Unions wage general strike to protest against labour reform

Spanish unions angry over economic reforms are waging a general strike, challenging a conservative government not yet 100 days old and joining other troubled European workers in venting their frustration on the street.

Thursday's stoppage, called to protest changes to labor market rules long regarded as among Europe's most rigid, comes just a day before the government will serve up even more austerity pain.

A budget expected on Friday is set to feature tens of billions of euros (dollars) in deficit-reduction measures. The cuts are designed to help Spain in its struggles to satisfy both the European Union and the international investors who determine the country's borrowing costs in the international debt markets, and therefore have a lot of say in whether Spain will follow Greece, Ireland and Portugal in needing a bailout.

On top of a round of spending cuts and tax hikes, and reform of the bank sector, last month Spanish Prime Minister Mariano Rajoy's newly elected government passed a decree on worker's rights. The piece of legislation, among other things, makes it cheaper and easier for companies to: lay people off, cut wages and modify other working conditions just by citing concerns over, for example, productivity.

The idea behind the decree is to make Spain more competitive once the rest of Europe recovers and employers are less wary of hiring. The jobless rate here is now nearly 23 percent, a eurozone high, and nearly 50 percent among young people.

The country's two main unions are hoping for enthusiastic turnout Thursday, more than during a general strike in 2010 when a Socialist government enacted its own, less aggressive labor market reforms. "The people will say whether they are resigned to accepting the reforms," said Ignacio Fernandez Toxo, head of one of Spain's main unions, known as CCOO.

The government says it will not falter in its austerity drive, calling the reforms essential to creating jobs and reviving an economy that is expected to contract 1.7 percent this year. "The question here is not whether the strike is honored by many or few, but rather whether we get out of the crisis," Finance Minister Cristobal Montoro said. "That is what is at stake, and the government is not going to yield."

Jose Ramon Pin, a professor of management at IESE Business School, said the unions hope to hobble the country by limiting public transport at rush hour. Major rallies are planned for Thursday evening in Madrid and other cities.

But unions face two problems, according to Pin. First, people who strike get docked a day's pay, which few can afford in these hard times. Also, Spaniards appear resigned to the fact that the country needs painful reforms to help the economy recover from the collapse of a property bubble in 2008.

The government, which came to power in December after the Popular Party scored a landslide win over the Socialists, has a mandate to save the country from financial ruin, Pin said.

That means it is unlikely to worry much about its popularity rating. "There are two elements: Spanish voters and international investors and right now the government is governing for the investors," he said.