By Sergio Goncalves

LISBON, (Reuters) – Portugal’s government said it would increase the wages of civil servants by an average of 3.8% next year, but unions say that is not enough given the rising cost of living.

Salaries of civil servants last year rose around 4.6%, below the 5.4% inflation estimated for the whole year by the central bank, Banco de Portugal.

Unions were informed of the planned salary hikes as the government puts the final touches to the 2024 state budget, which is scheduled to be delivered to parliament on Tuesday.

Portugal has over 745,000 civil servants and their average monthly salary is around 2,000 euros ($2,117.40) per month, according to government data.

Cabinet Minister Mariana Vieira da Silva said monthly salaries of up to 1,807 euros would rise by 6.8%, while the remaining wages would increase by 3%. On average, salaries would increase by 3.8% in 2024.

“We want to guarantee a salary progression path that can be sustainable and allows (civil servants) to recover from the inflationary peak,” Viera da Silva told reporters.

Unions are not happy with the announcement because salaries of most civil servants would only increase 3% while inflation is expected to reach 3.6% next year, according to Banco de Portugal.

The leader of Frente Comum, which is part of Portugal’s largest labour union CGTP, Sebastiao Santana, said the salary increases would not allow the country to “start reversing a path of impoverishment”.

Santana’s union has demanded a 15% and wants a new round of negotiations with the government. In Portugal, salary increases for civil servants serve as a reference for private sector companies.

($1 = 0.9446 euros)