Spain adopts stringent labor market reforms

MADRID – Spain’s new conservative government approved sweeping labor market reforms Friday as part of a drive to revive a sick economy and solve Europe’s worst unemployment nightmare – a jobless rate of nearly 23 percent.

The plan is designed to encourage companies to hire more people by cutting government-mandated severance packages and offering tax breaks for taking on young people.

Spain is eager to restore investor confidence, satisfy the European Union and other international institutions by seeking major structural reforms in order to cut its deficit, and ward off fears that it could follow Greece, Ireland and Portugal in seeking a bailout.

Under the new package of measures, Spanish companies facing hard times will be able to pull out of collective bargaining agreements and have greater flexibility to adjust an employee’s schedules, workplace tasks and wages depending on how the economy and the company are doing.