A rift was sparked today in Spain’s coalition government over the implementation of a reform plan to reduce working hours, with the Labour Minister accusing the Economy Minister of “siding with employers.”

Labour Minister Yolanda Diaz, head of the leftist Sumar party, told state radio station RNE that there are “obvious disagreements” with the prime minister’s Socialist Party Pedro Sanchez on the reform, and she called on government ministers to “respect the committee of experts” that drafted the reform.

Diaz aimed at Economy Minister Carlos Cuervo, who suggested delaying the reform’s implementation by a year to give small businesses time to adapt.

Cuirpo “must decide which side he stands on, that of the workers of this country who are asking to live a little better or that of the employers,” the labor secretary said.

A source at the Economy Ministry said the government remains committed to the reform plan and that its implementation is a “priority.”

“We must continue to rely on a functional economic policy that guarantees the sustainability of our economic and social achievements,” the source added.

Spain recorded one of Europe’s best economic performances last year, with growth significantly influenced by a rapid rise in tourism, immigration, and a strengthening labour market.

Diaz, who also serves as deputy prime minister, was tasked with the reform, which is key to her party supporting Sanchez’s minority government.

In their joint program, sealed in October 2023, Sumar and the Socialist Party had pledged to reduce before the end of 2025 from 40 to 37.5 hours of legal working week, with a first stage of 38.5 hours, with no loss of pay.

Spain’s central bank and a former economy minister have warned that higher labor costs could raise inflation and limit job creation.

Businesses have also expressed concerns about the reform.

Towards the end of December, after months of negotiations, the government signed an agreement with the two largest workers’ unions, the CCOO and the UGT, on this reform, but without the agreement of employers and at the risk of Parliament rejecting the reform.

This reduction, the first since 1983, is expected to affect nearly 12 million private sector workers – public sector employees already benefit from the 37.5 working week. The goal, according to Ms. Diaz, is for workers to be able to “live better, to be less tired.”

The employers’ side withdrew from the negotiations in mid-November after eleven months of fruitless meetings, believing their demands were not being taken into account by the government.

Employers’ organisations are concerned about the impact of the reform on Spanish competitiveness. They believe that not all sectors of activity are affected in the same way and that a general reduction in working hours could weaken some businesses.

Fears dismissed in December by Diaz, who recalled that the Spanish economy is the most dynamic among OECD countries, with growth expected to reach 3.1 percent in 2024 according to Spain’s central bank, and promised that the reform would be completed.

The agreement will have to be approved by MPs for it to come into force. But it faces reservations from many of the government’s allies in parliament, including the nationalist Basque party PNV and Catalan separatists Junts per Catalunya (JxCat).