For yet another year, ICSA Group, an integral part of the AEBYS network, has released its study on Salary Evolution.
The current edition, conducted in association with EADA Business School, investigates how compensations have shifted since 2007, acknowledged as the starting year of the major financial crisis.
Furthermore, the study examines the average remuneration of the 3 main job categories (executives, middle managers, and employees) and their relationship with the cost of living and the growth of the national GDP.
The average gross salary for Spanish workers in 2022 stood at 24,269 euros, middle managers received 44,778 euros, and executives earned 85,531 euros. This represents an increase of 3.71%, 5.99%, and 3.4% respectively when compared to 2021.
However, the recorded inflation largely nullified the salary improvements seen.
Insights from the Report Presentation
During the report presentation, Ernesto Poveda, President of the ICSA Group, stated, “In the 16 editions of the report, this is the first time all categories have increased their remuneration, although rampant inflation somewhat dulls these improvements. We cannot assume the high rise of inflation in a single exercise”. Regarding the remuneration model, Poveda urges a move “away from linear salary increases and towards flexible increases”.
Dr. Jordi Assens, a professor at EADA Business School, acknowledges that “opting for a wage increase at the same rate as inflation, far from relieving the loss of purchasing power, would likely provoke an inflationary spiral”.
Both Poveda and Assens concur that the only reasonable and sustainable way to achieve better compensation is by “linking it to productivity”.
Industry and Banking Sectors Lead in Highest Paying Jobs
The industrial sector, followed by the financial sector, leads the salaries for employees. Trade and tourism, two of the sectors most affected by the pandemic, remain in the category of the least paid in the country.
Madrid Boasts the Highest Salaries Across all Categories
As the data shows, Madrid leads the pack with an average compensation of 25,747 euros, followed by Catalonia with 24,815 euros, and Navarra with 24,627 euros.
Ernesto Poveda’s Thoughts on the Study’s Findings
In the current economic and social ecosystem where we are fully immersed, where globalisation plays a significant role, traditional solutions can no longer address the salary issues we are facing.
The resurgence of inflation we’re experiencing, as a result of unexpected and disruptive changes in the global socio-economic ecosystem, the war in Ukraine, supply shortages, and aggressive competition between the two main blocks of the world GDP, China, and the United States, all contribute to an environment dominated by uncertainty.
This is leading to the emergence of opportunistic or populist responses that try to take advantage of the complex situation.
In light of a significant increase in inflation not seen in decades, it’s unwise to apply old solutions of linear increments on salaries, as their application would have a multiplier effect that, far from solving the situation of loss of purchasing power, would encourage its continuity, entering, in fact, an inflationary spiral with unpredictable consequences.
For this reason, I consider it vital to reach an agreement among social agents (employers and unions) to create a new framework for updating wage incomes, switching to a model that encourages productivity and increases the competitiveness of organisations, thus facilitating the strengthening of companies and their survival.
Specifically, this framework should reflect three critical aspects:
- Firstly, the impossibility of recurrently updating salaries according to inflation in a single exercise.
- Secondly, the advisability of phasing the recovery of purchasing power over several exercises.
- And thirdly, those linear increments are minimised and complemented with remuneration models aimed at motivation and, above all, establishing wages that correlate with the increase in productivity of organisations, their stability, and sustainable growth.
Indeed, in the face of new circumstances, we need new solutions. The continuity alternative is certainly not advisable.