Second time charm
A wage agreement has emerged after weeks of discreet talks, with employers and unions finally agreeing to a cumulative 10 percent raise over the next three years. The deal, negotiated by industry intermediaries, will guide sectoral collective bargaining through 2025 and has been confirmed by sources connected to the negotiations. It is expected to receive formal approval from the top management bodies of the social intermediaries in the near future and includes an additional 1 percent increase contingent on the development of the consumer price index (CPI). The parties are watching CPI movements closely, and insiders say that if the CPI finishes this year above 4 percent, a 5 percent salary rise would be triggered. If CPI stays above 4 percent in both 2024 and 2025, the agreement envisions a 4 percent increase in those years. These triggers align with a broader framework designed to maintain purchasing power amid inflation pressures while providing a stable baseline for bargaining across sectors. Markers inside the process note that the content of the agreement does not rely on backward-looking formulas and aims to reflect current economic conditions as they evolve. Attribution: Negotiation sources cited by El Periódico part of the Prensa Ibérica group.
The Employment and Collective Bargaining Agreement, commonly known as the AENC, sets up a reference framework used to harmonize wage discussions across different sectors. The agreed percentages serve as benchmarks rather than mandatory targets. Signatory organizations concur to apply these references in wage talks, allowing room for variations as required by specific sector realities. The methodology encourages consistency in pay adjustments while permitting flexibility when sectoral circumstances warrant it.
With the current inflation trajectory showing an April CPI of 4.1 percent, the sectoral bases and the AENC framework aim to preserve workers’ purchasing power if sector agreements are fulfilled. While real wages saw a notable decline in 2022, the compensation landscape for 2023 through 2025 is framed to mitigate further erosion. Negotiators emphasize that the agreed content excludes retroactive measures and focuses on forward-looking adjustments aligned with economic developments. This approach seeks to balance business viability with employee welfare across industries. Sources describing the negotiation point to careful calibration of wage expectations against inflation estimates to avoid destabilizing price trends. Attribution: Sectoral negotiation sources.
How does the AENC mechanism operate in practice? For example, when employers and unions conclude an agreement at the central level, the draft contract may ripple through provincial and local agreements. In Barcelona, the extended bargaining process has influenced payroll planning for around 200,000 workers. The current understanding is that a 4 percent salary increase applies for this year as a reference figure, though not a legal requirement. Both sides retain the option to set higher or lower increases if circumstances warrant, with the 4 percent figure acting as a baseline when parties diverge on a final outcome. This flexible approach is intended to foster stability while accommodating differing regional dynamics.
What did the parties agree on?
The agreement follows a period of mutual concessions. The employers’ federation initially denied tying wage growth to the inflation rate, a stance that stalled talks, but the present deal introduces an extra point for annual wage increases tied to CPI growth. That provision would compel firms to allocate additional funds if price levels rise more than the agreed baseline. An extraordinary meeting of business leaders has been scheduled to grant final approval to the accord. The union side has softened its position, too, dialing back some hard red lines. The most notable concession was to require annual wage reviews that could align salaries with inflation at year-end, while preserving the base increase negotiated earlier. The final arrangement includes a mixed package where part of any extra increases depends on price movements and part on associated benefits. A sector-by-sector review mechanism was agreed, enabling up to a 1 percent uplift depending on CPI outcomes.
The negotiation dynamics reflect a pattern where the strength of unions varies by sector, influencing the level of wage growth achieved. Employers and unions have also been mindful of broader economic risks, including a banking sector unsettled by price volatility, ongoing inflation pressures, and global uncertainties such as the war in Ukraine. The sense of stability sought through this framework is meant to reduce the risk of abrupt wage shocks while supporting economic resilience across industries. Attribution: Negotiation summaries from central and sectoral rounds.