UPDATE 3-Spanish unions threaten general strike

* Spain’s 2 biggest unions threaten general strike

* Propose public sector workers strike for June 2

* Say austerity plan devastating for growth

(Adds details from press conference, economist comment)

By Andres Gonzalez and Feliciano Tisera

MADRID, May 13 (BestGrowthStock) – Spain’s unions threatened to call
a general strike to protest austerity measures aimed at reducing
the country’s deficit back to EU guidelines and calming markets.

“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 on
Thursday.

Earlier, the unions said they proposed calling a public
sector strike for June 2, after Prime Minister Jose Luis
Rodriguez Zapatero said on Wednesday the government would cut
civil servants salaries by an average 5 percent in 2010 and
freeze them until 2011.

The strike 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 disruption
in the travel plans of Spaniards over the long weekend.

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 Spain’s second largest 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 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 a walkout.

“First of all, 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 cosy
with the current government and I think they are just firing
blanks.”

In the event a general strike did take place, Seymour said
there would not be wide public support.

A Spanish economist, who asked not to be named, agreed.

“At most a general strike, which I don’t think is probable,
would be a gesture on the part of the unions to save face. But
it wouldn’t have massive support from the public,” the economist
said. “It certainly wouldn’t be anything like what we have seen
in Greece.”

The Madrid bourse fell 1.9 percent, bucking the broad
European trend, amid market concern over possible delays by the
government in applying the proposed austerity measures.

Analysts view Spain as another weak link in the euro zone
and consider it at risk of succumbing to a debt crisis similar
to that which has shaken Greece and the euro.

With unemployment running at close to 20 percent, the
economy expected to shrink 0.3 percent this year and a deficit
of 9.3 percent, Spain is struggling to gain the confidence of
financial markets.

“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.

Investment Advice
(Additional reporting by Clara Vilar, Jesus Aguado and
Elisabeth O’Leary; writing by Martin Roberts and Judy MacInnes;
editing by Karen Foster)

UPDATE 3-Spanish unions threaten general strike