Zara owner Inditex saw its go down as the markets closed for the weekend on Friday after it agreed to increase the wages of its entire workforce in Spain -its home market. The increase was announced a day earlier on Thursday after pressure from Spain’s two unions the CCOO and UGT. They claimed that salaries in some regions of Spain might increase by up to 40 percent. The next day Inditex of 4.7 percent the next day.
Of the total workforce of 165000 that Inditex employs in 177 countries, a third of its workers are based in Spain. Inditex has a women-dominated workforce in its 6477 shops, accounting for 86 percent of its worker’s strength.
Though known more as Zara’s owner, Inditex also owns other famous brands, including eight brands Massimo Dutti, Pull & Bear, and Bershka, which it markets in Spain. After signing a deal with Inditex the unions now intend to use the as the benchmark in negotiations with other brands.
Spain’s main business group CEOE appreciated the deal with Inditex but warned that across-the-board wage raises would lead to higher inflation which already stands at 8.6 percent. Inditex has already shielded itself from higher costs by passing on the costs to the consumers. The prices are expected to rise further.
Spanish retailers including supermarket chains have also increased wages but limited pay rises to the level of inflation, though Japanese Fast Retailing Co, owner of Uniqlo, increase wages by up to 40 percent in January. Fashion retailers are under pressure to retain young talent that is in short supply. The wage increase is about 9.7 percent of its operating cost which amounts to around 167 million euros per year.
