Businesses are relieved by the 40-hour week after four years of spiraling labor costs: "It was the death knell for thousands of SMEs and self-employed workers."

Business owners are breathing a sigh of relief. The powerful lobbying carried out by the country's largest employers has borne fruit, and the right-wing coalition— the PP, Vox, and Junts —has finally defeated the reduction in working hours in the Congress of Deputies. At least temporarily. But the suspension of this measure, even if temporary, is sufficient relief for thousands of SMEs and self-employed workers who have suffered an unprecedented rise in labor costs in recent years and who were set to face the final blow of the 37.5-hour workweek, with a global cost of up to €42.4 billion.

In a joint statement, CEOE and Cepyme thanked the parliamentary groups for rejecting Yolanda Díaz's bill, asserting that its comprehensive amendments prevent "a serious negative impact on the economy, employment, and also on consumers." And regarding businesses, "it would generate organizational problems, lower productivity, higher costs, lower service quality, and less attractiveness for investment, all in a context of difficult vacancies to fill."

Business leaders had estimated the economic impact of reducing the maximum legal weekly work week from 40 to 37.5 hours at around €24 billion . In a specific study, the SME employers' association estimated a direct cost of €11.8 billion for the hours that would be lost but would continue to be paid, plus another €30.6 billion for the gross added value that would be lost due to the reduction in working hours. The total is €42.4 billion.

The economic report for the bill to reduce working hours, which the government will have to rework for resubmission to Congress, acknowledged that the measure would increase business costs by up to 7%. Specifically, the text noted that "the reduction in the weekly working day to a maximum of 37.5 hours on average annually without a reduction in salary will lead to an increase in the salary cost per hour worked of a maximum of 6.67% , if the person was working 40 hours per week prior to the implementation of this reform."

However, the report stated that "this more pessimistic scenario is not the most widespread in Spain" because many companies already have working hours below the current legal maximum. Thus, it estimated that "the increase in wage costs per hour worked expected for the average working day of the nearly 14.5 million private sector workers would be 2.21% , and there is even a group of more than 1.88 million workers for whom the hourly wage cost would not increase at all ."

That 2% figure was used by Vice President Díaz in her response to the amendments last Wednesday in Congress, thus refuting the argument of the excessive cost of the measure advocated by business leaders, which was assumed by the parliamentary groups that defeated the bill. Even so, the Vice President of CEOE and President of ATA, Lorenzo Amor , assessed after the vote that the reduction in working hours "would have been the final straw" for "more than 900,000 self-employed workers and small businesses suffocated by rising labor costs, tax pressure, and the burdens and obstacles they have been enduring."

Contributions rise more than salaries

Specifically, the latest data released by the National Institute of Statistics (INE) at the beginning of last week reflect a four-year spiral of upward labor costs . Specifically, total labor costs per effective hour worked soared by 5.4% in the second quarter of 2025, accumulating no fewer than 16 quarters of uninterrupted annual increases. As for pure salary costs, they increased by 5.1%, while "other costs," which include social security contributions, rose by 6.2%.

And this is precisely where companies' bills are skyrocketing. Another INE survey, the quarterly labor cost survey, already reflected that companies' outlays on their employees' salaries reached a 25-year high in the first quarter of the year, after accumulating 17 consecutive quarterly increases. However, this does not mean that salaries have risen at the same rate. On the contrary, the most recent boost is driven by the contributions introduced in the pension reform to pay for the retirement of the baby boom generation , while salaries are growing at a more moderate pace.

As quantified in these pages , since Pedro Sánchez came to power in 2018, the cost of social security contributions has skyrocketed by 29.5%, rising from €594 to €769 per month, almost six points higher than wage costs, which have grown by 24% over the past seven years, from €1,844 to the current €2,290. All of this coincides with rising labor costs stemming from the continued rise in the minimum interprofessional wage (SMI), which over the same period has risen from €736 to €1,184 per month, an increase of more than 60%.

But the increase in contributions is much more significant if we take a more specific look at recent years. Since the last quarter of 2022, when Social Security contribution costs stood at €679 per month, the contribution bill has increased by more than 13%, while salary costs have not risen even 1% (the increase recorded is barely 0.99%). These figures reflect the growing pressure on business costs due to the disbursement of the Intergenerational Equity Mechanism (IEM) , which came into effect on January 1, 2023, and is paid by all workers, regardless of their salary, as well as the solidarity contribution, which applies to the highest salaries since 2025.