Spanish government set to approve labour market overhaul

The Spanish government is to approve yesterday a labour market overhaul deemed crucial for reviving the economy and fending off a Greek-style debt crisis despite union calls for a general strike.
Socialist Prime Minister Jose Luis Rodriguez Zapatero's cabinet is scheduled to approve the reforms -- which make it easier and cheaper for firms to fire workers -- at a special cabinet meeting.
The reform package will then be submitted to a vote on Tuesday in parliament, where the government is seven seats short of a majority and relies on the support of smaller, regional parties to pass legislation.
Last month the assembly passed the government's 15-billion-euro ($18.4 billion) austerity package, which includes cuts to public workers' salaries, by just one vote.
"This reform is necessary to revitalise the labour market," Labour Minister Celestino Corbacho said ahead of the cabinet meeting.
Spain's unemployment rate has soared to 20 percent, the highest rate in the 27-nation European Union after Latvia's, following the collapse of the labour-intensive construction sector at the end of 2008.
The rise in the unemployment rate from a low point of about 8.0 percent in 2007 has caused government spending on unemployment benefits to soar, helping to lift Spain's public deficit to 11.2 percent of gross domestic product last year, the third-highest level in the eurozone after Greece's and Ireland's.
Many economists blame the high jobless rate on the high cost of firing workers in Spain, which makes employers reluctant to hire staff and encourages the use of temporary contracts that have few benefits and rights.