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Spanish PM insists on raising retirement age to 67

Source: AP - Fri 17th Dec 2010

Spain's prime minister said Friday the government is set on raising the retirement age to 67 from 65 in the new year, despite strong resistance from some opposition parties and labor unions who are threatening another general strike.

Spain's central bank and other financial institutions have urged Zapatero to make changes in the pension system as part of reforms crucial to helping the country slash its deficit to prepare for a coming wave of retirements and emerge from the economic crisis.

His comments came as the central bank issued more negative news about the shaky banking sector, a key factor in Europe's effort to keep its government debt crisis from spreading. The bad loans ratio for the country's banks and financial institutions had risen to its highest level in 14 years, it said.

"The government maintains its proposal that the retirement age should be 67 years," Zapatero told reporters in Brussels following a European Union meeting.

"We can do it now progressively without any traumatic measures" that might be necessary 15 years down the line, he promised.

The government is intent on seeking consensus with other parties but the reform will be approved either way by Jan. 28, Zapatero said.

Spain's main parties have already agreed to extend the number of working years on which pensions are calculated. It is currently based on wages from the last 15 years. The parties have yet to set a new figure but it is expected to be either 20 years or 25 years. This means workers will have to contribute taxes for longer before being able to draw a pension.

But several parties are opposed and reject the reform, and union leaders have said it could spark another general strike similar to one held Sept. 29 that brought tens of thousands of people onto the streets, canceled some flights and halted produce shipments.

That national stoppage to protest government austerity measures and labor market reforms, the first in Spain in nearly a decade, was only partially successful. Labor Minister Celestino Corbacho said the strike had an uneven following and "a moderate effect."

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