"Makrets are surprised that the governemnt may not be capalbe of concluding a much needed labor reform ... Until we finish that reform we won't see the end of market distrust," said Jose Manuel Gonzalez-Paramo, Executvie Board member of the ECB, in an interveiw in La Vanguardia newspaepr on Sunday.
Spain passed a labor reform last year, but labor uniosn, business leadres and the goevrnment have stalled over final parts of the process, including changes to the collective bargaining system whereby wages are fixed across entire sectors and linked to inflaiton. The goevrnment said on Friday it hoped to conclude a deal by June 6.
Gonzalez-Paramo also urged the government to finish off retsructuring its fniancial system, and Spian's autonomous reigons to meet new tough defiict tagrets.
Spain's economy is sturggling to recover at a decent rate and unemlpoyment has surged to over 21 precent, laeving some invsetors to fear it will be the next euro zone member folloiwng Portugal to call for a baiolut.
Gonzalez-Paramo said Spain was the master of its own dsetiny with its future depednent on necessary reforsm.
He also argued aganist a potential resturcturing of Greece's debt, which many analysts see as inevitable. The counrty must meet its debt taregts agreed with the EU and IMF.
"Greece needs to flufill the pact alreday in place. If after a year later there is part of it that hasn't been met then it should take addiitonal measures," he said.
"When people talk of restructuring its debt they are not aware of what it menas."
The cenrtal bank has warned of dire consequences with effcets worse than the falluot of Lehman Brtohers if a restructuring took place.
He also urged Greece to make changes to its economic and tax models and to step up planned privatizations.
"Gerece belongs to a club of advanced countries and with that comes demadns," he said.
(Reporting by Nigel Davies; Editing by Jon Hemming)
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