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Spain stumbles in labour reform talks with unions

Talks with unions and business to overhaul Spain's rigid labour laws are going badly, a government spokesman said on Friday, casting doubt over reforms crucial for reassuring markets of the country's long-term solvency.

business Updated: May 28, 2010 22:57 IST

Talks with unions and business to overhaul Spain's rigid labour laws are going badly, a government spokesman said on Friday, casting doubt over reforms crucial for reassuring markets of the country's long-term solvency.

If unions and business can't agree on a consensual labour reform by a looming end-of-May deadline, the government will push through changes to labour market laws against union opposition, the parliamentary spokesman for the governing Socialists, Jose Antonio Alonso, said.

This would raise the prospect of a general strike and also raise pressure on a Socialist government already struggling to pass major legislation and hang on to power. The government was set to make a last-ditch attempt to get an agreement with unions and business in three-way talks over the weekend.

“I am aware that things are not going too well and it is possible that the government will have to reform the labour market through a royal decree,” Alonso said.

Growing industrial unrest could unnerve investors who fear the kind of unrest seen in Greece could spread to other euro zone countries, undermining fiscal consolidation efforts. Such doubts have already led investors to question the long-term survival of Europe's single currency.

A spokeswoman for the largest union confederation, Comisiones Obreras, said “things are difficult, complicated."