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Spain must make changes to labour market-minister

Published 09/24/2009, 07:52 AM
Updated 09/24/2009, 07:54 AM

* Temporary contracts, training must be studied-Corbacho

* Labour Minister rules out labour market reform

MADRID, Sept 24 (Reuters) - Spain must make changes to its labour market which relies heavily on temporary contracts and fails to provide sufficient worker training, Labour Minister Celestino Corbacho said on Thursday.

"It is important to study and reflect on how some aspects of how the labour market works and, if necessary, propose the necessary changes," Corbacho said.

His comments at a conference come amid turbulent tripartite talks between the government, business representatives and unions on how to deal with soaring registered unemployment, which stood at 17.9 percent in the second quarter.

Corbacho said his comments on the Spanish labour market, which has the highest rate of unemployment in the European Union, did not constitute a call for labour market reform.

"I not talking about a labour market reform but a reform of the productivity model through dialogue," he said.

Labour market reform has become synonymous with cuts to firing costs, some of the highest among developing nations, and the country's powerful unions have said they would call a general strike if the subject was brought to the negotiating table.

Corbacho outlined four areas which should be studied, including temporary contracts, limited use of part-time contracts, work force training and benefits.

Some economists warn the Spanish unemployment rate could reach 20 percent next year and remain over that level until 2012 following the collapse of the country's key construction sector.

Around 90 percent of job losses in the last 12 months have been workers holding temporary contracts, according to the OECD.

"The temporary nature (of the labour market) is one of the largest problems in Spain and is one of the reasons unemployment rises so fast in times of crisis," the Minister said.

The worst of the economic crisis was probably over but unemployment would likely rise more than normally expected due to seasonal factors over the next few months, Corbacho warned.

"In the current economic climate the last few months of the year are more vulnerable and, because of this, it's likely that the rise in the number of registered unemployed will be higher than usually seen due to seasonal factors," Corbacho said. (Reporting by Paul Day; Editing by Victoria Main)

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