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Spain Holds First Strike Since 2002 as Europe Marches

Jose Luis Rodriguez Zapatero, Spain's prime minister
Spain's Prime Minister Jose Luis Rodriguez Zapatero’s about-face stemmed from investor demands that he narrow the budget shortfall and spur growth after the Greek debt crisis. Photographer: Tomohiro Ohsumi/Bloomberg

Spanish workers disrupted transport and television broadcasts in the first general strike in eight years as demonstrators marched in a dozen European cities against government spending cuts.

More than 100,000 protesters descended on Brussels before a meeting between union members and European Commission President Jose Barroso, organizers said. In Athens, rail, communications and port workers struck. Police in Dublin made an arrest after a truck damaged the front gates of the parliament building.

Spain’s two biggest unions said 72 percent of workers joined the strike, including 65 percent in the energy sector and 82 percent in the airline industry, according to Jose Javier Cubillo of the UGT union. Labor Minister Celestino Corbacho said the strike had a “moderate” impact, with 7.5 percent of state workers and “almost 100 percent” of auto workers joining the walkout. Power demand was 17 percent below a forecast made by grid operator Red Electrica Corp. SA based on usual demand, as of 6:20 p.m.

“The strike has been an unquestionable success,” Ignacio Fernandez Toxo, head of the CCOO union, told a news conference in Madrid. He called on the government to abandon plans to raise the retirement age and to revise the 2011 budget that goes to parliament tomorrow.

Deficit Concern

Spanish unions turned against the Socialist Prime Minister Jose Luis Rodriguez Zapatero, a former ally, after he enacted the deepest budget reductions in at least three decades and weakened job security to cut Europe’s highest unemployment rate. Zapatero’s about-face stemmed from demands from investors and European partners that he narrow the budget shortfall after the Greek debt crisis.

The extra yield investors demand to hold Spanish 10-year bonds instead of German equivalents rose to 196 basis points today, compared with 193 basis points yesterday and a two-month low of 137 basis points on July 27. Moody’s Investors Service is due to complete a review of Spain’s credit rating tomorrow, the same day the budget goes to Parliament.

“A disappointing budget combined with an effective general strike and a rating review on 30 September could supply that catalyst” for investors to sell Spanish debt, said Robert Crossley, a fixed-income strategist at Citigroup Inc. in London.

Governments across Europe are imposing austerity to rein in deficits accrued as leaders implemented stimulus programs to pull their economies out of the worst recession in six decades. French unions are planning further protests against President Nicolas Sarkozy’s plan to raise the retirement age, following two strikes on Sept. 7 and 23.

Closed Kiosks

Protesters set a police car alight and torched dumpsters in Barcelona, where eight people were arrested, a police spokesman said. In Madrid, 38 people were detained for damaging property and gluing up doorways, while police identified 1,500 people who formed pickets, a spokesman for the government’s representative in the Madrid region said in a telephone interview.

Telemadrid, the television station of the Madrid region, stopped broadcasting because of the strike. Newspapers kiosks in central Madrid were closed or without newspapers, even as stores opened and the metro operated. Corbacho said 21 percent of transport workers joined the walkout. Frankfurt airport canceled 22 flights because of the Spanish strike and Iberia Lineas Aereas de Espana SA said it would operate 35 percent of its flights.

Refineries Stable

Repsol YPF SA, the country’s biggest oil company, said production at its refineries wasn’t disrupted. Cia Espanola de Petroleos SA said its refinery in Huelva operated normally while EDP-Energias de Portugal SA said its plants hadn’t been affected. About 3.9 percent of banking staff joined the walkout, said a spokeswoman for the Spanish Banking Association, which represents commercial lenders.

The government had negotiated minimum services with unions, including 25 percent services on suburban rail lines, and Corbacho said today that agreed services were being provided.

The turnout cited by unions was higher than participation levels forecast in a poll in El Pais newspaper on Sept. 5. Just 9 percent of workers “definitely” planned to join the walkout, according to the poll, down from 15 percent in a July survey. Fifty-five percent were sure they won’t join today’s protest, up from 50 percent two months ago.

Talks Sought

After defending higher pensions, subsidies for new mothers and benefits for people caring for dependents since winning power in 2004, Zapatero cut public wages by 5 percent in June and froze all but the lowest pensions for 2011.

The prime minister aims to cut the euro region’s third-largest budget deficit to 6 percent of gross domestic product in 2011 from 11.1 percent last year. The budget plan will be voted on next month in Parliament, where the ruling Socialists don’t have a majority and are negotiating with lawmakers from smaller parties for support.

The government has said that the strike won’t make it change direction and the labor overhaul that unions are protesting is already in force. Zapatero repeated today that he wants to include unions in negotiations on an overhaul to the pension system that he plans by the end of the year.

A public-sector strike on June 8 received the backing of 12 percent of workers, according to the government, or 75 percent according to the two unions. Total union membership in Spain is 14 percent, according to data from the Organization of Economic Cooperation and Development. That compares with 24 percent in Greece and 33 percent in Italy, the OECD figures show.

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