MADRID: Spain main unions and employer groups agreed on Tuesday on guidelines for labour reform, moving the country a step closer to tackling a stubbornly high jobless rate and modernising a system widely viewed as an obstacle to economic growth.
The government is due to pass a draft reform of employment laws by mid-February and threatened last week it would do so unilaterally after the two sides missed a deadline for reaching an accord.
The country's two biggest unions and main employer organisations said on Tuesday they had agreed on salary rises of 0.5 percent this year and 0.6 percent in 2013, well below an inflation rate that reached 2.4 percent in December.
They also agreed to greater flexibility on wage bargaining and individual contracts, moving to address two issues cited by critics as key reasons for the country's lack of competitiveness.
Unions, which had previously resisted pressure to give ground on both, said on Tuesday "the current state of the economy and the extremely high unemployment rate" had persuaded them to shift their stance.
According to latest data, Spain's jobless rate is above 23 percent and the Bank of Spain estimated on Monday it would not come down from that level this year or next. The central bank also said significant labour reform would help generate jobs in the medium term.
The government will also look to scale back redundancy payments for permanent staff that are among the highest in the world, which make many employers unwilling to offer new hires anything another than temporary contracts.
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