Spain approves labour law reforms to fight unemployment

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Spain's Socialist government approved Friday a fresh package of labour market reforms aimed at fighting sky-high unemployment, especially among youths, ahead of a general election on November 20.

Under the new rules fixed-term contracts will no longer be automatically converted into permanent contracts after two years, Labour Minister Valeriano Gomez told a news conference after a weekly cabinet meeting.

Workers on short-term contracts, often youths at the start of their careers, complain that companies prefer to let them go after two years instead of giving them a permanent contract, which carries higher benefits.

"We prefer to have a temporary worker than a jobless worker," said Gomez.

The government also introduced a new type of job contract aimed at youths between the ages of 16 and 25 without qualifications which allows workers to spend 25 percent of their time in training.

The new contract can last one or two years and is modelled after a similar training system in Germany.

Companies that hire a jobless worker on this type of contract will be exempt from making social security payments for the employee for the duration of the contract.

Government spokesman Jose Blanco said the contract will allow employees to be trained in new skills even as they are working as part of efforts to fight youth unemployment which he called a "national priority".

Spain's unemployment rate has soared from 7.95 percent four years ago to 20.89 percent in the second quarter of 2011 -- the highest rate among members of the Organisation for Economic Cooperation and Development -- following the collapse of a property boom.

The unemployment rate for under-25s is running at more than 45 percent and it has helped whip up a nationwide "indignant" protest movement against the pain caused by the economic slump.

Last year the government approved by decree a reform to the labour code that gave employers more control over how they deploy workers and made it slightly cheaper to fire permanent employees.

© 2011 AFP

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