Spain's new Socialist government under Pedro Sanchez on Wednesday brokered an accord with unions and bosses lifting the minimum wage 5.5 percent or €59.8 euros to €1,108 euros ($1,230) gross a month.
“We have reached agreement to lift the minimum wage this year,” said labour minister Yolanda Diaz, hailing a “very happy day for democracy in this country and for all workers.”
The cabinet is due to approve the measure within days upon which the rise will take immediate effect and be backdated to the start of January 2020.
Sanchez' new administration, which has the support of radical leftist party Podemos, has also announced a 0.9 percent increase in pensions and a 2.0 percent increase in wages of civil servants.
While unions saluted the minimum wage rise the president of the Confederation of Employers' Organizations, Antonio Garamendi, admitted that “we would have liked (the rise) to be a little lower,” even if the figure agreed was below an initially mooted €1,167.
The agreement was that the minimum wage would be set at €950 a month, payable in 14 installments to allow for the double monthly salary in July and December, a Spanish tradition that ensures there is enough funds to allow a holiday and celebrate Christmas.
The latest rise comes on the back of Sanchez's pushing through of an unparalleled 22 percent hike last year.
The government has pledged over the coming four years to lift the level to 60 percent of the current average salary of €1,970 — which would be currently €1,182.
Speaking at the Davos forum earlier, Sanchez said his government would still pursue “fiscal rigour” in targeting cutting the national deficit and public debt.
Spain's move comes weeks after Britain's conservative government pledged to increase the minimum wage by more than four times the rate of UK inflation from next year despite a warning by the British Chambers of Commerce that above-inflation pay increases could hit business amid economic uncertainty with Brexit days away.