Spain government to try to impose labor reform

Spain's government has given up on securing a deal with unions and employers on a reform of rigid labor market rules and is preparing to impose its own plan, newspaper El Pais reported on Monday without citing sources.

A deadline for the government to agree a labor reform deal with unions and employers had been set for Monday, but the labor ministry said on Saturday it had extended it by a week.

Under plans being mulled by the government, left-leaning daily El Pais said companies would have the possibility to make greater use of cheap work contracts for a broader range employees.

There was no immediate official government comment on the El Pais report.

At the moment, special contracts allow some workers to be hired on the basis of reduced redundancy payments - 33 days of salary per year worked instead of the normal 45 days - in the event they are later fired.

The government would try to extend this through a legal decree that would have to be voted on in parliament, but which would not allow opposition lawmakers to table amendments.

Imposing a deal without the agreement of the unions would likely set the ruling Socialists on a collision course with their traditional allies.

Spain's two largest unions have threatened a general strike if the government tries to impose labor reform.

Companies in Spain have long complained that burdensome hiring and firing costs are a disincentive to recruiting workers, exacerbating the government's high unemployment rate which has hit 20 percent.