Seat on Wednesday said it had asked its 14,000 workers to take a cut in hours and a proportional cut in pay in the face of falling demand in its main export markets, according to Reuters.

The company reportedly declined to give details of the size of the pay cut it had proposed.

"We put this proposal to unions yesterday and we've arranged a new meeting for tomorrow," a Seat spokesman told Reuters which added that unions rejected the idea.

"We don't agree to a wage cut because we don't think that is the right way to solve Seat's problems," a representative of one of Spain's two main unions, the CCOO, told Reuters.

A spokesman for the other main union, the UGT, reportedly urged the company to outline its business plan for the next few years and clarify what the proposal would mean for wages.

Reuters said a smaller union, the CGT, called a demonstration for October 5 to protest against Seat's suggestion.

The report noted that Seat said in late August it was employing 800 workers too many for current production levels.

In the first eight months of the year car production fell 8.5% at its Martorell plant near Barcelona. The company told unions on Tuesday it was not expecting a pick-up in production in the rest of the year, Reuters said.

The report added that, in 2004, Seat made 416,000 cars at Martorell but says it expects output to fall to around 381,000 this year. The company, which exports around 80% of its cars, has seen demand squeezed in its export markets due to strong competition from Asian manufacturers.