Trade unions on Saturday slammed Spain's new labour reform, arguing it would encourage companies to cut jobs and potentially deepen a recession but shying away from calling a general strike.

A key change in the law announced on Friday allows employers to fire staff paying 20 days severance pay per year worked and a maximum of a year's salary if its revenues fall for at least a nine-month period. In ordinary circumstances firing costs were cut to 33 days per year worked from 45 days previously, with the maximum payable amount also cut sharply.

Many employers are as irrestibly attracted to firing staff (in difficult times) as moths are attracted to light, the head of the UGT union Candido Mendez said.

In practice, (this reform) will mean all dismissals will tend towards 20 days' severance pay, he told a news conference held with Ignacio Fernandez Toxo, who heads the country's biggest union Comisiones Obreras (CCOO).

Labour reform is seen as key to Spain's efforts to persuade markets it is able to slash its budget deficit and boost the competitiveness of its fragile economy. Unemployment is running at 23 percent, and half of young workers are without a job.

But many economists say that Spanish companies must first be given the freedom to cut their labour costs to become more competitive, allowing them to then expand and create more new jobs.

Mendez said the reform would inevitably push unemployment to 6 million people from about 5.3 million now.

Spain's jobs market favours an older generation of workers with robust benefits who are very expensive to let go, but gives few rights to younger workers on temporary contracts.

Analysts welcomed the measures taken, but largely said the reform may not have gone far enough.

Unions have long been expected to call a general strike in protest at the labour reform, imposed by the government after employers and unions failed to reach agreement.

But given a low turnout for more recent protest actions as Spaniards increasingly appear to accept the inevitable, they appeared to shy away from calling a strike so easily.

Starting now, Comisiones and UGT are starting a series of growing protests. On Feb 19 we want the streets of Spain to become a clamour against this labour reform, Toxo said.

Media reaction to the reform was divided, with right-leaning editorials giving it an unequivocal thumbs-up while left-wing newspapers focused on the speed and ease with which workers can now be sacked.

Left-leaning El Pais called the reform profound and significant but called for more stimulus for job creation.

That way, apart from convincing European authorities of the political will to carry out economic reform, job creation will be optimised when the economy starts to reactivate.

(Writing by Elisabeth O'Leary; editing by Patrick Graham)

(This story corrects to show Mendez heads UGT not CCOO)