Sustainable pay rises in Spain: productivity, profit-sharing and training

When Miriam González Durántez launched Democracia 21 in Madrid, one of the problems on her list was how Spain can raise wages in a way that lasts, and she asked for innovative proposals to do it. We mapped the whole speech in our overview of Democracia 21's proposals. This is the radical-centre answer, and it draws on two of the books behind this programme: Mario Draghi's report on European competitiveness, for productivity and skills, and Mariana Mazzucato's Mission Economy, for the idea that people who help create value should share in the rewards.

Start with what the Banco de España says. Its 2023 annual report states that over the long run productivity growth is the main driver of real wages, and across advanced economies between 1990 and 2019 wages rose fastest where productivity rose fastest. The same chapter adds a second finding: in most of those countries productivity grew faster than average real wages, and Spain was among the countries with the widest gap. Spanish workers have lost out twice: productivity has grown slowly, and less of what it did gain has reached their pay. We explained the productivity side in what productivity is and why Spain grows without it.

The bank's 2025 report has better news. Spain's accumulated productivity gap with the rest of the euro area narrowed from 12% in 2013 to an estimated 8% in 2025. It also warns that the pickup may fade without further progress on the things that drive productivity, and it names regulatory complexity and low investment in research and innovation. The OECD's 2026 Employment Outlook, as reported by the newspaper Ara in July, found Spanish real wages up 2% over the year to the first quarter of 2026 and still about 2% lower than five years earlier, with no recovery expected in 2026 or 2027.

The floor has moved a long way. Royal Decree 126/2026 sets the minimum wage at €1,221 a month in fourteen payments, 3.1% more than in 2025, and keeps the goal of bringing it to 60% of the average wage. Above the floor, pay is set firm by firm and sector by sector, and it moves with what each firm can afford.

A share of the gain, paid where it's earned

The left is right that workers should share in the gains they help create. When a firm produces more per hour because its staff learned a new system or reorganised a line, part of that should show up in their pay. The market-liberal tradition is right about the discipline: a rise lasts when the firm can pay it next year as well, and that depends on productivity, on investment and on firms being able to grow. A rise written into base pay in a good year stays there in a bad one.

Profit-sharing satisfies both. Spain already has a version, and it's narrow. Article 42.3.f of the income tax law exempts up to €12,000 a year in shares of the employer, given free or below market price, as long as the offer is made on the same terms to all staff; the ceiling is €50,000 in startups covered by Law 28/2022. That works for companies with shares that are easy to value and hand out. A family firm with twenty employees, the kind of firm most Spanish businesses are, has no real use for it.

So we propose a cash version. A voluntary profit-sharing bonus, agreed in a company or collective agreement, with the same formula for the whole workforce, paid only out of profit above a set threshold after the year closes, and taxed favourably up to a ceiling. It goes up when the firm does well and down when it doesn't, and it never consolidates into base pay. France shows what a push towards small firms looks like. Participation is compulsory there from 50 employees, and the 2023 value-sharing law, which turned the agreement employers and unions signed on 10 February 2023 into law, asks firms with 11 to 49 staff that make a net profit of at least 1% of turnover for three years running to set up a scheme, as a five-year experiment. We'd keep Spain's scheme voluntary and let the tax incentive do the work, and borrow France's test of a profit record so the bonus only appears where there's something to share.

A training account that travels with the worker

Output per hour depends on skills. Draghi's report says Europe needs a fundamentally new approach to them, with a right for every worker to education and retraining so they can move into new roles as their companies adopt technology. Only 37% of EU adults took part in training in 2016, the report notes, and the rate has hardly moved since.

Spanish training money runs through companies. Under Law 30/2015 each firm has a yearly training credit, worked out from the vocational training contribution it paid the year before and a percentage by firm size set in the budget, which it claims as a rebate on social security contributions. The same law created a Cuenta de Formación linked to each worker's social security number, to record the training they receive over their career. It's a record and holds no money.

Turn it into a wallet. In June 2022 the EU Council recommended individual learning accounts: a personal budget the holder fully owns whoever paid in, an annual amount that builds up over time, entitlements that stay with the person through changes of job or status, top-ups from employers, and a public registry of eligible courses. Spain can build that on the account it already has. The state puts in a yearly amount, weighted towards workers with fewer qualifications. Firms can move part of their training credit into their own staff's accounts, and workers can pay part of their profit-sharing bonus in, with extra tax relief. Someone who leaves takes it with them. It's the logic of the single account for the self-employed we have already argued for.

What ties the pieces together is a number everyone can see. A firm that uses the tax-favoured bonus files a short note each year with its accounts: value added per hour worked, training hours per employee and the bonus paid. Workers and their representatives get a shared fact to bargain over, and the state gets the data to check whether the incentive raises productivity or simply relabels pay. Review the scheme after five years and keep what the numbers support.

Where public money is large, Mazzucato's argument applies directly. In her 2024 essay Policy with a purpose she lists profit sharing and the reinvestment of profits in R&D among the conditions governments can attach to public funding, and cites the US CHIPS Act, which asks recipients of $150 million or more for workforce development plans and a share of profits above an agreed threshold. Spanish firms that receive large public grants should offer the profit-sharing bonus and pay into their staff's training accounts. The first steps are cheap: a paragraph in the income tax law, and money in an account the BOE created eleven years ago.