Spain's UGT union expects labour deal next week

Agreement between Spanish unions and employers on labour market reforms is expected at the end of next week, the leader of the UGT union said on Thursday.

"We are working towards an agreement with business leaders. At the end of next week, the main points should be agreed on," Candido Mendez said in an interview with La Ser radio.

Reform of the labour market is aimed at reducing the number of temporary contracts, easing the costs of hiring and firing, encouraging the use of part-time contracts and bringing the long-term unemployed and the young back into the jobs market.

Mendez said tough new government austerity measures to reduce a big budget deficit, including wage cuts for state workers, had not helped the labour reform talks.

UGT is Spain's second biggest union and represents a wide range of public sector workers and pensioners.

The country's largest union, the CCOO, and the UGT have already called a public sector workers' strike against the cuts for June 8 and have not ruled out further action including a general strike.

The cabinet is due to approve on Thursday cuts worth 15 billion euros, including an average 5 percent pay reduction for public sector workers this year.

The spending cuts are aimed at slashing the budget deficit from 11.2 percent of GDP in 2009 to 3 percent in 2013.

With an unemployment rate of 20 percent, the euro zone's highest, a labour market reform agreement is considered crucial to economic recovery.