The government voted to back the changes to the collective bargaining system without the support of the CEOE employers organisation and the main unions after talks between them broke down last week.

Unions and employers had been negotiating for months over a reform of the system, considered a crucial plank of labour, banking and pension reforms aimed at reviving the economy.

The International Monetary Fund and the Bank of Spain believe the current system, which includes industry-wide agreements that cannot be modified, is too rigid.

“We have approved a bill on urgent measures in relation to collective bargaining,” Deputy Prime Minister Alfredo Perez Rubalcaba told a news conference.

“We managed to strike a balance between the flexibility necessary to create employment and the security that workers in Spain want.”

The reforms, which must still be approved by parliament, notably reduce the period that a contract remains valid once it has expired.

“In the absence of an agreement between unions and employers, the government has pursued a radical, advanced and balanced reform, taking into account the positions expressed by those involved in collective bargaining,” a government statement said.

The bill “aims to introduce more flexibility within companies so that when they undergo changes or go through difficult situations they can adapt to new conditions.”

But businesses have criticised the plan, saying it does not go far enough.

And protesters have taken to the streets in recent days to condemn the measures.

They are part of protests over the economic crisis, 21.29 percent unemployment — the highest rate in the industrialised world — and political corruption that began May 15 and fanned out to city squares nationwide.

About 40 so-called “M-15” demonstrators rallied outside the employment ministry on Friday morning to condemn the reforms.

The protesters chanted “We are going to stop this reform” and “We are not going to pay for this crisis”.

One of the organisers read a statement denouncing “the legalisation of slavery that the reform of the collective bargaining system envisages,” as the protesters raised their crossed arms in the air.

The government’s “labour reforms are getting increasingly worse,” said Antonio, a 62-year-old documentary filmmaker at the rally.

The protesters earlier briefly occupied the hall of the offices of the CEOE.

Spain, with an economy the size of the Greek, Irish and Portuguese economies combined, has been battling to convince markets that it should not be lumped together with the three lame ducks now under EU and IMF rescue terms.

Parliament last September already introduced controversial labour reforms aimed at cutting Spain’s high cost of firing workers and giving companies more flexibility to reduce working hours.

The government has also enacted measures to strengthen bank balance sheets, cut state spending, raise the retirement age and sell off assets.

The Spanish economy slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of a property bubble. It stabilized in 2010 and has shown slow growth in early 2011.