The wage hike will be applied retroactively from Jan. 1, Diaz told reporters after agreeing the rise with unions.
Spain's business associations did not back the move but will have to comply with the increase, which is the latest step in the government's plan to bring the minimum wage to 60% of the average national salary of 1,944 euros per month.
Calling the increase "a very important milestone", Diaz said that seeking to compete with other nations by pushing down salaries in the past had led to a weak economy and precarious businesses, and was profoundly unjust.
"We want to compete on the axis of productivity and not on the axis of low wages," she said.
The new agreement leaves Spain with the seventh highest minimum wage in Europe, according to European Union data, well ahead of neighbouring Portugal, which offers 705 euros a month, but lagging far behind France's 1,603 euros.
Last week, Spain's fragmented parliament approved the government's labour reform by a margin of just one vote, overturning a previous conservative administration's pro-business reforms by granting more power to unions in bargaining contracts.
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Zoltan (£9.5 * 40 * 52) / 12 = 1646 * 1.2 exchange
@ David not sure where you get those figures from. The official minimum wages in the UK is £9.50 an hour which works out at £1,520 a month for a 40 hour week. Then there will be tax and NI deductions.
@James Well it's just as well the PP and the fascist vox party aren't in power as the minimum wage would still be around 600€ a month.
I'm fortunate to have built a good business here and money isn't much of an issue. But even that wage is a joke. To run a car, to pay rent and bills and eat food. There's your wages gone. What type of life is that?? Your just existing to pay tax. And the government market this story as a success. Idiots!!
Zoltan I have often wondered how the ordinary people working people of Mallorca survive with the wages and costs of that island. I remember talking some years ago with Joann a native of Inca and he told me it is 30% more expensive to live than on the mainland. The full time U.K. minimum wage in U.K. is just shot of 2000 euro a month. U.K. costs are equal to or lower than the island. Lower earner tax payment is lower than Spain to with no tax below £12500 and reduced ni contribution. I really don’t no how people mange. U.K. pensioners retiring to Spain need proof of £25000 per year to do so but Spain expects its workers to live on less than half that.
Good news! How anyone is supposed to survive on the outrageously low wages on this island is beyond me