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Spain's parliament approves labour reform

Source: Reuters - Thu 9th Sep 2010

Spain's parliament approved the final amendments on Thursday to a labour reform the government hopes will kick start a stagnant economy and reduce a 20 percent unemployment rate which is the highest in the euro zone. Both houses of parliament approved the proposals, which are designed make it harder for unemployed people to turn down a job offer or training and reduce some of the highest costs of firing in the developed world but have angered trade unions.

The Socialist government also introduced a 15 billion euro ($19.06 billion) austerity plan in May, which included public sector pay cuts and a freeze on infrastructure spending, in an attempt to inspire investor confidence in its debt.

The structural reforms and deficit cuts were introduced after Spanish government bonds came under attack on markets, forcing the European Union and the IMF to create a $1 trillion financial safety net to prevent a widening of Greece's debt crisis to other euro zone countries.

Lawmakers have been working on overhauling the reforms since June, when the government adopted new labour market rules by decree and sent them to parliament for fine-tuning.

Critics have said the reforms are too timid to have a major impact on Spain's job market. Unemployment ballooned after the collapse of a construction bubble in 2007-8.

More than 280 suggested changes to the reform were voted on on Wednesday, with the ruling Socialists' proposing a cut in benefits for workers who turn down a job offer or professional training after 30 days from the current 100 day cut off.

The Senate passed the change despite heavy criticism by unions, which say it will make it easier for the government to cover up nasty jobless figures by subtracting those who have taken on professional training.

Unions have called a general strike on Sept. 29 to protest against the government's austerity measures and labour reform.

The government has also tried to ease its austerity measures by restoring some public works projects and borrowing by local councils.

Another change to the reform will make it obligatory to pay people in domestic service and other workers who can receive payment in kind at least the minimum wage of 633 euros a month.

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