Spain labor market: Companies adopt selective salary and flexible benefit strategies

Spanish companies are adopting more selective and strategic approaches to compensation amid rising labor costs. According to the INE, the average gross labor cost per worker reached 38,748.94 euros in 2025, a 3.3% increase from the previous year.

To manage these costs, businesses are increasingly utilizing flexible remuneration. This allows employees to include specific products or services, such as health insurance, in their compensation packages. Under Spanish tax regulations, health insurance premiums can be exempt as in-kind benefits up to 500 euros annually per person, with limits increasing to 1,500 euros for individuals with disabilities.

A study by WTW on salary planning for 2026 indicates that companies expect a median salary increase of 3% in 2027. The report suggests that firms are moving away from broad increases toward targeted investments in critical profiles and skills. Additionally, organizations are focusing on gender equity in line with the Pay Transparency Directive and exploring non-monetary benefits like training and improved employee experience to maintain competitiveness.