The runaway growth of inflation continues to take its toll on Spanish families. It has been three years since many of them have had to wait for the January slope for their budget to be strangled. 25% of households do not make ends meet at the end of the month, according to the Bank of Spain. However, 2023 will be the first in which many Spaniards recover some purchasing power. At last. It will be just a little. But for the first time since 2021, salaries will rise above inflation.
So far this year, the average salary increase agreed upon in the 3,385 collective agreements signed until November is 3.49% (compared to the 3.2% at which inflation stood last month). And next year the trend will continue, since the 1,041 agreements negotiated this year for 2024 include an average increase of 4.14%, as explained by Mari Cruz Vicente, confederal secretary of Trade Union Action of CC OO. “If inflation closes at 3.6%, as Funcas predicts, it will mean an improvement in the purchasing power of salaries. It will not be necessary to resort to the one-point salary guarantee clause agreed in the V Agreement for Employment and Collective Bargaining (AENC) last May,” the union leader advances.
It is a slight respite for the Spaniards after salaries fell almost eight points of purchasing power between 2021 and 2022 when they had not yet recovered from the shock of the Great Recession. Although it will be very difficult for workers to recover this important bite in their salaries, Vicente admits, “some can be recovered, but not everything,” he maintains.
Large companies seem willing to compensate their workers next year. According to the Total Remuneration survey carried out annually by Mercer, last September the companies consulted spoke of an increase of 4% in 2024, higher than this year. Although, as other surveys have been carried out, the organizations’ claims have been adjusted. The companies surveyed by Randstad stated that the increase they planned to apply to their payrolls in 2024 ranged between 2% and 3.5%. And the study that PeopleMatters just closed this month shows an average increase of 3.85% (lower than the 4.51% applied in 2023), slightly above the inflation estimated by Funcas, of 3.5%.
More than six out of ten companies carry out payroll reviews in the first quarter of the year, says Victoria Gismera, director of PeopleMatters, the remaining 40% have not yet decided on their remuneration policy. Gismera believes that it is positive that an increasing number of organizations are concerned about placing their increases in line with those of the market or above (just as companies that keep their salaries frozen are already anecdotal). Of course, there are companies that distance themselves from the rest and reward their employees with increases of 7%, 10% and even 14%, says this expert; but they are the least.
Ikea is one of these cases. He wanted to distance himself from his sector. Getting ahead, as recognized by the human resources director of a Swedish multinational in Spain, Virginia Garrido. And that is why it has negotiated an average increase of 6.68% for 2024. This increase is the result of that provided for in the department store sector agreement (4.5%), to which Ikea is subject, as well as the general improvement that the company is going to practice in the supplements with which it remunerates the different functions, whose increases will range from 10% for kitchen salespeople to 100% for cashiers or 133% for logistics personnel, depending on each position, he explains. Graceful. The company will invest 2.7 million in addition to the increase foreseen in the agreement.
Mercadona also stands out among the companies that are going to increase the salaries of their workers the most next year: up to 6%, depending on the company’s profit objectives. And it is that “the retail “It has had some very good years after the pandemic, so it is fair that it is one of the sectors that is making the most effort to recover salaries,” Garrido maintains. It must be taken into account that in commerce and distribution the jobs are hard, with very demanding schedules and dedication and with salaries that are not very high, Mari Cruz Vicente adds, hence companies are aware that in order to hire a staff that is scarce and to retain them they need to raise salaries. “In addition, they are making more profits than ever. Spanish companies have increased their profits by 53% compared to before the pandemic. They have to make an effort to improve the conditions of their staff,” he adds.
Eight in ten companies are reviewing their compensation strategy for next year to improve talent retention and attraction, according to Mercer. The strategy involves increasingly personalizing remuneration packages. “Inflation is important, but it is not what determines the salary increase,” says Juan Vicente Martínez, Human Capital consulting leader at Mercer, “personal performance is what makes the difference” (according to a company report). weight is 95% compared to 52% for prices). This is recognized by Jose Amoretti, director of human resources at ING for Spain and Portugal, who will increase salaries by 4% in 2024, after a 5% increase this year. His approach is one of total compensation; He takes into account fixed and variable remuneration and also the benefits offered by the bank, he explains.
In a general context of loss of purchasing power, benefits are increasingly valued by staff, especially those linked to flexibility and work-life balance measures, which are encouraging employees to move to other organizations and are proving key to retaining the talent. One in three employees would give up salary increases in exchange for the company increasing their flexibility, indicates a Mercer study.
For sample ING. The benefits most valued by its workers are: the 100% flexible work model, health insurance (which includes family psychological therapy) and the employee mortgage.
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