Spanish unions to strike over austerity measures

By Andres Gonzalez and Feliciano Tisera

MADRID (BestGrowthStock) – Spain’s two biggest unions are planning a one-day public sector strike in three weeks, and threatened to call a general strike to protest wage cuts aimed at bringing government costs under control.

As fears rise over contagion from the debt crisis in Greece, the unions held almost three hours of talks with Prime Minister Jose Luis Rodriguez Zapatero on Thursday to discuss austerity steps, announced yesterday under pressure from Spain’s EU partners and the United States.

“We radically reject this austerity plan and both unions are starting protests that could lead to a general strike very soon,” Ignacio Fernandez Toxo, the general secretary of Spain’s biggest union Comisiones Obreras (CCOO) told reporters.

The unions proposed a public sector strike on June 2 to protest the government’s plan to cut public sector wages by an average 5 percent in 2010 and freeze wages in 2011, and cut public investment spending by 6 billion euros.

That would fall on the day before Madrid’s Corpus Cristi public holiday ensuring maximum take-up by public servants in Spain’s capital and leading to possible disruptions in the travel plans for many Spaniards over the long weekend.

Spain, seen by analysts as another weak link in the euro zone that is struggling to gain the confidence of financial markets, has unemployment close to 20 percent, an economy seen shrinking 0.3 percent this year and a deficit of 9.3 percent.

Neighboring Portugal also adopted tough austerity measures on Thursday, part of a wider push to reassure market fears of a spreading Greek-style crisis.

The government’s plans to halt pension increases in 2011 was a breach of a previously agreed pension pact, CCOO’s Toxo said, while the leader of sister union Union General de Trabajadores (UGT) said the government’s austerity plan was devastating for growth and would increase unemployment.

“(The austerity measures) are a sharp blow to the chances of maintaining certain levels of consumption and will lead to delays in economic recovery,” Candido Mendez said.

SUPPORT FOR A GENERAL STRIKE?

Talk of a general strike has threatened Zapatero’s government on several occasions, although analysts question the extent to which the public would respond to such a measure.

“I don’t think the unions will go so far as to call a general strike,” said Alistair Seymour, Director of Henderson Global Investments in Spain said. “The unions are cozy with the current government and I think they are just firing blanks.”

In the event a general strike were called, Seymour said there would not be wide public support.

The Madrid bourse closed down 1.1 percent amid market concern over possible delays by the government in applying the proposed austerity measures.

“Zapatero’s unveiling of the measures was fine, but the actual situation in Spain is still difficult and foreign investors don’t want to know about us, and hedge funds are very active,” a trader said. “What the market demands is that these measures take effect forthwith,” she added.

Investing Research

(Additional reporting by Clara Vilar, Jesus Aguado and Elisabeth O’Leary; Writing by Martin Roberts, Judy MacInnes and Tracy Rucinski; Editing by Reed Stevenson)

Spanish unions to strike over austerity measures