The lowest wages rise by 0.3% for every 1% increase in the minimum wage.

The academic literature on the impact of minimum wage increases includes a new study that addresses the situation at the European level. This comprehensive study by Eurofound (a tripartite advisory agency representing EU governments, employers, and unions) entitled "Impact of National Minimum Wages on Collective Bargaining and the Compensation of Low-Wage Workers" reveals two main conclusions. The first quantifies that the lowest real wages grew by 0.31% for every 1% increase in a country's statutory minimum wage (SMI). In the case of minimum wages agreed upon in collective agreements, this increase was somewhat smaller, at 0.22%.

As a second finding, the authors of this analysis assert that, despite the fears expressed by employers in some European countries, the statutory increase in minimum wages does not weaken collective bargaining.

The first of these conclusions is the result of an econometric study carried out using wage data from the food and beverage industry and care sectors in Germany, France, Spain, Portugal, Romania, and Slovenia between 2006 and 2021. However, they note that the results are applicable to subsequent years, in which significant increases in minimum wages have been recorded in most European countries.

The study also suggests that, in addition to the aforementioned impact on real wages at the lowest levels of the pay scale, the impact of the increase in the minimum wage "extends beyond the lowest earners and also affects employees with higher salaries." Consequently, the authors point out that minimum wage increases also play a role in reducing wage inequalities in the country.

However, the data clearly show that the improvements are greater for the lower wage brackets, especially when the minimum wage increases in nominal terms of at least 15% are made. It is in these cases, according to the study, that "measurable and statistically significant impacts" are most noticeable.

In Spain it did not harm employment

In the section dedicated to Spain, the study particularly highlights the first major increase in the minimum wage in 2019, when this income increased by 22%, rising from €736 per month to €900 in 14 installments. That year, they add, generated a significant drop in wage inequality in Spain, which was the largest among the Twenty-Seven. Since 2018, the Spanish interprofessional minimum wage has risen by 61% to the current gross monthly minimum wage of €1,184 in fourteen installments.

The authors also add that job creation in Spain has not been harmed by increases in the minimum wage. As proof of this, they point out that both in 2018 (before the first major increase in the minimum wage) and in 2019, in a context of recovery that began in 2014 after the financial crisis, job creation was similar, around 3.2%.

They also cite "more sophisticated econometric analyses" for the Spanish case that also fail to identify negative effects of the sharp rise in the minimum wage in 2019 on employment levels—as is the case with the Airef study in 2021 or by economist Luis Cárdenas del Rey—or others that detect very modest impacts, of around 28,000 net fewer jobs, such as that calculated by Sara de la Rica, professor of economics and director of ISEAK.

No evidence that it damages collective autonomy

Eurofound economists have also conducted a qualitative analysis of how minimum wage increases impact labor relations and, in particular, the negotiation of collective agreements. Despite complaints from several social partners—the study mentions German and Spanish employers—the authors of the analysis assert that "no conclusive evidence has been found to suggest that [the statutory increase in the minimum wage] significantly relegates collective bargaining." Thus, they deny that constant wage increases reduce the scope of agreements or substantially impact their duration or renewal.

However, they do find an indirect effect on the salary structure included in these agreements: it consists of a greater number of salary supplements and certain bonuses intended to ensure that real salaries remain above the minimum wage, when the base salary does not grow as rapidly.

However, the authors do acknowledge that the signing of new collective bargaining agreements is less frequent in countries with a high minimum wage compared to the average wage. They also found that a government's increase in the minimum wage is more decisive when it comes to renewing collective bargaining agreements than other factors such as rising inflation or other macroeconomic indicators like the unemployment rate.

However, an increase in inflation is decisive in generating further increases in minimum wages. However, the authors of the report also advise that governments and social partners take into account other issues, such as the evolution of wages agreed upon in collective bargaining agreements. Currently, the Spanish Ministry of Labor is negotiating with employers and unions to transpose the minimum wage directive (which should be transposed by November 2024) to design a certain automatic increase in this minimum wage each year. In these discussions, the government has encountered opposition from business leaders.