Pension talks close to last-day breakthrough

Negotiations between Spain's main labor unions and the Socialist government of José Luis Rodríguez Zapatero on the reform of the state pension system look set to go to the wire after some progress was made in breaching their differences.

The administration has set itself a deadline of Friday for announcing the changes to the system. The main stumbling block remains the government's insistence on extending the retirement age to 67 years from 65. It initially offered to allow workers to still retire at 65 if they had contributed to the social security system for 41 years. Sources in the administration said this figure could be lowered to 39. While the CCOO and UGT unions have not formally said so, there are signs they might be willing to accept 38 years.

CCOO spokesman Fernando Lezcano on Wednesday acknowledged that the two sides had narrowed their differences over the past few days, while UGT official Toni Ferrer said "progress" had been made. Both unions warned of "conflict" in the absence of an accord, hinting at the possibility of a second general strike in six months. "We have to clear up all major uncertainties on Friday," Lezcano said.

The main parties represented in Congress are in favor of raising the retirement age to 67 but want this to be flexible and to be phased in gradually. One of the exceptions to this rule would be workers in arduous professions who would be allowed to retire before 67.

The two sides have also made some progress on the transition period. Zapatero initially wanted the retirement age to be raised progressively between 2013 and 2027. A government source said the administration may go someway to meeting union demands by increasing the period to 2030. The government, however, remains set on increasing the period for calculating pension entitlements to 25 years from 15.