Unions renew their pay pact in Spain

Spain's two main union confederations, the CCOO and the UGT, have renewed their 2005 pay pact with the employers' body CEOE for a further year. Similar agreements have been in place since 2002.

On pay, the key elements of the pact are that increases should:

* be in line with forecast inflation of 2.0%;

* contain a revision clause allowing pay to catch up if inflation is higher than forecast; and

* incorporate a variable element linked to productivity.

The latest official figures on pay last year, for the 11 months to November 2005, show an average agreed increase of 2.94% - below the rate of inflation, which was 3.4% in November.

But the UGT's own figures indicate that 75.9% of employees covered by collective agreements benefited from revision clauses, which on average took effect once inflation had passed 2.17%. This means that most employees will have had modest real increases in pay.

Both unions and employers have agreed that the 2005 agreement has been "reasonably positive, as the evolution of a number of elements, including pay, has shown". It is on that basis that they have agreed to extend the agreement into 2006.