Monday, May 31, 2010

Well I Guess the Spaniards learned nothing from Greece over promising and under delivering

MADRID (Dow Jones)--The Spanish government has decided to give unions and employers a "few more days" to reach an  agreement on labor-market overhaul before imposing its own changes.
  Under intense international pressure to take measures to fight a deep economic crisis, the government of Socialist Prime Minister Jose Luis Rodriguez Zapatero had given unions and employers until Monday to reach an agreement, although  it had indicated it could extend the deadline if one seemed near.
  In a joint release, unions, employers and Spain's labor ministry said "differences remain on some aspects of labor  relations" but that "there is still room for an agreement."
  Spanish Finance Minister Elena Salgado reiterated earlier Monday that the government plans to go ahead with labor  overhaul even if Spanish unions and business leaders fail to reach an agreement on the matter.
  "Have no doubt: If these talks don't produce the results we all want, the government will carry out this reform in the  short term, before the end of June," Salgado said at a meeting with business leaders Monday.
  As Spain's economic crisis has deepened, the government has jettisoned previously held taboos, including changing  labor laws without the agreement of the so-called social partners.
  Changes that would reduce the cost of hiring and firing are seen as key to reduce a 20% unemployment rate and spur  economic growth in Spain. The International Monetary Fund last week said that the country needs a "radical" reform,  while Fitch Ratings had cited Spain's "inflexible" labor market and its ailing savings banks as reasons behind its  Friday downgrade of Spain's credit rating, by one notch to AA+ from the AAA maximum.
  Furthermore, European Union leaders earlier this month demanded "structural reforms" as well as new austerity measures  from Spain and Portugal in exchange for a giant financial backstop that was designed to ease investor concerns about  their debts.
  "Labor market reform is essential for the government's international credibility," Elena Colombas, strategist at
Banesto Bolsa, said.

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