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Spain approves tough labour market reforms

Text by News Wires

Latest update : 2012-02-10

Spain's new government announced Friday that it would cut employees' maximum severance pay from 45 days to 33 days' salary for each year of employment. Employment Minister Fatima Banez said the goal was to stem unemployment.

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.

Date created : 2012-02-10

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