Spain approves tough labour market reforms

AFP - Spain's right-leaning government slashed employees' maximum severance pay in a sweeping labour reform unveiled Friday to confront a near 23-percent unemployment rate.

Severance pay falls to a maximum of 33 days' salary for each year of employment from the previous level of 45 days, Employment Minister Fatima Banez told a news conference after ministers agreed a draft decree.

"The government's goal is to fight joblessness and stem unemployment," she said.

The previous Socialist government, ousted in November 20 elections by the Popular Party, had introduced a new contract with a 33-day-a-year maximum severance and just 20 days for financially-motivated layoffs.

But the new contract, introduced in July 2010, was rarely used and the traditional contract offering 45 days a year in compensation for lay offs remained the norm.

"The goal is to make it easier to hire new workers in our country, especially the young and long-term unemployed," Deputy Prime Minister Soraya Saenz de Santamaria told the news conference.