I'DONT KNOW IF WE HAVE BEEN RESCUED BUT IT SEEMS TO BE

Lot of news has taken place in Spain in the past days but there is no doubt that the most important one is the new package of austerity measures (social cuts) adopted by the Government last Friday.

One week ago the Eurogroup decided to fuel up to € 100 billion to the Spanish banking sector. After that the Government declared that the loan was not linked to conditionality except for the banks needed of European money. Nevertheless two days later the Council of Ministers approved the most important pack of social cuts targeted on public employees and unemployed. I’ll try to summarise the most relevant measures:

Public employees:

·        Elimination of the extra month’s salary paid at Christmas (around 7’5% of annual salary). Last year the salary of public employees was frozen and the year before was reduced 5’5%.

·        Elimination of three days off and “seniority” days off.  These days aren’t a privilege of public employees as the Spanish Government usually says but an agreed compensation for the lack of increasing salaries in the last decades.  A public employee which has been working for 30 years will loose 9 days off.

·        40% salary reduction in case of sick leave.

·        Reduction of union’s representatives.

·        And it should be reminded that 150.000/ 600.000 public employees will be fired in the next months

Unemployed:  10% reduction of unemployment benefit from the sixth month of perception (only 62% of unemployed touch unemployment benefits).

Increasing TVA:  the Spanish TVA is below the EU average, it’s true. But it doesn’t seem a good idea to increase indirect taxes in the framework of decreasing economic activity. Furthermore, the TVA is counter-distributive and Spain is one of the most unequal member states in the UE.

The aid for young people to rent flats has been reduced 30%.

In the other hand, employers’ social contributions will be reduced in 2012 and 2013.

The streets are burning. Spontaneous demonstrations take place everywhere. Senior officials or policemen join the protesters for the first time. Next time we’ll talk on social protests in Spain.



Spontaneous protesters take the "Gran Vía" (one of the Madrid main streets) in the evening of Sunday 15th July