Spanish stocks dragged down by pay raise announcements

Spain’s two biggest unions, CCOO and UGT, announced the wage increase late on Thursday and UGT said wage increases will be up to 40% in some areas of the country.

Inditex, which employs 165,000 people in 177 countries, with a third of its workforce in Spain, did not respond to a request for comment. Around 86% of its employees work in its 6,477 stores and the majority are women.

The salary increase is part of a “homogenization process” of the working conditions of the personnel of the different Inditex brands, according to the document of the agreement signed by Inditex and the unions to which Reuters had access. In addition to zaraInditex owns eight brands in Spain, including Massimo Dutti, Pull & Bear and Bershka.

“In some places the wages were very low,” said UGT union leader Álvaro Cajigal, adding: “We hope he feels a role model.” LConsumer prices in Spain rose 5.8% year-on-year in December, according to the first data from the National Institute of Statistics. Average annual inflation was 8.4%, the highest since 1986.

The main Spanish employers’ association, CEOE, celebrated the agreement in a statement, but warned that too many wage increases could cause a second wave of inflation.

Swedish H&M announced in December a bonus of 500 euros ($535) to 4,000 store workers in Spain and Portugalafter Inditex offered 1,000 euros to store workers in its national market. The wage increases will cost Inditex some 167 million euros a year, or around 9.7% of its operating costs.

The new increase means that Inditex will pay a minimum salary of 1,500 euros (1,610 dollars) a month to dependents and a minimum of 2,041 euros in the case of workers with greater responsibilities in the store, CCOO added in another statement.