Mallorca food: Minimum wage rise will lead to higher prices

The minimum wage rise will most affect farming business with little mechanised activity. | Gemma Andreu

Andrew EdePalma15/02/2023 09:40

The increase to the minimum wage, which was formally approved by the Spanish government on Tuesday, will result in higher prices of local food products. This is the view of the Balearic agricultural sector, which points out that the cost of labour for some agricultural companies can be 50% of total production cost. The increase in energy prices has already led to higher prices for consumers and the minimum wage rise will now add to food inflation.

The manager of the Asaja agricultural businesses association in the Balearics, Joan Simonet, says that the increase "will, as always, mean that the consumer ends up paying". This can only be avoided, he argues, through a system of social security bonuses that offset the increase in production costs.

He feels that the rise in the minimum wage also represents a real risk of job losses, although he believes that farmers will first pass on the extra cost to consumers rather than lose workers. "Fifty per cent of the production cost is labour, unless companies are highly mechanised. If wages rise by 8%, costs will rise by 4%, which means that products are more expensive. Intermediaries will do the same to maintain their profit margins and so consumers will ultimately find that prices have risen by 8%."

* Over the past forty years, social security records show that the number of agricultural workers in the Balearics has dwindled from 20,700 to 2,400, a loss of almost 90%. Nationally, there has been a loss of getting on for one million workers - some 60% fewer.