If we allocate at most a third of the SMI to rent, prices in most cities are completely higher than the income of the most insecure workers
The increase in the minimum interprofessional wage (SMI) announced by the government from the current EUR 1,000 to EUR 1,080 per month will relieve part of the family budgets. In particular those of the approximately 2.5 million workers who live on the legal minimum wage that is possible in Spain. However, the increase collides with the harsh reality of access to housing, an odyssey that directly affects those who can benefit most from the new SMI: young people and groups of workers in more precarious circumstances.
The possibility of renting a house is still almost as complicated as with the old minimum wage. The increase, which will generate an additional 50 euros net per month (80 euros gross minus deductions and social charges), is insufficient to rent a home under the conditions recommended by the central banks and the financial sector: most , a third of income to pay the monthly payment to the tenant or, as the case may be, to the mortgage.
That’s the scheme the bank works with when it starts to issue a mortgage, and the one most recommended by the monetary institutions to ensure the budgetary viability of an average family: one-third for housing; 20% for savings; and the rest, almost half of the income, for all kinds of ordinary expenses, from day to day. In fact, allocating more than a third of income to housing puts too much strain on personal finances.
However, with current rents, every household’s bills will skyrocket, even with a small hiatus from the new minimum wage. Because in 14 counties, residents have to allocate more than a third of the new minimum wage to pay for the cost of renting a condo or a home in those areas. If a maximum of EUR 360 of the SMI’s EUR 1,080 is to be allocated to rent, in Barcelona – the most expensive province – it is necessary to contribute an additional EUR 300 per month on average to pay for housing. Occurs
These are those of – in this order – Barcelona, Madrid, Gipuzkoa, Balearic Islands, Girona, Las Palmas, Bizkaia, Málaga, Lleida, Santa Cruz de Tenerife, Álava, Valencia, Seville and Navarra. At the other end of the list -provinces where paying rent is much less than 360 euros per month- include Jaén, Zamora, Ciudad Real or Ávila.
The statistics are even more difficult if they are analyzed municipality by municipality. Because in this case the imbalances are even greater, since they are provincial capitals, large cities where rents have risen in the last ten years. The city where much more money than a third of the SMI is needed to pay the rent is Barcelona, where you’ll need to scratch an extra 400 euros to cover that monthly payment. It is followed by San Sebastián, Madrid, Bilbao and Palma de Mallorca. The capitals where money is left over from that third of the minimum wage to pay the rent are Zamora, Ciudad Real, Ávila and Lugo.
The real estate tragedy faced by those earning the minimum wage is even more complex when it comes to looking for a home that meets the criteria of spending up to a third of that income on it. Because we are strictly rigorous, there are currently only a thousand houses in Spain whose price meets that financial requirement.
In particular, houses whose price is below 360 euros (one third of the updated SMI) are concentrated in the provinces of Jaén (117), Ciudad Real, Coruña and Badajoz.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.