SCENARIOS-How will unions react to Spain spending cuts?

By Judy MacInnes

MADRID, May 12 (BestGrowthStock) – The response of Spain’s unions
could be key to determining the success or otherwise of
government austerity moves similar to those which have provoked
violent demonstrations in Greece.

The two big unions, Comisiones Obreras (CCOO) and Union
General de Trabajadores (UGT), have generally enjoyed close
relations with the Socialist government, but the latest
measures, including a 5-percent wage cut for public servants,
will hit their members harder than earlier moves.

(For more on the the new austerity measures (see
[ID:nLDE64B0S8])

Following are possible scenarios:

GOVERNMENT BACKS DOWN AFTER UNION PROTESTS

Prime Minister Jose Luis Rodriguez Zapatero has been much
criticised in Spain for failing to take tough decisions to deal
with the economic crisis quickly, and relatively small union
protest marches in February were enough to put the brakes on a
government plan to raise the pension age.

But this time the pressure from international markets and
governments in Europe and the United States mean backing down
from the cuts would have potentially catastrophic consequences,
meaning that he is likely to stand his ground.

UNIONS RESPOND BY SCUPPERING LABOUR MARKET REFORM

With the governmemt unlikely to back down on wage cuts, the
unions still have a major weapon with which to hit back and
remind their membership that they are able to protect some
worker rights. The government wants the unions to reach an
agreement with business over reforms to Spain’s rigid labour
laws. The Bank of Spain and economists say that these laws,
which make it expensive to fire long-term contracted workers,
have helped push up unemployment to 20 percent. But many
Spaniards, and the unions, regard the laws as key to workers’
economic security.

Unions are going to have to respond somehow to the wage
cuts, and one way would be to withhold support for the labour
reform. But the leaders of both the UGT and CCOO struck a
surprisingly conciliatory note when speaking after the austerity
announcement, saying that a labour market reform might still be
possible.

UNIONS CALL FOR ONE DAY GENERAL STRIKE

There is little tradition of major strikes in Spain’s recent
democratic history. Unions last called a general strike under
the conservative Popular Party in June 2002, but it only lasted
for one day. But nonetheless, a strike is very possible now
given the direct assault on union members’ pay checks, although
it would be unlikely to deteriorate into Greek-style civil
disorder.

UNIONS HOLD PROTEST MARCHES, BUT NO STRIKE

Both of Spain’s leading unions UGT and CCOO said on
Wednesday that they do not rule out any type of action in
response to the government’s spending cuts, but that they will
not make any snap decision and take time to analyse the
situation.

This would have worried the more beligerant union members,
who have been irritated by the fact that the unions have only
staged one significant protest against the government since the
beginning of the economic crisis. Union leaders could well be
tempted to call more marches, at least initially, before taking
the harsher option of a strike.

Investment Tools

(Reporting by Judy MacInnes; additional reporting by Carlos
Ruano; editing by Jason Webb)

SCENARIOS-How will unions react to Spain spending cuts?