Small Union marches ease pressure on Zapatero

Thin turnouts for union protests against an unpopular pension reform may ease pressure on the Spanish government as it seeks to calm markets with austerity measures while avoiding social conflict.

A total of only a few tens of thousands of protesters showed up for marches in Madrid, Barcelona and Valencia on a chilly Tuesday evening, according to most estimates.

The size of the protests, the first by the unions against Socialist Prime Minister Jose Luis Rodriguez Zapatero, was being monitored by international investors for signs the governemnt might struggle to contain social anger against the rise in the pension age to 67 from 65 and a 50 billion euro austerity plan.

These measures are seen as vital if Spain is to convince markets that it can tame a budget deficit that reached 11.4 percent of gross domestic product in 2009.

Doubts over Spain's long-term credit-worthiness caused the spread of 10-year Spanish bonds over German bunds to spike to more than 100 basis points earlier this month during a scare over Greek finances. They have since eased and traded little changed at 76 basis points on Wednesday.

One newspaper poll showed almost half of Spaniards would support a general strike against increasing the retirement age.

But Tuesday's turnout will reinforce suspicions that Spanish unions, which represent only 16 percent of workers, would struggle to bring the country to a halt.

WANING INFLUENCE

"The unions were powerful in the past, but they've lost it. They have much more influence in times of economic boom," said Juan Carlos Rodriguez, of Madrid consultancy Analistas Socio-Politicos.

Protesters in Madrid were overwhelmingly middle-aged or older and representatives of Spain's large immigrant population were almost completely absent. The unions also seemed to fail to attract support from people without full-time employment.

"There is a very clear segmentation between the employed and the jobless," said Jose Luis Martinez, of Citigroup.

"Unemployment is at 19 percent, nearly 20 percent," he said, adding that it was essential Spain reform the rigid labour markets which now both protect most union members and bar millions of others from finding employment.

The lack of impact of the union protest was apparent in Wednesday's session of parliament, during which it was notably missing as a major subject of debate.

Nonetheless Labour Minister Celestino Corbacho repeated the government's desire to reach negotiated deals on reforming the pension system and labour laws.

"Protests are one thing. But they are not incompatible with a possible accord," Corbacho told parliament.

Apart from increasing the pensionable age, which the government says is necessary as Spain's population gets older, the government has indicated it is willing to negotiate the length of time for which people must make contributions to the system.