Spain makes it easier to fire staff | Business| Economy and finance news from a German perspective | DW | 08.03.2012
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Spain makes it easier to fire staff

The Spanish parliament approved a sweeping labor market reform aimed at reducing layoff barriers for the country's ailing companies. The government hopes deregulation will help it overcome record unemployment.

The controversial labor market reform was approved by the Spanish parliament Thursday with 197 votes against 142.

Prime Minister Mariano Rajoy described the reform as "useful" in attempts to drive down Spain's unemployment rate of more than 23 percent - the highest in the industrialized world.

Notably, youth unemployment is particularly bad, with nearly half of those under the age of 25 out of work.

The reform, which already took effect by decree last month, is aimed mainly at deregulating employment laws by cutting the costs of firing workers and easing conditions for dismissals.

The legislation was part of Spain's "most ambitious reform agenda since 1975," Economics Minister Luis de Guindos told parliament, referring to the year in which Spain became a democracy after the death of dictator Francisco Franco.

Fierce opposition

A key element of the reform allows companies suffering from declining revenues for a period of six months to unilaterally cut wages and extend working hours.

In addition, a new type of contract has been created aimed at encouraging businesses to hire especially young people. Furthermore, severance pay, to which workers are entitled according to their working years in a company, is to be cut.

The government said the reform would act as a "hiring incentive" and reduce the number of "temporary work contracts" widely used by Spanish employers.

However, the Socialist opposition in the Spanish parliament said the reform was "increasing unemployment and undermining social rights."

And trade union leader Candido Mendez slammed the government's decision to deregulate the labor market as "aggravating inequalities."

The trade unions said they were considering a general strike to go along with nationwide protests scheduled for March 11.

uhe/mll (dpa, AP)