All workers will receive reduced salaries in January 2024

In January 2024, all workers in the Canary Islands will see a reduction in their income, as both tax and Social Security contributions are set to increase. This negative impact on workers' salaries (nominas) is a result of the Intergenerational Equity Mechanism (MEI), an additional contribution introduced in 2023, which will see an increment in its amount in 2024 and subsequent years. The effects of this will be evident in the January payrolls.

The MEI, a component of the pension reform, involves paying an additional percentage in Social Security contributions. However, this increase will not translate into higher benefits for the worker, such as contributing to retirement pensions or sick leave compensation, its primary objective is to strengthen the National Social Security Reserve Fund.

How much will it cost you?

Introduced in 2023 with an additional 0.6% (0.1% from the employee and 0.5% from the employer), the MEI will increase to 0.7% in 2024. This means that employees will contribute an additional 0.12%, and employers, 0.58%. This rise will result in a reduction in workers' salaries, particularly noticeable for those with higher incomes due to the increase in the maximum contribution base, which will rise by 5%, from 53,946 euros to 56,600 euros.

Those contributing at the maximum base will pay 81.5 euros annually for the MEI, while for companies, the impact will be more significant, with a total of 393.93 euros per year for this concept.

The changes are part of ongoing efforts to shore up the financial stability of the Social Security system.