Wage inequality rebounds with covid: the richest 10% earn 9.5 times more than the poorest 10%

  • Salaries among the best paid workers grow 5%, while the worst paid fall 2%

  • The most common salary among Spanish employees in 2020 was 1,706 gross euros per month

The wage inequality among workers has rebounded after the outbreak of the covid. Not all professionals have surfed the vicissitudes of the pandemic in the same way and those who earn the most, earn a little more today; while those with the lowest salaries earn slightly less. This is confirmed by the data by deciles of the Active Population Survey (EPA) published this Tuesday by the INE, which reflects that the gap between the best and worst paid grew by 7.2% in 2020. That is, the highest paid 10% employee wins 9.5 times more than a worker among the lowest paid 10%. The positive note left by the survey is that the wage gap between men and women, on average, drops substantially, going from 18.4% in 2019 to 16.3% in 2020. The income protection effect of ertes and the accumulated increases of minimum salary (more common among women) could be two factors that would explain this reduction in the gap.

The EPA by deciles makes it possible to measure how the distribution of labor income evolves, regardless of other key factors in the distribution of wealth such as shares or properties. And the 2020 edition leaves several data that underpin this rebound in wage inequality. The median salary last year was 2,038.6 euros gross per month. Without context, it would be a good figure, since it implies an increase of 2.8% compared to the average salary of 2018 and the second highest salary growth in the last decade. The point is that this average growth has not been distributed equally and those who earn the most have earned more than those who have the least, who have seen their income decrease.

Another data that the EPA leaves by deciles is the median salary, which would measure how the salary that more people earn in the Spanish labor market has evolved. This was in 2020 1,706.4 euros gross per month; almost 300 euros less than the medium. And it barely grew 1.3% compared to the previous year, at an intensity less than half as accelerated as the average salary. And it is that the workers of the lowest paid 10% (with an average salary of 521 euros gross per month) saw their salary drop 2.1%. And those concentrated in scales 2, 3, 4 and 5 registered increases between 0.4% and 1.2%. Below half of the average increments.

The covid crisis is being suffered by the lower and middle class of workers, especially the former. While the upper classes of wage earners are going through the pandemic with their incomes protected and (for now) on the rise. The increases between groups 6, 7, 8 and 9 grew between 1.3% and 4.1%, also in a linear fashion. In other words, the higher the salary, the greater the increase recorded last year. Finally, the highest paid 10% registered the highest salary increase, with a 5% increase and an average salary of 4,964 gross euros per month.

The gap is narrowing, but 4 out of 10 women earn less than 1,340 euros

Related news

The positive note of the EPA by deciles of 2020 is the reduction of the wage gap, which accumulates three consecutive years downward. This still stands at 16.3% on average, which means that men win 358 euros more per month than women. This improvement in terms of gender parity is explained by the rise of the lowest-earning women to middle-class salaries.

If all female workers are grouped in a row by income order and the row is divided into three groups, with one group with the best earners, another with those in the middle and others with the lowest paid, between 2019 and 2020 there were a transition from the lowest earners to the middle class. And if in 2019 40.5% of salaried women earned less than 1,336 gross euros per month, a year later that percentage drops to 38.8%. However, there are still twice as many low-income women as there are men. This female concentration in the lowest paid scales is one of the main explanatory factors of the wage gap, not so much that companies pay a woman worse than a man for the same job.


Leave a Comment