Zapatero: Conflict With Spanish Businesses
October 1st, 2009
Spanish Prime Minister Jose Luis Rodriguez Zapatero on Monday accused business leaders of selfishly arguing for easier rules on firing workers in a sign of a growing breach between the Socialist government and companies.
In an interview with Cadena Ser radio, Zapatero said he would not give into pressure from “the powerful”, a reference to business leaders who left talks with the government and unions on boosting Spain’s competitiveness during the economic crisis.
The Socialist leader’s rhetoric has become more aggressively left-wing in recent months as he tries to maintain the support of core voters during a year when the government expects the economy to contract by 3.6 percent.
Asked who he meant by the powerful, Zapatero replied: “All those who have been asking the government to make it easier to fire workers.”
“That’s who I mean by the powerful. I really think they lack a certain sense of what is good for the country and a certain sensitivity,” he said.
Spanish companies want labour rules made more flexible to boost productivity in an economy where inflation long outran the eurozone average and which became over-reliant on services and Spanish property construction during a now defunct property boom.
But the prime minister’s language will further disillusion business leaders already unhappy with the economic management of the government, which on Saturday announced it would boost value-added tax by two percentage points as it tries to cut the budget deficit back from roughly 10 percent of output.
The VAT rise has been criticised by both Left and Right and now faces a rough ride through parliament where the Socialists are short of a majority and will probably have to seek support from Basque nationalists in order to ensure its approval.
The leader of the Spanish Business Confederation (CEOE), Gerardo Diaz Ferran, who participated in the failed talks about competitiveness with the unions, said companies were losing faith in the government.
“There is an enormous lack of confidence in the business world at the moment,” he told newspaper El Mundo.
“The government is not carrying out the right economic policies. At first they denied there was a crisis and now they are not making the necessary reforms,” Diaz Ferran said.
The government, which has fallen behind the conservative opposition Popular Party in opinion polls, is not only facing increased dissatisfaction from the corporate world. Unions and smaller left-wing parties also criticised the budget.
“The rise in VAT is going to hit the poorest the hardest,” said Fernando Lezcano, spokesman for Spain’s biggest union, Comisiones Obreras.
Story from Reuters
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