Jul 31, 9:30 AM EDT

Spain to give civil servants first pay rise in 5 years

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MADRID (AP) -- Spain's prime minister Friday promised a 1 percent pay rise for Spain's 2.5 million civil servants in the 2016 budget, their first hike in five years after public spending was reined in because of the country's economic crisis.

Mariano Rajoy said the improving economy made recompense possible for the sacrifices made by civil servants.

The measure comes as Rajoy's conservative Popular Party prepares for general elections by the end of the year. The party hopes the economic recovery will help stem its plunging popularity ratings in time.

Rajoy said the budget to be presented to Parliament next week would also include a 0.25 percent increase in pensions.

Earlier this month, Rajoy brought forward by six months an income tax reduction plan he estimated will put 1.5 billion euros ($1.7 billion) back into people's pockets.

Spain was battered by the global financial crisis and only emerged from a double-dip recession at the end of 2013. It still has a 22.4 percent unemployment rate, the second highest in the European Union after Greece.

Figures released Thursday show the economy grew 1 percent in the second quarter, its eighth consecutive quarterly growth figure.

The government estimates the economy will grow 3.3 percent this year and 3 percent in 2016. Spain now has one of the EU's fastest growing economies and is one of the bloc's main job creators.

"This budget brings an end to a most difficult period for all Spaniards and opens up a new period of sustained growth and intense job creation," Rajoy said.

He added that the country was in line to reach the targeted 2.8 percent budget deficit next year.

Spain has pledged to bring down its deficit from 11.2 percent of GDP in 2009 to within the EU limit of 3 percent by 2016.

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