Loss-making firms excused from pay rise

Unions representing 200,000 textile workers in Spain have agreed an above-inflation increase for this year - but with exceptions for loss-making companies.

Signed in principle on 17 May, the agreement provides for a 2.5% increase for 2005, backdated to January. This is below the latest inflation figure of 3.5% (April 2005) but above the government's forecast 2.0% inflation for the year as a whole. Furthermore, since it provides for a catch-up payment if inflation at the end of the year exceeds the government's targets, the agreement in effect guarantees a 0.5% increase in real terms.

However, the increase will not necessarily be paid where a company has made losses in the two preceding years. If this is the case, and the company's "economic stability could be damaged" by the increase, pay will be negotiated locally.