Spain’s national minimum wage is to be increased by 3.6% to €1,167 per month, as announced by Labour Minister Yolanda Díaz, the fourth hike since the left-wing coalition government came to power in 2019.

The increase will be applied retrospectively from 1 January according to Díaz, after reaching an agreement for the rise with unions, it’s within the average range advised by experts and “the best instrument” to fight inequality.

“There are many forms of agreement and in this case it was bipartite”, said Díaz.

Following the signing of the agreement, the Labour Minister said during a press conference that this hike “is a very important milestone for the country” and something she does “with satisfaction and joy”, after rounds of talks with employers and unions.

Although business associations in the country didn’t support the move, they will have to conform to the increase, the latest advance in the government’s plans for the minimum wage to reach 60% of the average national salary of €1,944 per month, states a Euronews report.

Díaz went on to say that past bids to compete with other countries by driving down salaries had weakened the economy and was fundamentally unfair.

“We want to compete on the axis of productivity and not on the axis of low wages,” she added.

This latest agreement sees Spain having the seventh highest minimum wage in Europe, as per data from the European Union, surpassing Portugal, which offers €705 a month, yet trailing France, which has a minimum wage of €1,603.

Spain’s parliament last week approved the government’s labour reform with just a one-vote margin, reversing prior pro-business reforms by awarding more power to unions in bargaining contracts.