The Spanish government , battling to rein in public spending, wants Telefonica to foot the bill for unemployment benefit due to 8,500 employees the telecoms group plans to lay off,

The Spanish government , battling to rein in public spending, wants Telefonica to foot the bill for unemployment benefit due to 8,500 employees the telecoms group plans to lay off, the Labour Minister said on Thursday.

Spanish newspapers reported on Friday that the cost of benefits for the 25 per cent of Telefonica's Spanish workforce to be laid off would be 270 million euros to 440 million euros ($615 million).

The total value of benefits paid to those workers, additional to the redundacy package paid by Telefonica will depend on how long they have worked, their current wage and the formula used in firing them, under Spanish legislation.

Telefonica declined to comment. The telecommunications company is reining in costs in Spain, having suffered tough competition in a stagnant economy which has made it more expensive to win and retain customers while unemployment affects more than one in five.

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