By Tracy Rucinski MADRID

FORMAL talks between Spain's government, unions and business ended with no agreement on labour reforms yesterday, but the government said it was confident of pushing the measures through parliament this month.

The reforms, aimed at loosening a rigid labour market, are seen as essential to ensuring Spain's long-term economic recovery and to ease market fears of a Greek-style debt crisis.

The minority ruling Socialists want to reach a consensus on the measures, and say informal talks with unions and business will continue, but have said they are determined to push them through with or without it.

They have started talks with smaller political parties on the reforms, Spanish media have said, and will present a working document with their proposals at today's cabinet meeting.

With the largest opposition Popular Party sure to vote against any Socialist proposals, the government depends on regional parties like the Catalan Nationalists (CiU) to pass any legislation. The CiU's 10 votes would be enough to push the reforms through parliament. Without them, the government would have to cobble together votes from an array of other parties.

A 15-billion-euro austerity plan scraped through parliament by one vote in May after the Catalans abstained. The CiU told Spanish television on Wednesday it would not abstain this time, however, and would vote for or against.

Spanish Prime Minister Jose Luis Rodriguez Zapatero said on an official visit to Italy yesterday he was confident of receiving majority support in parliament for the reforms, which he promised would be substantial. “We want a model that makes permanent contracts the norm, that reduces the cost of firing without sacrificing workers' rights and that clearly changes businesses' flexibility in terms of working hours, conditions and wages,” Zapatero said. “We're confident it will have majority support in parliament,” he added. The government said it was open to informal discussions with unions and business leaders after all-night talks ended in the early hours of yesterday, and planned to have bilateral meetings with both parties today.

In the meantime, the government's draft would go to politicians and the cabinet, with an eye to the cabinet passing the final document next week, possibly at a special meeting on June 16, a labour ministry spokesman said.

That deadline could always be extended, he said. “If it really looks like we can get an agreement (with unions and business), it could go on another week,” he told Reuters.
Failure in parliament would be a huge blow to Zapatero and could even force him to call an early election. “The government's best option to save the reform in parliament is to get an agreement with the unions and business leaders, so it's going to exhaust that option,” said Esther Sanchez, a private law professor at business school ESADE. “But it can't wait too long. International pressure is massive,” she added yesterday.