Spain Set To Pass Crucial Labor Market Reforms

MADRID (AP) — Spain's new conservative government has passed labor market reforms deemed crucial to creating jobs to chip away at Europe's worst unemployment nightmare and restore confidence in a sick economy.

Deputy Prime Minister Soraya Saenz de Santamaria said Friday that the changes are aimed at encouraging companies to hire young people, the long-term unemployed and people with dependents.

She said the package stresses, among other things, open-ended contracts and tries to limit temporary ones that are very common in Spain and make the country's workforce vulnerable to swings in economic growth.

Saenz de Santamaria said the reforms will "mark a before and after" in Spanish labor law.

Passage came after a Cabinet meeting.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

MADRID (AP) — Spain's new conservative government on Friday will pass labor market reforms deemed crucial to creating jobs to chip away at Europe's worst unemployment nightmare and restore confidence in a sick economy.

The Cabinet is expected to make it cheaper for companies to lay people off — a task the previous Socialist government also tried, only to see the jobless rate keep climbing. It is now at nearly 23 percent and the economy is shrinking.

The reforms are also expected to make it easier for companies to sidestep collective bargaining agreements with unions and change working conditions, including working hours and wages. The goal is to make for more flexibility and give firms options other than outright layoffs when times get tough.

Prime Minister Mariano Rajoy acknowledged this week the jobless rate will go up this year, and has said the labor market reforms could lead to a general strike.

Unions are likely to be angered over the collective bargaining change and have complained that the government has not advised it in advance on what reforms were coming, as previous governments have.