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Spain will give unions and businesses more time to reach agreement on unhooking salaries from inflation, Labour Minister Valeriano Gomez said on Thursday, signalling further delays to a final accord on wages.
A reform to de-link wage increases from inflation is the Spanish government's next move to convince markets of the country's long-term economic growth prospects as it battles sluggish growth and unemployment of over 20%.
After pushing through pension reforms in January, Prime Minister Jose Luis Rodriguez Zapatero is under pressure to wrap up the wage accord in time for a European leaders' summit on March 24.
"The government is convinced a unanimous agreement will be reached," Gomez said in a statement.
PM Zapatero signed up to a euro zone competitiveness pact on March 11 in which leaders agreed to give particular attention to ensuring that wages grow in line with productivity, including a review of wage indexation mechanisms.
The collective bargaining process in Spain agrees salary hikes across industries and links wages to consumer prices.
Injecting life into the job market is a key concern for the Spanish government after the collapse of a housing and construction boom. Spain's unemployment rate is more than double the European Union average.
A labour reform last year attempted to overhaul business unfriendly laws, making it easier to hire and fire, but was criticised for not going far enough.