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Spain — Labour market reforms delayed due to strong disagreements

31 May 2010

The deadline for negotiations on crucial labour market reforms between the government, employers and unions was extended by one week on Saturday since no agreement could be reached, Reuters reports.

The government had threatened to push through labour market reforms unilaterally if no three-way agreement could be reached by today, which was met with threats of a general strike by the CCOO and the UGT unions.

Credit ratings agency FITCH downgraded Spain's public debt to AA+ from AAA on Friday and the government sees the overhaul of Spain's rigid labour laws as crucial if a Greek-style debt crisis is to be avoided.

At 20.04%, Spain has the second highest level of unemployment in the European Union after Latvia and current labour laws protect permanent employees with massive severance pay guarantees.

Labour Minister, Celestino Corbacho, told EFE news agency "next week will be definitive to see if there is a possibility of an agreement or not."

The government of Socialist Prime Minister, Jose Luis Rodriguez Zapatero, won the vote on the passing of a 15 billion Euro austerity package in parliament last Thursday by one single vote.

Employer representative Jose Luis Feito commented on the unions' actions "it is like a child threatening to hurt the mother by not eating. These kinds of reactions are infantile and immature."

Candido Mendez, Head of the UGT union, said about Feito "he is acting like a hit-man trying to undermine these talks and he is making the debate more difficult."



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