Low salaries, high cost of living – the Balearics paradox

The most recent figures from the National Statistics Institute for average gross salaries relate to 2020. They didn’t make very good reading. In the Balearics, the average was 1,844.85 euros, the fifth lowest in the country, above Murcia (1,843.41), Andalusia (1,837.33), the Canaries (1,775.71) and Extremadura (1,760.52). The national average was 2,038.59 euros.

But while the average salary is low, the standard of living is high. Housing, to buy or rent, is among the most expensive in Spain. The cost of fuel is the highest. Palma has recently been shown to be the most expensive city in the country for the average “shopping basket”.

Joan Mayans of the association of service stations in the Balearics draws attention to an issue that has simply never been addressed properly. “We have been asking for years that, once and for all, the famous Balearic special economic regime be approved in order to put us on equal terms with businesses and consumers on the mainland.”

The comparative level of income hasn’t always been like this. In the 1990s, the Balearics could boast being in the top two regions of the country in terms of the ratio of per capita income to GDP. The islands have slipped down the rankings in part because of the great increase in population – far higher in relative terms than the rest of Spain. But then there are also the salaries.

The Confederation of Balearic Business Associations attributes the paradox of low salaries and high cost of living “to the fact that our economic structure and specialisation, although it has allowed us to achieve high levels of well-being, has not been able to evolve and become more sophisticated in order to increase the generation of income, salaries included”.

Pau Monserrat, an economics professor at the University of the Balearic Islands, says that the problem lies with the economic model. “It is eminently touristic, requires workers with limited training and offers them jobs with relatively low pay and without contributing all year round. In order to change this, the model will have to be changed. There have to be new ways of managing companies, of attracting tourists with greater purchasing power, who demand quality services offered by trained professionals. On the other hand, we must make progress in improving our economic model, away from one that is essentially based on hosting and entertaining tourists.”

Luis García Langa, director of, says that in the Balearics “we have a problem with salaries, which are below the average, as is per capita income”. “The standard of living shouldn’t therefore be as high, but a little lower than the national average. However, tourism, sometimes with stronger per capita incomes and currencies, and new foreign residents, who come from countries with much higher living standards, cause some prices to skyrocket, especially that of certain products, such as housing.”

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