| |
Spain OKs Labor Market Reforms 09/09 08:21
MADRID (AP) -- Spain gave final approval Thursday to labor market reforms
designed to shake up a listless economy and help slash a bloated deficit that
has prompted European-wide worries of another Greek-style debt crisis.
But it was hardly a day for the government to cry victory, as most parties
voted against the changes and lambasted a prime minister whose approval rating
has sunk to under 30 percent.
One key thrust of the reforms as Spain battles a 20 percent jobless rate and
struggles to crawl out of recession is to make employers less wary of hiring by
making it cheaper and easier for them to lay people off.
Spain has been a key focus of Europe's debt crisis, which began in Greece.
It ran a deficit equal to 11.2 percent of GDP last year, far above the EU limit
of 3 percent. Troubled government finances mean Spain, along with Portugal and
Greece, is having to pay higher interest rates to borrow.
Under pressure from bond investors, governments are slashing expenditure and
raising taxes --- but this raises fears that such austerity moves will kill off
growth and in the long run make it even harder to pay back bond debt.
Spain's efforts to restructure its hidebound regulations on hiring and
firing are one effort to boost growth in coming years.
The reforms are designed to give companies more flexibility by making it
easier to transfer workers to other parts of the country --- Spaniards tend to
be very attached to their native regions --- or change their job roles within
the company.
Other goals are to crack down on workplace absenteeism and discourage
companies from giving workers only temporary job contracts with few benefits. A
full third of the work force now has these so-called garbage contracts, making
the joblessness rate vulnerable to swings when the economy tanks because such
workers are the first to get sacked when things go bad.
Also, companies will be able to try to lay people off --- with the lowest
available rate of severance pay --- if they are losing money, expect to in the
future, or suffer from a "persistent" drop in revenue.
Only a weak smattering of applause greeted the final votes in the ornate
parliamentary chamber, showing how isolated Prime Minister Jose Luis Rodriguez
Zapatero is because of his handling of an economy that tanked when Spain's real
estate bubble burst about two years ago.
Many opposition parties say he ignored the crisis for too long and is acting
belatedly, especially with reforms of a job market that employers have long
criticized as too rigid.
Unions call the reforms blatantly pro-business and have cited them --- and
plans to extend the retirement age from 65 to 67 --- as reasons for a general
strike they have called for Sept. 29.
The package had already been approved as an emergency decree in June by the
lower chamber of the legislature and has been in effect since then. Thursday's
votes in that chamber were on a series of amendments introduced last month by
the Senate. Most were rejected.
Zapatero, who runs a minority government, got the package through with the
sole votes of his Socialist party and abstention from a Basque nationalist
party that he is wooing furiously for support on his next challenge, which is
much bigger: passing a budget for 2011. That process starts later this month,
and the government has all but acknowledged that if it cannot pass a budget it
will have to call early elections.
The government says it will be a lean spending blueprint, with spending by
government ministries cut on average to the levels of 2006.
The government has warned that the economy, which has only just begun to
grow after nearly two years of recession, might weaken yet again because of
austerity measures passed in May and a rise in VAT taxes in July, both of which
could sap consumption.
The labor market reforms' pointman, Labor Minister Celestino Corbacho, tried
to sound optimistic Thursday. But he acknowledged that many in Spain think
these changes will not really help resurrect an economy that showed only anemic
growth in the first two quarters of this year even as Germany and other
European countries recover from recession in more robust fashion.
"Some have said that this reform probably comes up short. Time will tell. It
is probably more far-reaching that some imagine and believe, and if that is so,
it means the reforms are good," Corbacho told the lawmakers.
(KA)
|
|
