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Spain's government increasingly isolated over labour reforms
25 June 2010 @ 01:32

Spain's Prime Minister, Jose Luis Rodriquez Zapatero, looked increasingly isolated after crucial labour reforms only just won enough votes to pass through parliament.

The measures, which will ease hiring and firing regulations seen as essential to lift Spain out of the recession, won preliminary approval only after Spain's opposition parties agreed to abstain in Tuesday's vote.

The governing Socialist party won 168 votes in favour in the 350-seat assembly with 173 deputies abstaining, including all those from the conservative opposition Popular Party.

The labour market reforms, which will make it easier to dismiss workers and will simplify contracts, have angered Spain's main unions, who have called a general strike in September in protest.

The Governor of the Bank of Spain, Miguel Angel Fernandez Ordóñez, also voiced his criticism of the measures claiming they did not go far enough.

Spain's unemployment rate has soared to 20 per cent of the workforce, the highest rate in the 27-nation European Union after Latvia's, following the collapse of the labour-intensive construction sector at the end of 2008.

The rise in joblessness has caused government spending on unemployment benefits to soar, which has in turn helped to push Spain's public deficit to 11.2 per cent of gross domestic product last year, the third-highest in the eurozone after Greece and Ireland.

Zapatero's €15 billion (£12.5 billion) austerity bill scraped through parliament by one vote last month. The unpopular plan aims at shoring up Spain's public finances amid investor concerns it could follow Greece into a financial crisis.

Source: The Telegraph

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