage point.

Thus, wages are rising faster than prices and exceeding the agreements by CEOE, Cepyme, CC OO, and UGT. However, this growth has not yet restored lost purchasing power. A comparison to 2019 reveals a 1% drop, equivalent to a loss of €236 annually, according to Adecco's latest wage analysis with data through the last quarter of the previous year. Looking further back to 2008, the average purchasing power in 2024 is 4.6% lower.

Adecco's findings align with union concerns over insufficient wage growth. Since 2007, prior to the 2008 financial crisis, wages have not gained purchasing power, according to UGT's recent notes on price trends. Additionally, UGT warns of the threat posed by runaway housing costs: "In the first quarter, home sale prices increased 12.2% annually, the highest since 2007. Affordably accessing housing is almost impossible in many areas." UGT calls for this issue to be integrated into wage demands.

CC OO echoes this sentiment: "The Consumer Price Index does not capture the full reality of living costs, excluding the soaring prices of home purchases. This escalation forces working families into greater economic strain, without sufficient public policy response."

As the current AENC concludes in December, negotiations for a new agreement are imminent. While neither employers nor unions are compelled to reach a new deal, the text remains crucial for guiding collective bargaining. Employers may approach these talks cautiously, following successive increases in the minimum wage, now at €1,184 gross monthly over 14 payments. These government-mandated hikes, often exceeding inflation, have taken cues from broader wage trends.

Another factor prompting conservative employer stances is the debate over reducing work hours, which could increase hourly costs. CC OO leader Unai Sordo noted in a recent interview that uncertainty around this issue complicates negotiations. CEOE president Antonio Garamendi argues that cutting work hours might stall wage increases in many agreements.

Given the government's parliamentary fragility and the conservative majority in Congress, the proposed work hour reduction might falter by the time new AENC discussions begin. Whether the debate continues or succeeds, it will undoubtedly affect employer-union dialogues.