MADRID (Reuters) - Spanish opposition parties have stepped up their challenge to Prime Minister Mariano Rajoy's minority government, passing a motion in parliament urging him to reverse a labor reform which cheapened the cost of hiring and firing.


The proposal voted on by lawmakers late on Tuesday is not binding. Yet less than two months after conservative Rajoy was reinstated for a second term, the motion is a show of force by opposition parties who together hold a majority in parliament and are teaming up to fight his policies.


The labor market overhaul from 2012 - passed by Rajoy during his last mandate when his People's Party (PP) enjoyed an absolute majority - is credited by economists with helping to bring down an eye-wateringly high unemployment rate.


But it was deeply unpopular with left-wing parties and unions, who argued it weakened workers' rights in collective bargaining too much and made it easier for companies to slash salaries.


"We're asking for the support of parliament to undo the labor reform that brought precariousness, exploitation and poverty so that we can usher in dialogue," said Rafael Simancas, a lawmaker with the Socialists, the second-placed party in parliament, who put forward the motion.

It wants to design a new bill of workers' rights and reduce employers' reliance on temporary contracts, which is far greater than in most other European countries.

Lawmakers from anti-austerity Podemos ("We Can") and far-left Izquierda Unida ("United Left") backed the motion, while centrists Ciudadanos ("Citizens") abstained, helping it to pass. The PP voted against it, and Rajoy has warned his rivals not to undo his landmark economic reforms.

Emboldened by this success, opposition parties could try to table a binding law proposal with labor market changes, though Rajoy's government has the power to veto such bills if it can argue they affect the budget.

In the most fragmented parliament of Spain's modern history, parties last month managed to paralyze the implementation of an unpopular education reform.

Spain's jobless rate has fallen to just under 19 percent from nearly 27 percent three years ago, but remains second-highest in the European Union after Greece.

(Reporting by Blanca Rodriguez and Rodrigo de Miguel; Writing by Sarah White; Editing by Andrew Roche)