Millions of workers across Spain will notice significant changes to their salaries starting January 2025, due to the introduction of the Mecanismo de Equidad Intergeneracional (MEI), affecting payrolls nationwide. Both CaixaBank and Banco Santander have issued urgent communications to their clients about this adjustment which could result in lower net salaries.
The MEI is a new measure implemented to finance Spain's pension system, which has been under pressure from the growing costs associated with aging demographics and increased retirements. This mechanism acts as an additional contribution to the Social Security system. Currently, for 2024, the MEI contribution stands at 0.7% of the contribution base, split between employers who take on 0.58% and employees covering 0.12%.
Starting January 2025, this percentage is set to rise to 0.8%. Employers will be responsible for 0.67%, with 0.13% deducted from employees' salaries. Although most of this increase is assigned to employers, the small portion deducted from workers could lead to noticeable pay reductions, particularly for those without prior salary reviews.
CaixaBank has been proactive about this change, highlighting, "A partir de enero de 2025, millones de trabajadores en España verán un cambio significativo en sus nóminas" (From January 2025, millions of workers in Spain will see significant changes to their payslips). It is important for employees to understand how this new system operates and the potential impacts on their monthly income.
The MEI serves as part of broader reforms aimed at ensuring the sustainability of the pension system as reflected by the growing number of retirees from the baby boomer generation. Banco Santander has noted, "El Mecanismo de Equidad Intergeneracional es una cotización adicional de la Seguridad Social que afecta a todos los empleados" (The Intergenerational Equity Mechanism is an additional contribution to social security affecting all employees). It's imperative for all Spanish workers, whether with these banks or others, to be informed about this imminent change.
This adjustment affects everyone, not just clients of CaixaBank and Banco Santander. Workers are encouraged to consult their contracts and discuss potential impacts with their employers, especially if no salary adjustments are anticipated before January.
Despite the unfavorable news for some, there are positive developments on the horizon. Notably, Yolanda Díaz, Spain's Second Deputy Prime Minister and Minister of Labor, has expressed intentions to facilitate discussions around reducing the standard workweek to 37.5 hours by 2025. This measure, initially starting with a gradual decline to 38.5 hours by 2024, is perceived as part of the government’s broader effort to improve work-life balance.
Looking forward, the MEI is projected to rise annually, reaching 1.2% by 2029, with year-by-year increments. This is part of the Spanish government’s strategy to reevaluate pension funding mechanisms, ensuring the financial health of the system moving forward. Given these changes and developments, it's clear 2025 will be marked by significant labor reforms and notable shifts within workplaces across Spain.
