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Business Lobby Praises PP Government's Labor Overhaul

Source: Bloomberg - Wed 15th Feb 2012
Business Lobby Praises PP Government's Labor Overhaul

Spain's business lobby praised the government's overhaul of labor laws, while unions called rallies across the country to protest lower firing costs and new rules making it easier for companies to cut wages.

"The government has taken the bull by the horns," Juan Rosell, chairman of the CEOE business association, told a televised news conference today in Madrid. "It's a modernization."

The two month-old People's Party government passed a decree on Feb. 10 that cuts severance pay, makes it easier for companies to reduce wages, and creates a new type of contract for small companies. The government, which came to power on pledges to create jobs, is trying to reduce the highest jobless rate in the European Union, at almost 50% among young people.

Spain's two largest unions, Comisiones Obreras and Union General de Trabajadores, called protests today in 57 Spanish towns and cities for Feb. 19. The decree was "conceived to satisfy businessmen and financial markets," is "unjust" to workers, and won't create jobs, Comisiones Obreras said in a statement.

Even though the measure won't produce new jobs "the day after tomorrow," it will help in the medium term, Rosell said. Prime Minister Mariano Rajoy also said today that the steps taken by his government won't have immediate effects. Spain's unemployment rate was 23% in December, and a third of the euro region's jobless live in Spain, according to data from the EU's statistics institute.

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