May 21, 2010 / 11:22 AM / 10 years ago

UPDATE 3-Spain union says general strike over austerity likely

* Spain’s UGT union does not rule out general strike

* General strike talk seen as posturing by economists

* Labour reform talks crucial

(Adds detail)

By Paul Day

MADRID, May 21 (Reuters) - Spain’s largest union Comisiones Obreras (CCOO) could call a general strike to protest against planned austerity measures, its head said on Friday, although analysts regarded wider Greek-style unrest as unlikely.

CCOO head Ignacio Fernandez Toxo said he would “probably” invoke a general strike over the Socialist government’s “right-wing economic policy, financial speculation and the markets.”

Spain has the highest levels of unemployment in the euro zone at 20 percent, up from a 2007-low of 8 percent, after a burst property bubble and consumer spending slump left millions from the construction and service sector without work.

After protests in Greece turned violent in early May, there are concerns Spain could follow the same route, as the government makes drastic spending cuts in an effort to convince markets its public finances are under control.

Investors fear Spain’s Socialist government will be unable to reduce its budget deficit, from 11.2 percent of gross domestic product in 2009.

United States President Barack Obama and German Chancellor Angela Merkel have called on the Spanish government for reforms over concerns of potential contagion from the failure of an economy more than three times the size of Greece’s.

While Toxo did not say how long the strike might be, a CCOO spokesman said industrial action normally lasted just one day.

CCOO and Spain’s second largest union confederation, the UGT, have already called a June 8 strike of civil servants angry over pay cuts imposed by the government’s austerity campaign.

Asked whether the UGT would join a general strike, a spokeswoman said: “We don’t rule anything out. Our position hasn’t changed.”

The CCOO and UGT have also promised to fight civil servant wage cuts, which form part of a 15-billion euro ($18.76 billion) austerity package announced by the government on Thursday, in the courts. [ID:nLDE64J19M]

While the unions have a strong hold over public servants, many of whom pay full union dues, the rest of the Spanish working population is less represented.

Only some 16 percent of Spanish workers are union-affiliated and the work force is deeply split between those holding permanent contracts, most likely to be union members, and those with temporary contracts who often have no representation.

UNEMPLOYED

About 90 percent of the estimated 3 million people made unemployed since 2007, in the nation of 46 million, held temporary contracts, often without union representation.

Some economists said a general strike was unlikely to draw wide participation, even from unionised workers, since many of them hold the relatively safe permanent contracts and could be loath to jeopardize them by walking out.

The unions themselves, closely tied to the Socialist government, could also be uncomfortable provoking widescale unrest against Prime Minister Jose Luis Rodriguez Zapatero.

The daily newspaper Expansion reported last year that state payouts to the unions had risen by around 50 percent since 2006 and by 10 percent in the last 2 years as Spain suffered its worst economic slump in living memory.

“The unions don’t want to lose that ...they are trying to wear the government down. That’s really what this is all about,” said Ismael Crespo at think-tank Fundacion Ortega & Gasset.

“There will be a public sector strike and other spot demonstrations, but a general strike won’t have popular support,” Crespo added.

Spain’s government, the unions and business representatives are in three-way talks on a much anticipated labour reform and are expected to reach agreement some time next week.

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