The Labour Market In Spain
Spain has a population of more than 47 million. In 2020, the registered population in Spain grew for the fourth consecutive year due to an increase in immigration, which compensated for a natural population decrease. The fall in the number of Spanish nationals was accompanied by a rise in the number of foreign nationals, both from EU and non-EU countries, mainly South America and Africa.
The Spanish economy is the fourth largest in the Euro area, fifth largest in the European Union and fourteenth in the world in terms of nominal gross domestic product (GDP).
Spain’s business structure is highly fragmented into small units. In fact, eight out of ten companies in Spain have fewer than three employees. The largest percentages of small businesses occur in the service sector, especially retail and wholesale. In contrast, the bulk of large companies is concentrated in the industrial sector.
Moreover, a significant number of large companies are major international players in sectors related to infrastructure development, renewable energy, tourism, banking, insurance, textiles, medtech, aerospace, agrifoods and automotive.
As of July 2022, roughly 20 million people were in employment, giving Spain one of the highest unemployment rates within the EU.
Collective Labour Agreements In Spain
Collective bargaining in Spain takes place at national, industry and company level, with a national agreement generally providing a framework for lower-level bargaining. The overall level of coverage of collective bargaining is high (80% of employees) and major legal changes introduced in 2012 haven’t changed this.
Figures produced by the ministry of labour show that the vast majority of agreements (80%) were signed at company level and cover about 7.5% the total workforce, covered by collective bargaining. At the other end of the scale, there are less than 100 national industry deals (1.7% of all agreements) that cover a third of the total number of employees. And, in the middle, provincial agreements account for an eighth of the agreements registered (12.5%) but cover a third (33.7%) of employees.
Most other workers were covered by agreements signed at regional level, which made up 5% of the agreements registered - but almost a quarter (22.8%) of employees. These proportions have remained broadly constant in recent years.
The general pattern has been that large and medium sized companies have their own agreements, sometimes at plant level, while smaller employers have been covered by provincial agreements for their industry. In addition, some industries, like construction, banking and chemicals have national agreements. Collective agreements are binding on all employers and employees in the areas that they cover, provided they have been agreed by unions and employers or employers’ associations with the right to sign them.
Wage Setting In Spain
Recommendations for wage increases agreed between unions and employers at national level do not have any binding force. However, figures on pay increases agreed by lower-level negotiators indicate that they are generally observed.
The Spanish labour market is flexible, with wages set through collective bargaining agreements between employers and unions. However, the economic crisis has led to a decline in union membership and a corresponding increase in non-standard work arrangements such as temporary contracts and self-employment. This has put downward pressure on wages, particularly for low-skilled workers.
In July 2022, the Spanish tax office reported an accumulated average gross income rise in large companies of 3.5% since January 2022 - clearly higher than the 1% increase in 2021 and in contrast to the virtual freezing of average income since 2010. The increase of salaries in an inflationary environment in the middle of the previous year is the explanation for the change that is being experienced in this respect.
Compensation Surveys In Spain
Compensation survey results in Spain provide insights into jobs and salaries. Pay market data helps employers determine and design their compensation strategy.
Finding fair and competitive compensation for employees in Spain typically relies on this compensation survey market data, as labour agreements are more frequently created at the individual level rather than the collective. For employers to get insights into quantifiable aspects of compensation such as base salaries, job tenure based increase percentages, starting salaries, allowances and benefits, holiday entitlements and working hours - compensation surveys are the key.
The market for compensation surveys in Spain is relatively mature, there are the Anglo-American vendors, as well as a few local vendors such as CEINSA with its CENTRO DE INVESTIGACIÓN SALARIAL and its employer sourced data.
The gradar Solution
For companies looking to gain more clarity over their compensation, combining information from labour agreements and market data - supplemented by an internal analysis - makes a lot of sense. gradar is the tool by which to do it.
With our foundation in point-factor based job evaluation, alongside our comprehensive compensation benchmarking functionality, we allow you to establish fair, transparent pay structures under one roof in one consolidated system.
Market data from third-party compensation survey providers can be uploaded to your gradar account - or even purchased as an out-of-the-box feature. Just purchase your gradar licence and pick the data sets you want - it’s that simple!
Data for Base Pay and Target Total Compensation is then displayed on your job profiles and as a detailed report. The system uses the benchmark job code from our job matching module to display job specific benchmark data.
This is the most affordable way to perform a salary comparison against market rates worldwide - and structure effective remuneration systems that set salaries at the most appropriate level.