By Tracy Rucinski
MADRID (Reuters) - Spanish unions hold a general strike on Thursday in a test of public patience with austerity a day before Prime Minister Mariano Rajoy announces a new round of deep budget cuts.
Spaniards have shown remarkable tolerance as Rajoy's centre-right government struggles to meet strict European-set deficit goals, but that may be running low as the economy enters its fourth year of low or no growth.
Polls have shown only 30 percent of workers would join Thursday's one-day strike against labor reform, but a surprise electoral setback for the ruling People's Party, or PP, at two regional elections on Sunday may spur wider participation.
"Sunday's election results are a sign that the population won't accept these kinds of reforms ... and could mark the start of a new cycle with more active opposition to policies than we've seen in recent months and year," economics professor at Spain's Santiago de Compostela University Xavier Vence said.
The unions' strong transport branches agreed to minimum services, which means one in four buses and about a third of underground and local trains are expected to run, but only 10 percent of domestic flights and 20 percent of European flights.
Spain's largest airline Iberia, owned by the UK-based holding International Airlines Group, said it would cancel 222 flights, more than 60 percent of those scheduled to fly on Thursday.
Large corporations like telephone operator Telefonica and oil firm Repsol are also highly unionized, but there was no official data on how the strike might affect production.
Spanish protests against cuts and economic reforms have been muted and mostly peaceful so far, even though unemployment is the highest in the European Union at 23 percent and half of workers under 25 are jobless.
Spain's last general strike in September, 2010, had limited impact beyond disruptions in transport and on factory production-lines as Spaniards resigned themselves to the then-Socialist government's austerity drive.
But Spain is now tipping into its second recession in three years and some observers expect at least another million people to join already swollen unemployment lines.
One Madrid elementary school, Colegio Siglo XXI, told parents it could not guarantee normal academic or cafeteria services on Thursday, "in protest at the difficult situation that is suffocating and worrying many families across Spain".
Left-leaning political website eldiario.es said this week the strike might in fact help Rajoy in his dealings with European leaders anxious to contain the continent's debt crisis.
"If we Spaniards accept this abuse with resignation, apathy and docility, the government won't have the will or the arguments to stand up to Brussels and Berlin," eldiario.es said.
FEAR OF JOB LOSS
Spanish unions called Thursday's strike to protest a jobs reform that makes it cheaper for companies to fire people and dismantles the nationwide system of collective bargaining.
But union power has been slowly disintegrating, with less than a fifth of Spanish employees currently affiliated with the country's two biggest unions, Comisiones Obreras (CCOO) and Union General de Trabajadores (UGT).
"Under the circumstances the unions have to do something, but they don't really think it will do any good," said Jose Ramon Pin, professor at business school IESE.
Prime Minister Rajoy has said that his labor overhaul now going through parliament is necessary to end unemployment and that it would not be a real reform unless it triggered a strike.
Economy Minister Luis de Guindos dismissed unions' calls to change it. "Regardless of whether (the strike) is considered a success or failure, the government is not going to alter the reform one jot," he said on Wednesday.
The very fear of job loss may be a major deterrent for many workers. "Those of us lucky enough to have a job don't want to risk it by striking," said a 45-year-old shop attendant in a wealthy Madrid neighborhood on the eve of the strike.
But former conservative Prime Minister Jose Maria Aznar backed down on his labor reform plans in 2002 after a general strike that shut down a large part of the country.
And following Sunday's surprise regional election result, which denied Rajoy the absolute majority he had hoped would reinforce his mandate for spending cuts, the prime minister will have to measure his next steps to avoid sparking more protests.
He said on Tuesday his administration would pass a "very, very, austere budget" and this year's deficit reduction goal of 5.3 percent of gross domestic product implies nominal cuts of at least 35 billion euros ($46.63 billion).
The aim is to keep borrowing costs down; the risk is that the country's recession will deepen.
There is expected to be a wide turnout at evening marches in cities around the country, and more demonstrations are expected as austerity intensifies. The Madrid march will terminate at the capital's central Puerta del Sol square, cradle of last year's "Indignant" movement.
"I think the realization that these measures don't solve the crisis, but aggravate it, is starting to spread," economics professor Vence said.
(Additional reporting by Feliciano Tisera; editing by Philippa Fletcher)