Spanish unions threaten general strike, June 2

UPDATE 3-Spanish unions threaten general strike
Thu May 13, 2010 11:57am EDT

* Spain's 2 biggest unions threaten general strike

* Propose public sector workers strike for June 2

* Say austerity plan devastating for growth

(Adds details from press conference, economist comment)

By Andres Gonzalez and Feliciano Tisera

MADRID, May 13 (Reuters) - Spain's unions threatened to call a general strike to protest austerity measures aimed at reducing the country's deficit back to EU guidelines and calming markets.

"We radically reject this austerity plan and both unions are starting protests that could lead to a general strike very soon," Ignacio Fernandez Toxo, the general secretary of Spain's biggest union Comisiones Obreras (CCOO), told reporters on Thursday.

Earlier, the unions said they proposed calling a public sector strike for June 2, after Prime Minister Jose Luis Rodriguez Zapatero said on Wednesday the government would cut civil servants salaries by an average 5 percent in 2010 and freeze them until 2011.

The strike would fall on the day before Madrid's Corpus Cristi public holiday ensuring maximum take-up by public servants in Spain's capital and leading to possible disruption in the travel plans of Spaniards over the long weekend.

The government's plans to halt pension increases in 2011 was a breach of a previously agreed pension pact, CCOO's Toxo said, while the leader of Spain's second largest union Union General de Trabajadores (UGT) said the government's austerity plan was devastating for growth and would increase unemployment.

"(The austerity measures) are a sharp blow to the chances of maintaining certain levels of consumption and will lead to delays in economic recovery," Candido Mendez said.

SUPPORT FOR GENERAL STRIKE?

Talk of a general strike has threatened Zapatero's government on several occasions, although analysts question the extent to which the public would respond to a walkout.

"First of all, I don't think the unions will go so far as to call a general strike," said Alistair Seymour, Director of Henderson Global Investments in Spain said. "The unions are cosy with the current government and I think they are just firing blanks."

In the event a general strike did take place, Seymour said there would not be wide public support.

A Spanish economist, who asked not to be named, agreed.

"At most a general strike, which I don't think is probable, would be a gesture on the part of the unions to save face. But it wouldn't have massive support from the public," the economist said. "It certainly wouldn't be anything like what we have seen in Greece."

The Madrid bourse fell 1.9 percent, bucking the broad European trend, amid market concern over possible delays by the government in applying the proposed austerity measures.

Analysts view Spain as another weak link in the euro zone and consider it at risk of succumbing to a debt crisis similar to that which has shaken Greece and the euro.

With unemployment running at close to 20 percent, the economy expected to shrink 0.3 percent this year and a deficit of 9.3 percent, Spain is struggling to gain the confidence of financial markets.

"Zapatero's unveiling of the measures was fine, but the actual situation in Spain is still difficult and foreign investors don't want to know about us, and hedge funds are very active," a trader said. "What the market demands is that these measures take effect forthwith," she added. (Additional reporting by Clara Vilar, Jesus Aguado and Elisabeth O'Leary; writing by Martin Roberts and Judy MacInnes; editing by Karen Foster)

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