UPDATE 1-Spain will fulfill labour reform plan, not lower pensions after EU deal, minister says

(Adds details from labour minister)

MADRID, July 22 (Reuters) – The Spanish government will fulfill its commitment to change the country’s labour laws and will not lower public pensions after approval of the EU recovery fund earlier this week, Labour Minister Yolanda Diaz said on Wednesday.

Diaz’s comments echoed remarks by Foreign Minister Arancha Gonzalez, who said Spain intended to reform its labour laws to reduce the structural unemployment rate as part of commitments tied to the disbursement of the European Union recovery fund.

“We will fulfill the government agreement because it is necessary,” the labour minister told SER radio station when asked if the EU deal could affect the agreement between the Socialist Party and its far-left coalition partner, Unidas Podemos, to modify the 2012 labour legislation.

Diaz said it was necessary to correct what she called the “enormous precariousness” of Spain’s labour market and its wage devaluation, but stressed those issues would be addressed in talks with unions and business associations.

Asked if public pensions would be lowered as a consequence of the EU deal, she replied: “No”.

Introduced by a previous conservative government, the labour reform allowed far greater flexibility in the labour market, making it easier to cut wages and cheaper to lay off workers.

Supporters of the reform argue it helped convert Spain into a more competitive market, but detractors say it eroded workers’ rights and promoted the creation of more precarious low-wage jobs.

“Our pending task is to carry out reforms with the consensus of all the political and social forces of the country,” Gonzalez said earlier on Wednesday in an interview with Spanish TV channel La Sexta, without elaborating on how the laws would be reformed.

The number of people in Spain registering as jobless rose by 0.13% in June from a month earlier, or by 5,017 people, leaving 3.86 million people out of work as the coronavirus lockdown was lifted.

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