Thousands of people took to the streets of the Spanish capital on Thursday to demand higher wages to cope with soaring inflation and energy costs.

Demonstrators waved red union flags and banged drums as they walked behind a large banner reading “Salary or Conflict” towards the Spanish capital’s landmark, Plaza Mayor.

Police estimate that around 25,000 people took part in the demonstration, which was called by the two main Spanish trade unions, CCOO and UGT.

“Either there is a pay rise or labor disputes will increase exponentially in our country over the next year,” CCOO Secretary-General Unai Sordo told reporters at the protests.

Like other countries, Spain is grappling with soaring inflation as a result of the aftermath of the war in Ukraine and the reopening of the economy after pandemic-related lockdowns.

Inflation in Spain this summer hit a 38-year high at 10.8 percent in July, before slowing slightly to 7.3 percent in October – still well above normal levels.

“Salaries are still extremely low” while the cost of “necessities” has skyrocketed, Maria Luisa Ortega, a 57-year-old service sector worker, told AFP at the protests.

She said salary increases must match the rise in inflation.

The protest comes as Spain’s left-wing government is negotiating with unions and business groups over a fresh increase in the minimum wage, currently set at 1,000 euros ($987) a month.

The left-wing extremist Podemos party, junior partner in the coalition government of socialist Prime Minister Pedro Sánchez, is demanding a ten percent increase in the minimum wage.

But Spain’s main business association CEOE has ruled out wage increases in line with inflation, arguing they would hurt businesses, especially smaller ones, although it is open to discussing more modest increases.

The government has promised to raise the minimum wage to 60 percent of the average Spanish salary by the end of its term in December 2023, bringing it in line with the level of its European neighbors.