SPAIN - The Spanish government has reached preliminary agreement with trade unions on a series of reforms that are likely to increase the retirement age from 65 to 67.

The increase is likely to be gradual, and no details have yet been worked out. 
In the meantime, the government is understood to have reached an agreement on the most contested issue - the number of years employees will have to put in to receive a full social security pension at 65. The compromise agreement is understood to be 38.5.

The cabinet is expected to approve the pensions bill on Friday.

Figures released by the labour ministry this month showed the average Spanish pension under the social security scheme at €906 - a year-on-year increase of 3.5%. 

Spain is also facing the euro-zone's highest unemployment rate at 20%.

Without reform, Spain's economy ministry reckons pensions could account for 40% of public expenditure within 30 years.

The OECD in December criticised the government's plan to raise the retirement age as an inadequate response to the issue of longevity.

Instead, it urged the government to introduce a sliding retirement age, extending it annually on the basis of life expectancy, and to tighten the rules on state-subsidised early retirement and widows' pensions.