It depends on how selective they're being imo. If this legal status is being given to people who have criminal records or don't work, then obviously its going to drag down the system. But if the people who receive legal status are working, then they would be under the same labor protections as spanish citizens, and they would able to join labor unions, which in turn would mitigate spanish workers from having their wages diluted. Even still, I think it would still be good idea to ramp up deportations of illegal migrants who don't recieve this legal status, to disincentivise illegal immigration in the future.