Spain’s government this week approved a plan to reduce the working week to 37.5 hours in the country, reports France24. The measure faces an uphill battle in parliament where there is no clear majority and the misgivings of business leaders who fear it will stifle growth.

Spain’s central bank and former economy minister have both warned that higher labour costs could fuel inflation and curb job creation.

The Spanish Socialist Party committed to reduce the working week from 40 hours to 37.5 hours without any loss of salary by the end of 2025 as part of their 2023 coalition deal with Sumar, a platform for a range of progressive, left and far left parties. The reduction, agreed after more than a year of political wrangling, would affect around 12 million workers, notably in retailing, hospitality and agriculture. Public-sector employees and most large companies already have a 37.5-hour work week. Labour Minister Yolanda Diaz said the plan would “modernise Spain” and boost productivity.