Spain draws up 'much improved' law on wages

Spanish Finance Minister Elena Salgado said the wage-bargaining law approved is "much improved" on a draft that employers criticised as "disappointing". "It has been very much improved compared with the text that was sent to the unions and employers representatives," Salgado said in a telephone interview from Madrid on Friday. As part of its efforts to shield Spain from the sovereign debt crisis, the Socialist government had pledged European partners it would overhaul wage rules that have been criticised by the European Central Bank. After being sent a draft of the proposed law, Spain's CEOE business group said on June 8 it was "disappointing" and didn't reflect their proposals. "As finance minister, I'm very happy with what we've approved," she said. "It's a good reform." The new text, which will be published on June 13 or 14, states "clearly" that wage deals negotiated on a company level take precedence over provincial agreements, Salgado said. That allows the deals to adapt to the "specific characteristics of the company," which is "enormous progress," she said. The new law, passed by decree Friday, also stops expired wage agreements being indefinitely rolled over in the absence of new deals. It forces parties into an "obligatory arbitration" if they don't come to a new agreement after as long as 14 months, Salgado said. That "obligatory" mediation wasn't in the original text, she said. The ruling Socialist Party, which suffered its worst local- election defeat in three decades on May 22, has to juggle electoral interests with the need to tame a surge in Spain's borrowing costs just nine months before a general election that polls suggest it will lose. The government risks failing to convince investors it can bring down the highest unemployment rate in Europe and spur enough growth to rein in the euro region's third-largest deficit. The extra yield investors demand to hold 10-year Spanish debt rather than German equivalents surged 10 basis points yesterday to 251 basis points. That is more than 10 times the average in the first decade of monetary union. The law comes into effect immediately, even as the government plans to allow for amendments in Parliament. CEOE Chairman Juan Rosell said on June 8 he would make proposals to improve the legislation during that process. No one at the CEOE was available to comment today after the final text was approved. From / Gulf News