SEPTEMBER 9, 2010, 

Spain Approves New Labor Laws

By JONATHAN HOUSE

MADRID—Spanish lawmakers Thursday gave their final approval, without making major changes, to a long-awaited overhaul of labor laws expected to help cut unemployment and spur economic growth.

The parliamentary vote came at the end of a two-month period allowing lawmakers to make changes to legislation approved in June. The reform aims to encourage hiring by reducing the Spain's high cost of dismissal and giving companies more flexibility to reduce working hours and staff levels in economic downturns.

The legislation removes most restrictions on the use of indefinite contracts with unfair dismissal costs equal to 33 days of salary per year worked. The standard indefinite contract currently in use has a cost of dismissal equal to 45 days.

Furthermore, it makes it easier for workers to be dismissed on a "fair" basis, which has a 20-day cost of dismissal.

The reform has come at high political cost for Socialist Prime Minister José Luis Rodríguez Zapatero who has seen his standing fall in opinion polls and who faces a general strike on Sept. 29.

Mr. Zapatero's government, however, has come under intense international pressure to take measures to reduce a double-digit budget deficit and spur economic growth. Spain's 20% unemployment rate is twice the 10% average for the wider euro zone.

(the wallstreejournal)