SPAIN will not bow to union pressure and revise a 15-billion-euro ($18.76 billion) austerity plan, Prime Minister Jose Luis Rodriquez Zapatero said on Sunday. “I know there are protests by those who do not share them (government views), like the unions, but we will not change,” Zapatero told his Socialist party in Elche, southeast Spain.

With the Greek debt crisis shaking world markets, Zapatero is under pressure to make spending cuts while pushing through long-awaited labour reforms to avoid a similar loss of confidence in Spain. “No one can doubt at any time that Spain is a strong country and an economic power that will meet its obligations and pay debts,” he told a meeting of 2'000 Socialist mayors who face municipal elections next year.

Earlier on Sunday, the leader of Spain's largest union reiterated that he might call a general strike over cuts he saw as unfair and unnecessary.
Zapatero said he respected the unions, who have called for a strike on June 8 by civil servants who will have wages cut by an average of 5 percent this year.

He said cuts approved by the cabinet on Thursday would reduce social spending by 1.5 percent, but that this had risen by 50 percent since he took power in 2004. “We have to make this effort to save now so that tomorrow the development of a welfare state and equal opportunities may continue,” Zapatero said in his first address to the party since he unveiled the cuts on May 12. He reiterated calls for agreement on a long-awaiited labour reform, which the government hopes to achieve this week in a country where one in five of the workforce are jobless. “I call on society as a whole, especially businessmen and unions, to reach a good labour accord as soon as possible, so that young people may have more hope of finding work, and those with temporary contracts may have more hope of a stable job,” he said.

Agreeing a labour reform deal is a huge challenge as it will have to provide the job security the unions want and flexibility demanded by big business.
Labour leaders writing in the ABC newspaper on Sunday said government cuts could thwart an agreement.
Analysts say an agreement may be reached, but it is unlikely to provide the real change its EU partners want to see.
Zapatero reiterated that the government may ask wealthier Spaniards to make a bigger contribution to efforts to cut the budget deficit, which last year was 11.2 percent of gross domestic product. “Those who have greater economic means must be asked to make a greater effort, and that is what we will do,” he said.
He gave no details of possible tax hikes which were predicted in local media reports last week.