UPDATE 1-Spain strike delayed, PM confident of reform

Mon May 17, 2010 9:09am EDT

Related Topics

* One-day strike delayed to June 8 from June 2 - unions

* PM says confident of agreement for labour market reform

(Adds details, background)

MADRID, May 17 (Reuters) - Spanish unions decided to delay a one-day public sector strike to protest wage cuts to June 8 as they wait for more details on the government's austerity measures aimed at reining in the budget deficit.

Last week the government said it would cut wages for state employees and slash investment spending, sparking union anger at the toughest moves yet to deal with a budget deficit some feared could exacerbate a wider euro zone crisis.

"We'll know the details of the impact of the government's cuts on May 20, so for organisational matters we've decided to push back the strike until June 8," a spokesman for Spain's second largest union UGT said on Monday.

The government is expected to approve at cabinet level on May 20 the spending cuts, which total 15 billion euros over two years, and were aimed at stemming the debt crisis in the euro zone. The cuts were announced after the EU and IMF pledged $1 trillion emergency funds for weak euro zone members.

The government is studying salary cuts of between 2 and 8 percent for civil servants to save over 4 billion euros. The majority of Spain's 2.8 million state employees earn between 1,200 and 3,000 euros a month, El Pais reported on Monday.

Meanwhile, Spain's Prime Minister Jose Luis Rodriguez Zapatero said he was confident of reaching labour market reforms, seen as crucial to boosting the economy out of its worst recession in 50 years.

"The best labour reform will be the one that has the most support," Zapatero told reporters at the EU-Latam Caribbean summit in Madrid.

Labour reform is also key for unions, who want to protect the generous rights workers have in Spain if they have full-time job contracts.

Spain's unemployment rate is the highest in the euro zone at 20 percent in the first quarter and the government is in three-way talks to streamline the labour market and increase productivity.

(Reporting by Feliciano Tisera, Clara Vilar and Tracy Rucinski; Editing by Dominic Evans)

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