Zapatero meets business leaders to bolster support for sweeping reforms

José Luis Rodríguez Zapatero met with the country's top business leaders on Saturday, promising them he would speed up the government's reforms. The meeting came at the end of a turbulent week that saw the fallout from the EU bailout of Ireland prompt further concerns over Spain's ability to borrow money on the international markets.

Zapatero chaired the gathering with the heads of 37 of the country's largest businesses, including Emilio Botín of Santander Group, César Alierta of telecommunications giant Telefónica, and Florentino Pérez of construction and services company ACS and the president of Real Madrid soccer club.

"The government has a commitment to cut its deficit... to complete structural reforms. The changes will make us more productive and change our economic model to become more competitive. The government is doing its homework," Zapatero told journalists after the meeting.

He said the executives present at the meeting had also committed to implementing reforms aimed at reactivating the economy and creating jobs. Spain has the highest unemployment rate in the euro zone at around 20 percent. Economy Minister Elena Salgado said the entities were "the tractors of our economy'' and the meeting was "to discuss growth perspectives and the possibilities for stimulating that growth.''

Zapatero said the meeting had been "extraordinarily useful" to shore up confidence in the Spanish economy after the country's risk premium - as measured by the spread between yields on the Spanish 10-year bond and the German equivalent - hit a new euro-era high of 250 basis points.

The main areas of reform discussed were the labor market, the consolidation of the banking sector and the pension system. In all three, business leaders promised to work with the government, Zapatero said. Energy supplies and tariffs, along with ways to boost competitiveness, were also discussed.

The heads of the country's main savings banks committed themselves to meeting the December 24 deadline to finalize mergers underway in their sector. "The savings bank sector association representatives and the heads of those savings banks present at today's meeting have confirmed the mergers are on track and by December 24 the process will be definitively completed," he said.

On pension reform, Zapatero reiterated that the government will present parliament with draft legislation in the first quarter of next year.

Key to the reforms is a plan to delay the mandatory retirement age in Spain to 67 from the current 65, a commitment made by the government to the EU. This comes as many in France riot against a plan to delay the retirement age there to 62 years from 60 years, and Spain's unions prepare for more rallies, following a general strike in September.

The October appointment of Labor Minister Valeriano Gómez, part of a sweeping cabinet shuffle, sent a conciliatory message to the unions - although he helped to craft the reform plan he now must advance, which includes steps to make it cheaper to lay off employees. Zapatero said on Saturday that he is planning another meeting with business leaders in two to three months.