Spain raises minimum wage 5%, above inflation rate

MADRID, Jan 12 (Reuters) – Spain’s government said it reached an agreement on Friday with major unions on an above-inflation 5% rise in the minimum wage – an increase that the main employers’ group said went too far.

The sixth rise under the leftist administration would increase the minimum wage by 54 euros ($59.27) to 1,134 euros. It still needs to be approved by the cabinet.

“Since 2018, the minimum wage has risen by 54%. It is the best tool to fight in-work poverty and for wage equality,” Prime Minister Pedro Sanchez said on the social media platform X.

The increase will benefit more than 2.5 million workers, mainly women and young people, Sanchez added.

The main employers’ association, CEOE, which was not part of the agreement, said that the rise was too large.

CEOE representative Antonio Garamendi said he backed a 3.4%-3.5% increase and warned that there was a risk of so-called second-round inflation, when higher wages push up consumer prices.

The increase is higher than the EU-harmonized inflationrate, which ended 2023 at 3.3%

($1 = 0.9112 euros)