The report 'OECD Employment Outlook 2026' reveals that real wages in Spain have not yet recovered to pre-pandemic levels, with a 2% drop since 2021. The organization points to low productivity and inflation as major burdens.
The Organisation for Economic Co-operation and Development (OECD) has published its report 'OECD Employment Outlook 2026', and the diagnosis for Spain is bittersweet. While the labour market shows signs of improvement in employment and temporary contracts, real wages — once inflation is accounted for — remain 2% below the level of the first quarter of 2021. In other words, the purchasing power of Spanish workers is now lower than before prices surged.
According to the OECD, Spain ranks among the three countries with the largest drop in real incomes since the pandemic, only behind Italy and Australia. Most European partners have already regained lost ground, but Spain lags behind. The organization predicts that real wages will barely rise in 2026 and 2027, hindered by low productivity and new inflationary pressures.
The minimum wage rises, but the rest stagnates
The interprofessional minimum wage (SMI) has seen significant increases in recent years. In 2026 it reached 1,221 euros per month, a 3.1% increase from the previous year, and has accumulated an improvement of over 60% since 2018. This measure protects workers at the lower end of the wage scale, but the vast majority of employees do not benefit from these increases. The result is wage compression: a worker with years of experience may earn only slightly more than a new hire.
According to the National Institute of Statistics (INE), the labour cost per worker rose by 4.9% in the first quarter of 2026, but with inflation around 3%, the real improvement is minimal. The OECD warns that, with productivity stagnant, business margins do not allow for widespread increases, leaving a large part of the workforce without a tangible improvement in purchasing power.
Real wages are not taking off because productivity has not improved for a decade and inflation erodes any nominal increase.
Declining productivity and high unemployment: the other burdens
The OECD points to productivity as the underlying culprit. Spain has had a decade of stagnant labour efficiency, which limits wage increases without cutting business margins. Additionally, recent inflation adds pressure: every euro that wages rise loses value if prices increase at nearly the same rate. The organization insists that only a boost to productivity can break this cycle, recommending policies for training, digitalisation, and improving business competitiveness.
Unemployment remains a national wound. Spain is the second country in the OECD with the highest unemployment rate, double the average. In May, unemployment fell to 10.3%, levels not seen since 2007, but geographic inequality is enormous: the difference between the region with the highest and lowest unemployment reaches 15.5 points, well above the OECD average. This gap reflects a two-speed labour market and hinders the equal distribution of employment improvements across households.
The report also highlights a positive statistic: thanks to the labour reform of 2022, the proportion of companies that dismiss employees during economic fluctuations has decreased from 8.9% at the end of 2019 to 4.3% in the first quarter of 2026, and temporary contracts have fallen from 24.8% to 14.8%.
What it means for the average worker
For the average employee, the message is clear: purchasing power will not recover in the short term. Nominal wage increases are eroded by inflation, and productivity does not allow for real improvements. Collective agreements and wage reviews will be key to trying to gain some ground. The OECD recommends that workers pay attention to collective negotiations and seek training to improve their individual productivity.
The report does not foresee specific assistance from the Government, but suggests that training and digitalisation policies are the way to break the stagnation. In the meantime, wage compression and geographic inequality will continue to be structural challenges. Spain needs a boost to productivity for real wages to grow sustainably again.
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