Gonzalez proposes recession-beating pact

THE Spanish government, and union and employers' representatives began a first round of talks yesterday aimed at reaching a 'social pact' to brake the spiralling jobless rate and tackle an unexpectedly deep recession. The Prime Minister, Felipe Gonzalez, made such a pact his priority after narrowly winning last month's elections and forming a minority government.

His aim is to get all social sectors in agreement for a three- year pact to start next January. Failure to do so, political analysts believe, could bring down his Socialist government and force new elections.

Taking part in the meeting at the Economy Ministry were the new ministers of Economy and Labour, Pedro Solbes and Jose Antonio Grinan, the leaders of the two big union federations, Nicolas Redondo of the General Workers' Union and Antonio Gutierrez of the Workers' Comissions as well as Jose Maria Cuevas, head of the Employers' Federation.

The government, desperate to cut a public deficit expected to reach 5 per cent of GDP this year, hopes to reach a compromise between the unions' refusal to see of social welfare cuts and industry's insistence on more flexible labour legislation to make Spain competitive within Europe.

The employers say workers have been mollycoddled during 11 years of Mr Gonzalez's Socialist Party rule and that the right to strike or picket, dismissal benefits and high unemployment payments have been discouraging productivity. 'Moonlighting' - having two jobs, or one 'unofficial' job while collecting dole money - is considered by many workers as almost a basic civil right.

Employers' figures released this week showed strikes and work hours lost were down 22 per cent in the first half of this year compared with the first six months of 1992. That was hardly something to celebrate, however, since this year's first-half figure was 1,014 strikes and 15.5 million work hours lost.

The unions are reluctant to cede any of the rights they have built up over the years and have warned Mr Gonzalez against cutting pensions or unemployment benefits. The government's Catch 22 is how to reduce the spiralling deficit without doing so. Mr Gonzalez and his ministers have been putting out contradictory signals. Essentially, however, they have made it clear they must at least 'contain' public spending. Since the jobless figure is still rising, that seems to imply social welfare cuts along the line.