The Socialist spokesman in Congress, Antonio Hernando. Uly Martin

There was a bigger uptick in 2004, but it was spaced out in two separate hikes, in January and July.

The PSOE has also convinced the Popular Party (PP) conservatives to establish a deficit target of 0.6% of GDP for regional governments, one tenth of a point higher than what the government originally wanted. This will free up millions of euros for social welfare policies.

We are ready to make the most of our parliamentary strength

Rafael Simancas, PSOE spokesman in Congress

The deal illustrates how the PP, now heading a minority government, can no longer push its own policies through without prior negotiation.

But it also shows how the Socialists are keen to prove that all their actions are aimed at benefiting the voters who turned their backs on the PSOE at recent elections, party sources confirmed.

The PSOE is still reeling from the effects of its decision to let Mariano Rajoy, of the PP, return to office after a 10-month political paralysis in Spain.

In a move that split the party in two, leaders decided to abstain at a critical congressional vote, effectively delivering the prime minister’s office to Rajoy.

Socialist officials said they will now use all their muscle as the main opposition group to force the government to adopt more socially-friendly policies during this political term.

“We are ready to make the most of our parliamentary strength, either through deals with the government or through an alternative majority among the opposition groups,” said Rafael Simancas, the Socialist spokesman for employment issues in Congress.

PSOE leaders know they are being closely watched by a sector of the party that opposed a new Rajoy administration, and also by the leftist Podemos. Last week, Podemos introduced a bill – which the PSOE supported – asking for a minimum wage of €800 by 2018.

The PSOE has made the wage hike a requirement if the government wants Socialist support for the spending ceiling and for the budget plan Spain must send to Brussels in the coming weeks.