Spain's Economic Growth Shadowed by Rising Poverty and Lagging Wage Increases

Spain's economy is showing robust growth, with projections for 2025 raised to 2.9%, yet significant social challenges remain. The Spanish government announced the inclusion of indicators on inequality and poverty in its macroeconomic framework for the first time, aiming to address widening disparities in wealth and living standards. According to Manuel Bretón, president of Cáritas Española, there are over 3 million empty homes across Spain, highlighting housing as a key driver of poverty and social exclusion. Alarmingly, 13.6% of the population experienced persistent poverty in 2024, an increase of over two percentage points from the previous year.

Despite this economic expansion, salary growth is not keeping pace. Spain is one of the fastest-growing economies in the European Union, yet its average gross salary stands at €2,808 monthly—considerably lower than in northern European countries. Growth is fueled largely by migrant labor and reactivation of previously inactive workers, but productivity has stagnated, particularly in sectors driving the expansion, which tend to be low-paying. Real wages have decreased by 0.5% between 2021 and 2024, eroding purchasing power amid rising essential goods prices. The Spanish labor market is preparing for new negotiations to update collective wage agreements, with union proposals calling for wage increases that consider local housing costs. This new macroeconomic approach signals an effort to incorporate social equity into economic planning moving forward.