Spanish government, unions near accord on pensions

[January 27, 2011]  MADRID (AP) -- Spain's Labor Ministry said Thursday it had reached preliminary agreement with unions on key reforms to the country's pension system, a deal that could avert a general strike.

The ministry declined to give details but leading daily El Pais and other media outlets said the agreement included the government's highly contested plan to raise the retirement age gradually from 65 to 67 under certain conditions.

The government has pledged to approve a pension reform bill Friday. The bill is seen as crucial to its attempts to shore up public finances as it struggles to emerge from recession.

Unions have long opposed any changes in the retirement age and had threatened a general strike.

Spain is battling to reduce a euro-zone high near 20 percent unemployment and a swollen deficit. The country has also come under fierce pressure from bond investors in recent months over fears it may be unable to handle its debt and will need a bailout like Ireland and Greece.

El Pais said the two main unions have agreed to accept the age change but demand that people who have worked for 38.5 years can retire at 65 with full benefits. The government had insisted on people working 41 years if they wanted to receive full pension at 65.

Workers who do not fulfill the requirements for a full pension at 65 will have to work at least 37 years and retire at 67 if they wish to receive full benefits.

Under the deal, the amount received will be calculated from a person's wages in the last 25 years of their working life, up from the current 15.

The negotiations have been going on for several weeks.

Unions called a general strike Sept. 29 to protest the government's austerity measures and labor reforms. The stoppage was partially successful, affecting mostly industry and transport but not services.

[Associated Press; By CIARAN GILES]

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