Spain to increase minimum wage by 22 percent in 2019

Spain's government will approve a 22 percent increase in the minimum wage to 900 euros (813.35 pounds) per month on December 21, Prime Minister Pedro Sanchez said on Wednesday.

The increase, “the biggest since 1977”, will be submitted to a cabinet meeting in Barcelona on December 21, he told parliament.

“A rich country can’t have poor workers,” said Sanchez, who is widely expected to call an early general election next year.

The increase, due to enter into force in January, was agreed jointly with anti-austerity party Podemos, as part of the Socialist prime minister's efforts to get enough support for the 2019 budget to be adopted in parliament.

The announcement comes after French President Emmanuel Macron unveiled Monday a €100- (US$113) per month increase in the minimum wage from next year in a major concession to “yellow vest” protests which have roiled the country.

After years of austerity policies imposed to cope with the fallout from the 2008 financial crisis, governments are under increasing pressure to ease the purse strings, especially for the lower paid.

The wage increase, initially expected to be formally decided on December 28, will be approved by decree as the cabinet exceptionally meets in Barcelona on December 21, in what Sanchez said was a sign that his government wanted to boost "prosperity for all territories".

Tensions over Catalonia are one of the thorniest issues facing the premier, who controls fewer than a quarter of seats in parliament. The Catalan regional administration has faced anti-austerity protests over the past weeks.

Sanchez's Socialists need the support of smaller parties to pass legislation such as the budget proposal.

The government estimated the minimum wage hike will cost the state €340 million per year.

Employers groups and the conservative opposition parties, the Popular Party (PP) and Ciudadanos, oppose the wage hike, saying it will hurt job creation.