Spain's Rajoy stays away as candidates hold election debate

MADRID (Reuters) - Three of the candidates vying to become Spain's next prime minister clashed over the economy, corruption and Catalan independence in an election debate on Monday but a fourth, Prime Minister Mariano Rajoy, stayed away. Rajoy, whose People's Party holds a narrow lead in polls for the Dec. 20 election, said he had been invited to take part in more than 30 debates and could not "spend all day in debates." Candidates for the Socialists, business-friendly Ciudadanos and anti-austerity Podemos parties meanwhile set out their positions in a two-hour discussion on the Internet and television, attacking government policies and arguing among themselves. The People's Party and Socialists have long dominated Spanish politics but face a threat from new parties like Podemos and Ciudadanos that seek to capitalise on Spaniards' disillusionment after years of financial crisis. Spain's economy grew faster than most others in the euro zone from July to September, but unemployment in the European Union's fifth largest economy remains above 20 percent. Polls show the People's Party lead is not enough to allow them to govern alone it win the general election. Despite Rajoy's absence from the debate, he tried to steal the limelight in a television interview broadcast at the same time in which he promised social security tax breaks to encourage employers to take staff on permanently rather than temporarily. Under his plan, neither the employer or a new permanent employee would pay social security contributions on the first 500 euros ($528.25) a month of pay for the first four years. While Rajoy pledges more fiscal discipline to bring down a big budget deficit, Podemos promises an easing of austerity and a crackdown on corruption after a series of high-profile scandals. "By reducing the deficit a little more slowly, of course you can do things, because what costs Spain a lot is corruption," Podemos leader Pablo Iglesias said during the debate organised by the El Pais newspaper. Another key election issue is the future of the wealthy northeastern region of Catalonia, where the regional assembly passed a resolution this month calling for secession from Spain. Asked how the candidates would respond to a unilateral declaration of independence by Catalonia, Socialist leader Pedro Sanchez said: "We must apply the rule of law and the whole rule of law, but let's hope we don't reach that situation." An opinion poll published by newspaper El Mundo on Monday showed the People's Party holding on to its lead but Ciudadanos overtaking the Socialists to move into second place. A number of other election debates are planned. (Reporting by Inmaculada Sanz, Adrian Croft and Paul Day; Editing by Andrew Hay)