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Spain, unions strike deal to raise pension age to 67

Spain’s government said Thursday it had struck an outline deal with unions to raise the pension age from 65 to 67, a hard-fought reform at the heart of its battle to repair public finances and soothe rattled markets.

Prime Minister Jose Luis Rodriguez Zapatero’s Socialist government has vowed to lift the retirement age so as to cut expenses and stop long-term government finances seeping deeper into the red.

Investors are watching the plan as a sign of Madrid’s determination to carry out promised reforms and avoid being trapped in the debt quagmire that swamped Greece and Ireland.

“There is an agreement in principle with businesses and unions regarding pension reform,” the Labour Ministry said in a statement.

“During the day we expect to close the outstanding chapters,” the ministry said.

According to Cadena Ser and RNE radio, the agreement would raise the retirement age to 67. But it would also allow those who have made social security payments for 38 and a half years to retire at 65.

The Labour Ministry did not provide those details.

Zapatero’s Socialist government plans to present the plan at a weekly cabinet meeting on Friday.

The country’s two main unions, the UGT and the CCOO, have previously voiced fierce opposition to raising the retirement age, threatening a new general strike if the government went ahead without union agreement.

The unions staged a general strike in September 2010 over the government’s labour-market reforms.

The pension reform would be introduced gradually between 2013 and 2027, Labour Minister Valeriano Gomez said Monday.

The number of pensioners in Spain is expected to rise from eight million now to 12 million over the next 30 years, he added.

Spain is among the eight European Union countries with the highest long-term budgetary cost of aging through 2060, according to the European Commission.