Spain to Pay Living Wage That May Cost $3.3 Billion a Year

(Bloomberg) --

Spain approved what it calls a living minimum wage for low-income households in a bid to help its working poor, a problem aggravated by the coronavirus crisis.

The subsidy is expected to reach 850,000 households - an estimated 2.3 million people in Spain -- and cost the government 3 billion euros ($3.3 billion) annually, Social Security Minister Jose Luis Escriva said Friday in Madrid.

Spain's coalition government, led by the Socialists with support from far-left Podemos, had already pledged to implement a living minimum wage before the coronavirus plunged Spain into a deep recession.

With the Spanish economy at risk of shrinking more than 12% this year, pushing the jobless rate close to 20%, that makes the measure all the more urgent, officials have said.

People will receive between 462 euros and 1,015 euros per month, depending on the number of family members. Government payments can supplement income earned by the recipient, creating an incentive to work, according to Deputy Prime Minister Pablo Iglesias.

That means if a person earns 200 euros per month, the government would transfer 262 euros to that person to ensure they reach the established monthly floor, the deputy prime minister said.

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