Spain's unions threatened to call a general strike to protest austerity measures aimed at reducing the country's deficit back to European Union 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 today.
Earlier, the unions said they proposed calling a public sector strike for June 2nd, after Prime Minister Jose Luis Rodriguez Zapatero said yesterday the government would cut civil servants salaries by an average 5 per cent 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, Mr Toxo said. 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," UGT leader Candido Mendez said.
Talk of a general strike has threatened Mr Zapatero's government on several occasions, although analysts question the extent to which the public would respond to a walkout.
The Madrid bourse fell 1.9 per cent today, 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 per cent, the economy expected to shrink 0.3 per cent this year and a deficit of 9.3 per cent, Spain is struggling to gain the confidence of financial markets.
Reuters