Spain's Socialist government will stand by a plan to raise the retirement age despite a threat of union protests, Labour Minister Celestino Corbacho said in an interview published on Monday. Prime Minister Jose Luis Rodriguez Zapatero's government is trying to cut a budget deficit which hit 11.4 percent of gross domestic product last year, and head off a crisis of confidence on financial markets which has already hit fellow euro zone members Greece and Portugal. “The government has sent a proposal on pensions to parliament and we're not going to withdraw it, with demonstrations or without them,” El Mundo newspaper quoted Corbacho as saying. A poll in left-leaning newspaper Publico showed that 49 percent of Spaniards would support a general strike against the government's plan to raise the legal retirement age to 67 from 65 and consider cutting pension payments as the population ages. Unions will hold protest marches at the end of the month, marking an end to relatively good relations with Zapatero. The government had managed to keep the unions on side during the economic crisis, despite unemployment doubling to almost 20 percent, by promising not to accede to business demands to make it cheaper to hire and fire workers. But investors fear that some euro zone governments, notably in southern Europe, might default on their debts if they fail to reduce their budget deficits. Selling of Greek and Portuguese government bonds has been particularly heavy. But Spanish debt has also suffered to a lesser extent, with the yield on its 10-year government bond about one percentage point more on Monday than the German euro zone benchmark. Corbacho also told El Mundo he expected unions and employers' associations to reach agreement on reforming labour laws to encourage companies to offer more permanent, rather than short-term, contracts. “We should make an effort so that we have got a deal on the labour reform within three months,” he said. The government has proposed fiscal incentives on permanent contracts and higher social security payments on less stable temporary contracts, which are often offered to young workers.) “In January, 1.5 million contracts were signed and hardly 9 percent were permanent,” Corbacho said. The Publico poll was based on interviews with 800 people from Feb 1
