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Spain's labor reform could sideline unions: report

MADRID (Reuters) - Spain may make it easier for companies to bypass unions to lower workers’ pay and conditions if they can prove they are in financial difficulty, El Mundo newspaper reported on Sunday, citing government sources.

Civil servants protest over planned pay cuts in front of the economy ministry in Madrid May 20, 2010. REUTERS/Andrea Comas

Companies in financial difficulty can currently only negotiate down wages and conditions to below those established by the collective bargaining procedure if they have the approval of unions, which is rarely given.

But El Mundo said one of the Socialist government’s drafts of labor reform due to be handed to unions on Wednesday says independent government commissions would be created to negotiate salary cuts between workers and employers in such cases.

A government spokesman declined to comment on the report.

Details of the government’s reform plans have been leaking into the media, and on Friday newspapers said the latest draft includes a proposal for companies to offer only 20 days’ severance pay per year worked, versus 45 days at present, if they could prove they had financial difficulties.

Economists consider labor market reforms, along with bank restructuring and deficit reduction, essential to solving Spain’s economic problems. Fears of a debt crisis contagion in the euro zone after Greece’s woes has piled on the pressure.

An analysis in El Mundo, which leans toward the opposition conservative Popular Party on economic policy, cited experts as saying that an overhaul of collective bargaining would have to be an element of any labor reform.

“Agreements between workers and employers must reflect the conditions at each individual place of work,” El Mundo quoted Juan Iranzo, the director of Spain’s Institute of Fiscal Studies as saying.

The government has said it will push long awaited labor reform through parliament unilaterally if three-way talks it is hosting with employers and unions end without success, though it has also said it is keeping the channels for communication open.

“I reiterate ... that whatever happens the government will approve the labor reform on June 16,” Deputy Prime Minister Maria Teresa Fernandez de la Vega told reporters after a weekly cabinet meeting.

“Until this happens, we should be cautious and allow the talks to continue without any kind of pressure. We are still in favor of dialogue and consensus.”

Spain’s largest unions have called a one day strike for Tuesday to protest at government austerity measures and have said they will call a general strike if they are not happy with the coming labor reform.

Reporting by Jonathan Gleave, Editing by Sonya Hepinstall and Elizabeth Fullerton

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