video transcript

Times are tough for Spain's unemployed. Joblessness is at a 30-year high and almost a quarter of the population is out of work -- the highest proportion in the European Union. It will get worse for some now the government has announced controversial changes to an unemployment benefit. UPSOUND The Spanish government is becoming increasingly unpopular as unemployment rises and austerity measures and tax hikes hit those who are in work. These public sector workers demonstrated outside the economy ministry over the loss of bonuses and overtime. The debt crisis has pushed Spain's borrowing costs to record levels. The euro zone's fourth-largest economy is still shrinking, and the government is bringing in more cuts as it battles to avoid a sovereign bailout. Madrid has already asked for aid for its struggling banks. Soraya Saenz de Santamaria, Spain's Deputy Prime Minister, denied reports Spain is negotiating with euro zone partners over conditions for receiving aid. SOUNDBITE: Soraya Saenz de Santamaria, Spain's Deputy Prime Minister and Government Spokeswoman, saying (Spanish): "The spokesman for Economic Affairs of the European Commission, in case there was any doubt, signalled the Commission isn't negotiating with Spain, beyond the aid awarded to support Spanish banks. There are no discussions underway for any type of aid to Spain. The spokesman for economic affairs says it and I confirm it today." Big challenges lie ahead. Spain has to cut its public deficit from almost 9% of GDP to 6.3% this year. And some analysts say despite the government's assurances the country is inching closer to an EU bailout. Joanna Partridge, Reuters