Spanish Economy Disrupted as Unions Strike to Protest Rajoy Cuts
Emma Ross-Thomas, ©2012 Bloomberg News
Thursday, March 29, 2012
-- Spanish transport, power demand and manufacturing were disrupted today in the first general strike against labor reforms and austerity policies since Prime Minister Mariano Rajoy took office three months ago.
Iberia, the Spanish unit of International Consolidated Airlines Group SA, said it canceled 65 percent of flights, while national power demand was 16 percent below that of a typical day, grid operator Red Electrica Corp SA data showed. At Volkswagen AG and Renault SA factories, 100 percent of workers followed the strike during the nightshift, the Comisiones Obreras union said in a statement.
The People's Party government "will not cede" to union demands to retract changes to labor rules, Budget Minister Cristobal Montoro said yesterday. Thirty percent of workers planned to strike, according to a poll by El Pais.
While Rajoy's measures have angered unions and undermined support for the party in a regional election on March 25, the government is still struggling to convince investors its policies are enough to restore the public finances and reduce a 23 percent jobless rate. Spanish 10-year borrowing costs have surged almost 50 basis points since the start of March.
"He has no choice," said Antonio Barroso, a political analyst at Eurasia Group in London and a former government pollster. "If he gives in, the markets will punish Spain. Rajoy has his back against the wall."
Spanish 10-year bond yields rose to 5.37 percent at 10:45 a.m. in Madrid, compared with 5.33 percent yesterday. The Ibex 35 share index, which has lost 7 percent this year, was unchanged. Fewer Spanish workers are following the general strike than they did in the last walkout in 2010, Cristina Diaz, a director general at the Interior Ministry, told a televised news conference today.
Department stores opened as usual, except in Pamplona, where a violent picket line blocked the entrance to El Corte Ingles, she said. In the automobile industry, participation is "medium-high," while the number of public-sector workers staying home is "not significant," she said.
Unions organized a demonstration in central Madrid at 6:30 p.m. In the El Pais poll, published on March 25, 51 percent of those surveyed said the strike was justified. More than 90 percent of industrial workers and garbage collectors joined the strike, Antonio del Campo, head of organization at Comisiones Obreras union, told a news conference in Madrid.
CEOE, the business lobby, said while industrial workers stayed home more than others, "the immense majority" of Spaniards had gone to work today. State broadcaster RTVE had a reduced service, re-running old documentaries in place of its usual breaking news service.
Police arrested 58 people and nine people were injured lightly in "incidents," Diaz said.
Flights in and out of the country were disrupted. Barcelona, which drew 0-0 at Milan in a Champions League soccer match last night, will remain in Italy until tomorrow to avoid the effects of the strike, a team official said by phone.
At the last general strike in September 2010, which was also called to protest changes to labor rules and austerity measures, 72 percent took part, according to the unions. The former Socialist government said the impact was "moderate," with participation rates ranging from 7.5 percent in the public sector to 100 percent in the automotive industry.
The latest labor overhaul goes further than the attempt by the Socialists to reduce the European Union's highest jobless rate, which amounts to 50 percent among young people. The bill makes it easier to cut wages, reduces unions' negotiating power and allows for lower firing costs.