Waiter in Palma. | Jaume Morey

CAEB and PIMEM are insisting that salary increases must be linked to factors such as productivity and rejected the possibility of salary increases proposed by the union to alleviate inflation.

Pay negotiations between employers and unions broke down last week and since the two sides have been verbally defending their stance.

The Confederation of Business Associations of the Balearic Islands pointed out that the uncertainty generated by the Covid pandemic and the war in Ukraine had reduced economic growth.

"Wage increases should not be linked to concepts as volatile as inflation" said CAEB.

The President of the Spanish Confederation of Business Organisations Antonio Garamendi, insists that indexing wages to productivity and competitiveness can result in a bigger wage rise than if they’re indexed the CPI and he has the support of small and medium business employers.

“Not all Balearic companies are the same, so wage increases depend on the situation at each individual company,” said CAEB President Carmen Planas.

The Employers Association for Small & Medium Enterprises President, Jordi Mora, also favours increases linked to productivity.

"We are aware that it’s difficult for workers to maintain purchasing power, but linking wage increases to inflation is a bad solution,” he said. "Businessmen are aware of the increase in the cost of living and housing in the Balearic Islands, their predisposition to negotiation has been key to getting the hospitality and commerce sectors to reach agreements with salary conditions are amongst the best in Spain."

In terms of salaries, the Balearic community is below the national average, according to the National Institute of Statistics, or INE.

In the last quarter of 2021, the average gross salary in the Balearics was 2,064 euros, which is 100 euros below the state average. In 2020, the Balearic Islands had an average salary of 1,844 euros compared to the national average of 2,038.

Union representatives have been calling for a salary increase of 2.5%-3.5% in the Balearics and have heavily criticised employers claiming they're not willing to reach an agreement.

"Employers always bring up the issue of productivity when they don't want to talk about anything," complains CCOO General Secretary in the Balearic Islands, José Luis García. “It's a joke to talk about productivity when the problem is something else, to be productive you also have to raise wages."

"Companies have put their prices up, in line with inflation, but they haven’t raised workers’ wages,” said UGT General Secretary, Lorenzo Navarro. “The rise in salaries must be linked to the CPI and dispensing with a major framework agreement for wage increases is going to involve sectoral negotiations that may generate conflict."