Spanish parliament approves labour market reform

MADRID - The Spanish parliament Tuesday approved a controversial labour reform in a vote marked by the abstentions of most legislators.

The reform is meant to make Spain’s rigid labour market more flexible in an attempt to slash the country’s 20-percent unemployment rate and to restore market confidence in the sluggish economy.

The trade union confederations UGT and CCOO, however, said the reform increased the vulnerability of workers without improving productivity.

The reform was approved with 168 votes from Prime Minister Jose Luis Rodriguez Zapatero’s Socialist Party, while 173 legislators from other parties abstained, and eight voted against.

The large number of abstentions was seen as reflecting the weak position of Zapatero, who has resisted calls to stage early elections after parliament approved an austerity package with the majority of only a single vote in May.

The premier was also not planning a cabinet reshuffle, government sources said Tuesday.

The labour reform “is not enough” to solve all the country’s employment problems, but it would “pave the way” for Spain to emerge “stronger” from its economic crisis, Infrastructure Minister Jose Blanco said.

Trade unions have called a general strike for September 29 over the reform, which will favour work contracts with a lower severance pay.

The reform has already entered into force as a decree. The government would, however, have found it difficult to apply the reform without parliamentary backing.

Parliament voted in favour of turning the decree into a law over the coming months. It will thus be submitted to a wider parliamentary debate, which could lead to parliament modifying it before it becomes a full-fledged law.

The reform favours work contracts with a severance pay of 33 days per year worked, instead of the current norm of 45 days per year worked. A government-managed fund will cover a part of the severance pay in some cases.

The reform is also aimed at encouraging employers to hire permanent rather than temporary workers, who have few rights, but make up more than a quarter of the Spanish workforce.

The reform was in the interest of more than eight million people who were unemployed or on temporary work contracts, Labour Minister Celestino Corbacho told parliament.

Spain’s strong protection for permanent workers was seen as one of the main reasons for the 20-per-cent jobless rate, the highest in Western Europe.

The EU and International Monetary Fund (IMF) had requested the labour reform as part of efforts to guarantee Spain’s economic stability amid concerns that the country could be heading for an economic meltdown similar to that of Greece.

Some analysts, however, have described the reform as a half-hearted compromise that did not go far enough in increasing labour mobility.