Basques stage general strike, protest Govt's plans on retirement age

Workers in the Basque Country are staging a general strike to protest government plans to raise the retirement age to 67 from 65 despite resistance from opposition parties and labour unions as part of austerity measures searching to slash its budget deficit and overcome recession.

This is the first general strike in the Basque Country in 2010 and marks a divorce between nationalist and non-nationalist unions. Basque unions LAB, STEE-EILAS, EHNE and HIRU support the call for a general strike whereas CC.OO and UGT do not support the call and are trying to reach an agreement with the Spanish Government.

The strike goes under the name of "No to the sacking of the pensions".

Spain is striving to emerge from two years of recession and has an euro-zone high unemployment rate of 20 percent. Spain''s central bank and other financial institutions have urged the government to make changes as part of structural reforms.

The Spanish government''s desperation to calm financial markets means it will risk a political firestorm to impose new pension rules that may not even help its budget for at least a decade.

The cabinet has already passed a record austere budget and taken tough steps to rationalise its small banks. Over the past week it has also rushed out other measures including state selloffs aimed at soothing its cashflow issues.

The pensions reform, however, is about convincing investors of its commitment to structural change; savings built up over the last decade mean it will have no impact before 2015 and bring only gradual benefits in the years that follow.

As elsewhere in Western Europe, Spain has to deal at some stage with the an aging population that will outlive the contributions they have made to the pension system during their working lives.

A lower birth rate than many of its neighbours will also add to pressure over the next 20 to 30 years and reforming the system goes some of the way to addressing the broader issue of Spain''s problems of competitiveness.

Pensions could account for 14 percent of Spain''s public expenditure by 2040-2050, compared to between 8.5 and 9 percent in 2010. Raising the retirement age would shave 20 billion euros off the state''s pensions costs, or 2 percentage points off GDP, by 2030, according to recent Economy Ministry data.