A liberal think tank in Madrid has calculated that more than half of the cost of employing an average worker in Spain goes to the state. The Juan de Mariana Institute, which is sharply critical of the government, estimates that taxes and social security contributions account for €53.60 of every €100 in total labour costs.
The figure comes from a report that the institute describes as an “economic autopsy” of the premiership of Pedro Sánchez, according to the Spanish news outlet The Objective. The report, written by the institute’s head of research, Diego Sánchez de la Cruz, puts the average annual labour cost per employee at €39,481, of which €21,144 is absorbed by taxes and social security.
The calculation is based on the employer’s total labour cost, not the gross salary, and includes income tax, VAT, social security contributions, and other levies. The institute has previously documented 141 tax increases between 2018 and 2026.
Lifetime tax bill and rising public debt
According to the report, the average taxpayer in Spain will pay €460,600 in taxes over their lifetime. That is equivalent to nearly 30 years of the country’s most common salary, or 16.4 years based on the average wage.
Since 2018, revenue from taxes and social security contributions has risen by 39.7%, an increase of around €168.17 billion in nominal terms, which also reflects inflation and employment growth. The tax-to-GDP ratio has climbed from 34.9% to 37.1%.
The report acknowledges that healthcare spending has increased by 43% and education spending by 40%, but it argues that public services have deteriorated. It points to a 28% rise in surgical waiting lists, which now stand at 853,509 patients, an average wait of 102 days to see a specialist, and the results of the 2025 PISA report.
Public debt has reached €1.763 trillion, roughly €600 billion more than eight years ago. The report also notes that one in every four euros spent on pensions is funded through government contributions.
Housing and wages under pressure
The study highlights a stark gap between rents and young people’s incomes. Median rent (€1,080) now exceeds the median salary of a young worker (€1,048), and only 15.2% of young people live independently, the lowest figure since 2006.
The author attributes this to a housing shortage: 1.16 million new households have been formed since 2021, but only 465,000 homes have been completed on the open market. The report also blames rent caps introduced under Spain’s housing law, linking them to a 43% drop in new rental contracts in Barcelona, 44% in Navarre, and 51% in A Coruña.
On employment, the report acknowledges a 66% increase in the minimum wage but describes it as leading to “unprecedented wage compression.” It also claims that unemployment figures are distorted by inactive workers on permanent seasonal contracts.
The institute describes the period as “devastating” and criticises the state’s response to crises including Covid-19, the DANA floods, and the situation in Ceuta as “non-existent.”
These findings come as Spain grapples with broader economic challenges, including delays in digital invoicing rules that affect small businesses, and housing affordability comparisons that resonate across the Spanish-speaking world. The debate over taxation and public services is likely to intensify as the country approaches its next general election.
