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PM paves way for cross-party social accord

Pension deal with unions giant step toward image-boosting pact

In a monumental step toward the government's set goal to reach an ambitious pact with the nation's major political and economic forces, Prime Minister José Luis Rodríguez Zapatero and the unions early Thursday hammered out an historic agreement on the thorniest issue that had stalemated pension reform talks.

After three hours meeting alone, Zapatero and the UGT and CCOO leaders, Cándido Méndez and Ignacio Fernández Toxo, worked out a compromise that would allow employees to retire at age 65 if they reached a required 38.5 years of Social Security contributions. It was a major compromise on the part of the Socialist government, whose basic proposal is to push the mandatory retirement age from 65 to 67. The three emerged from their private dinner meeting at La Moncloa shaking hands shortly after midnight Wednesday.

The unions had threatened to call a general strike if the government continued to insist on putting the retirement age at 67.

The two sides also agreed to new rules that, if passed by Congress, would allow individuals who stay home to take care of their children, and young people, who are interning as they prepare for professional careers, to build up a maximum of two years in contributions that will go toward their retirement. The Cabinet is expected to approve the agreement on Friday. The new rules will go into effect in 2013, with a transitory period until 2027.

The opposition Popular Party said that while they have to see the agreement, they were inclined to agree with it, according to Javier Arenas, a senior PP figure. All other parties, with the exception of the United Left (IU), have said they will support the agreement.

The government is under a self-imposed Friday deadline to reach an ambitious social pact with the parties, unions and the powerful CEOE employers' group in an effort to boost Spain's solvency and image abroad.