The data was released by the National Statistics Institute (INE), which reveals that there was an identical increase in other costs, which include social contributions and insurance.

“In the first quarter of 2025, the Labour Cost Index recorded an annual increase of 4.0%. In the previous quarter, it had increased by 10.1%,” the statistics office reports.

This index aggregates salary costs and other costs, both based on the hours actually worked. Salary costs include base salary, regular bonuses and allowances, irregular bonuses and allowances, and overtime.

Now, in the first quarter, this indicator increased by 4% compared to the beginning of 2024, which can be explained, at least in part, by wage growth. The national minimum wage, for example, went from €820 to €870 in January.

The INE details that, until March, the services sector was the activity where salary costs grew the most (5.1%), followed by construction (4.8%), industry (2.6%) and public administration (2.6%). “Compared to the previous quarter, the increase observed in this quarter was lower in all activities: services (9.5% in the previous quarter), construction (13.5%), industry (9.8%) and Public Administration (10.5%)”, indicates the statistics office.

Other costs include severance pay, legal charges borne by the employer (such as employer contributions to Social Security and work accident insurance) and conventional, contractual and optional charges (such as health insurance and life insurance). In the first quarter, this indicator also rose 4% compared to the same period of the previous year.

“Non-wage costs recorded increases of 5.2% in services, 4.8% in construction, 2.7% in industry and 2.5% in Public Administration”, adds the INE, which highlights that there was also a slowdown here.

“The less pronounced increase in wage and non-wage costs was essentially due to the smaller increase in average costs (wage and non-wage) per worker, as well as the increase in the number of hours actually worked per worker”, explains the statistics office.