The gap between the communities with the highest and lowest salaries grows by 15%: in Madrid they earn 749 euros more than in Extremadura

Salaries have experienced growth in recent years, but this has not been uniform across all autonomous communities. In fact, the disparity in average salaries between regions has increased by 15% since 2021. The Community of Madrid and Extremadura remain at opposite ends of this heterogeneous reality, with only two communities escaping the decline in purchasing power experienced by workers over the past two years.

According to the Adecco Employment Opportunities and Satisfaction Monitor published recently, the average salary increased by 5.4% last year compared to 2021, reaching its highest level in the historical series at 1,920 euros gross per month. The report highlights that there have been consistent year-on-year increases in average salaries across all autonomous communities for the past eleven quarters, indicating a recovery process that began in 2021 after the pandemic.

In the past two years, salaries have increased in all communities, albeit with significant variations. While the Balearic Islands and the Community of Madrid have seen average salary increases of 7.7% and 6.7% respectively since 2021, Extremadura and the Canary Islands have seen increases of just over 3%, less than half of the former. This disparity in salary increases has widened the gap between the highest and lowest average remuneration by 15%, with Madrid and Extremadura being most affected.

In Madrid, the average salary reached 2,282 euros per month in 2023, which is 749 euros higher than in Extremadura, where the average amount stood at 1,533 euros. Besides Madrid, only three other regions exceed the national average salary – the Basque Country, Navarra, and Catalonia – where the amounts reached between 2,056 and 2,282 euros, representing a 4.6% to 6.2% increase compared to 2021.

The four leading communities maintain their positions, although the distance between them varies. The report states that Navarra has managed to surpass Catalonia, and Madrid has also outperformed the Basque Country in terms of average salary growth.

At the opposite end of the spectrum, there have been no changes. Extremadura continues to have the lowest average salary in 2023, with the Canary Islands just above that level as the second lowest. In the Canary Islands, salaries increased by 4% last year to reach 1,630 euros per month, followed by the Region of Murcia at 1,674 euros after a growth rate of 5.9%.

Despite the increase in salaries, purchasing power has not seen a corresponding boost over the past two years. On the contrary, the purchasing capacity of Spaniards has decreased by 2.6% since 2021 due to inflation, resulting in a loss of 610 euros per year. The decline in purchasing power was primarily concentrated in 2022 when prices rose by 8.4%, an unprecedented annual rate in history. While there has been some recovery in the third and fourth quarters, with a 0.2% and 1.5% increase respectively, the purchasing power of the average salary in 2023 remains lower than the peak reached in 2009, with an 8.8% decrease.

The uneven increase in salaries across communities has occurred alongside varying degrees of price increases. After adjusting for inflation, fifteen regions witnessed a reduction in purchasing power in 2023 compared to 2021. The most affected were Asturias, Galicia, and the Basque Country, with declines of 5%, 4.8%, and 4.6% respectively. This translates to a decrease of more than 1,000 euros in purchasing capacity compared to 2021.

In contrast, only residents in the Balearic Islands and the Canary Islands experienced an increase in purchasing capacity, with growth rates of 3.1% and 2.1% respectively. In the Balearic Islands, workers had an average of 674 euros more in annual earnings at their disposal, while in the Canary Islands, the figure stood at 399 euros.