General strike threat over Spanish labour reforms

The reforms, passed last month and confirmed in Parliament on Thursday, slash the cost of firing workers and ease conditions under which they can be dismissed. Salaries can be lowered unilaterally, and companies can lay off employees at the cheapest level of severance pay by reporting three straight months of declining revenue.

The Workers Commission and the General Workers Union called the stoppage following separate committee meetings.

Ignacio Fernandez Toxo of The Workers Commission said the reforms are steered too much in businesses’ favour and likened the changes to labour laws that existed when General Franco ruled from 1939-1975.

“It is the most regressive reform in the history of democracy in Spain,” he said.

Deputy prime minister Soraya Saenz de Santamaria said a general strike was not the remedy for a country with more than five million people out of work. She said: “It’s not the solution. In moments of grave difficulties for all Spaniards, the government values more constructive efforts that help improve the country.”

The government approved two other plans yesterday to try to revive the economy.

It said banks had agreed to provide a €35 billion syndicated loan that will be used to pay off suppliers that are owed huge amounts of money by town halls and regional governments. The suppliers are often small- and medium-sized companies that are the backbone of the Spanish economy.

The government also announced a voluntary “code of good practices” for banks to treat Spaniards having trouble paying their mortgage with care.

Between 2008 and 2011, about 350,000 families have been evicted after banks foreclosed on their homes, according to a banking-sector consumer association called ADICAE. This year will be just as bad, it said.

Under the new code of conduct, banks are being urged to refinance mortgages, or lower the principle of mortgage-holders’ loans.

In the worse-case scenarios – such as a family in which everyone has lost their job – the code asks banks to allow the mortgage holders to settle their debt by simply giving back the property. Currently, most people who are evicted still end up owing a large part of their mortgage.

Unions have called rallies across Spain tomorrow to protest against the reforms.

Before he approved the reform, prime minister Mariano Rajoy was recently overheard telling European Union colleagues in Brussels that the measures would mean a general strike.

The latest labour market overhaul is aimed at rebooting an ailing economy suffering a eurozone-high unemployment rate of near 23 per cent.

Mr Rajoy has acknowledged that the rate will probably go over 24 per cent this year despite the reform, and says that when the economic cycle eventually changes, Spain will be in a better position to create jobs.