Friday, September 24

These are the Spanish cities with the best relationship between wages and cost of living

Puertollano, Castellón de la Plana and Sagunto are the Spanish urban areas with the best relationship between wages and cost of living, according to a report by the Bank of Spain that explores the differences in purchasing power in the different areas of our country. The study, prepared by economists Víctor Forte-Campos, Enrique Moral-Benito and Javier Quintana, establishes a cost of living index (which we already published in and subsequently relates it to the average wages in each urban area.

The map of the richest and poorest cities in Spain

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From this intersection comes the following graph and the conclusion that, as a general rule, the big cities (Madrid and Barcelona) and the most touristy areas are the ones that fare worse, because even if the salaries are high, the cost of living does not compensate. The cities of the Basque Country and Navarra do not appear because there is no administrative data on the prices of their rents, necessary to construct the general price index. All data correspond to 2018.

Puertollano’s average nominal salary is 1,834 euros per month. The nominal salary is the one that a worker receives in his account at the end of the month. This nominal salary will spread more or less depending on where you live and inflation, because 1,834 euros are not the same in Puertollano as in Madrid. If the city of La Mancha comes out so well positioned it is because it is among the cheapest in Spain, according to the aforementioned index, ranking 74 out of 75 (the cheapest is the Alicante conurbation of Elda-Petrer).

The rental price in Puertollano is, according to current Idealista data, at 5 euros per square meter, more than half the average for Spain (10.7 euros per square meter). For sale, a square meter costs 576 euros compared to 1,826 on average in Spain. Thus, you can see advertisements for apartments for rent of more than 80 square meters for less than 500 euros per month and advertisements for apartments for sale of more than 100 square meters for around 60,000 euros.

It should be noted that, despite this good relationship between salary and cost of living, Puertollano is, together with Zamora, Ferrol and Linares, one of the few urban areas in Spain that has lost population in the last twenty years, according to data from the Ministry of Transport. The city has suffered the closure of several energy companies and the presence of the AVE – which many consider a solution to depopulation – has not reversed the situation. Despite good average salaries, Puertollano has an unemployment rate of 25.5%.

Rent is the variable that explains the greatest differences in the cost of living in cities and the culprit that Madrid and Barcelona stand out so much above the rest.

In Sagunto (Valencia) and Castellón de la Plana (Castellón) the dynamics is similar to Puertollano, although unemployment rates are lower, between 16% and 17%. Rental prices are well below the Spanish average – 5.5 euros per square meter in Sagunto and 6.3 euros in Castellón – and the average nominal salary exceeds 1,700 euros per month.

To estimate average wages, the authors of the report have used the Continuous Sample of Working Lives, a detailed statistic offered by Social Security that includes, among many other things, the place of residence of the workers.

Other cities with a good relationship between average salary and cost of living are A Coruña, Valencia, Valladolid, Granada, Ciudad Real, Ávila, Albacete, El Ejido, Ferrol or Mérida. In contrast, in addition to Barcelona and Madrid, urban tourist areas such as Tenerife South, the Costa Blanca and the Costa del Sol have very high living costs for their salaries.

Even the conurbation of Malaga, sounded by the technological investment that it attracts in recent times, is among the ten most expensive in the country when its average salary (1,512 euros, conditioned by the high percentage of tourism and hospitality workers, two of the lowest paid sectors in Spain) is in the middle of the table. Santander and Córdoba have similar indices.

The differences are increasing

One of the main conclusions that the study authors drew was that living in Madrid and Barcelona is, on average, 20% more expensive than in the rest of Spain. Seen in another way: that a person would need 1,200 euros of monthly salary to have the same purchasing power as someone charging 1,000 elsewhere.

The study emphasizes that the size of urban areas is closely related to the cost of living – the more the population, the more expensive it is – and that the differences continue to widen.

“In 2004, the difference between the two most expensive cities and the cheapest was 22%, compared to 31% in 2020,” he says. “In addition, the gap in the cost of living between a large city and a smaller one has been increasing over time. In 2004, the difference between an urban area and another with half the population was 2%. 2020, this differential was 3.1% “. Some authors have pointed out that one of the only positive effects of these disparities is that contain depopulation.

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