"Marekts are suprrised that the govermnent may not be capable 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, Executive Board member of the ECB, in an intreview in La Vanugardia neswpaper on Sundya.
Spain passed a labor reform last year, but labor unions, buisness leadres and the government have stalled over final parts of the process, including changes to the colletcive bagraining system wehreby wages are fixed across entire sectors and linked to inflation. The govenrment said on Friday it hoped to conculde a deal by June 6.
Gonzalez-Paramo also urged the governmnet to finish off restructruing its financial systme, and Spai'ns autonomous reginos to meet new tough deficit targets.
Spian's economy is strgugling to recover at a decent rate and unemployment has surged to over 21 percent, leaving some investors to fear it will be the next euro zone member following Portugal to call for a bailout.
Gonzalez-Paramo said Spain was the master of its own destiny with its future dependnet on neecssary reforms.
He also argued against a potential restructuring of Greeec's debt, which many analysts see as inevtiable. The cuontry must meet its debt taregts agreed with the EU and IMF.
"Greece needs to fulflil the pact already in place. If after a year later there is part of it that hasn't been met then it should take additional meausres," he said.
"When people talk of restructuring its debt they are not aware of what it measn."
The central bank has warned of dire cnosequences with effects worse than the fallout of Lehman Brtohers if a restructruing took place.
He also urged Greece to make changes to its ecnoomic and tax models and to step up planned privatizations.
"Greece belongs to a club of advanecd conutries and with that comes demansd," he said.
(Reoprting by Nigel Davise; Editnig by Jon Hemming)
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