jueves, 27 de septiembre de 2012


Last July, Eurozone finance ministers agreed to grant the Spanish Government one more year to reach a deficit target of 3%. Thus, the deficit in 2012 won’t have to exceed a 6’3% instead of the initially foreseen 4%. Nevertheless, precisely because of austerity policies imposed by European authorities and the IMF (and firmly supported by the Spanish cabinet) the deficit in 2012 will be notably higher as well as in 2013 and 2014. So, everybody lies or everybody seems to believe their own lies.

Public spending has been reduced: thousands of public employees have been fired or their salaries have been lowered, national health and education systems have suffered deep cuts and the budget of other policies has been reduced as R&D (-20%) or development cooperation (-72%). Only two main budgetary headlines increases: unemployment benefits (even when the coverage rate of unemployed people receiving benefits is lower than previous years) and the interest payment of the public debt. It’s remarkable that, for the first time in the budgetary history of Spain, the interest payment of the debt is higher than the wages of all public employees (state, regional and local administrations). So regarding to public expenditure requirements the Spanish government is doing its homework.

What about of incomes?  First of all, TVA and Personal Income Tax were raised in the last six months.  Nevertheless public incomes have abruptly fallen as consequence of austerity policies. Private consumption is in coma due to 25% of unemployment and lower salaries. For instance, sales of new cars have been fallen continuously for the last 27 months. Car sales are now 70% lower than before the onset of the crisis (they are even bellow of Moroccan levels). So the collection from TVA and Personal Income Tax is fallen. It is estimated that the Spanish Tax Administration has lost 70 bn € (7% of Spanish GDP) due to austerity policies.

Incomes from corporate income tax also are at a very low level due to the lack of economic activity. However, it’s worth underlying some aspects of those taxes. Nominal corporate taxes are around 20-25%, depending on the size of the firm, but real taxation rate –after deductions- is 11’4%. In other words, taxation on workers is much higher than capital one and real corporate taxation in Spain is lower than in Ireland. Furthermore, the Spanish government rejects to introduce property or inheritance taxes.

The conclusions are evident. First of all, the solution to budgetary problems is not in outcomes but in incomes and then, the crisis is being used to transfer employment incomes to capital incomes.

We are facing a peculiar kind of vicious circle. Radical austerity policies are implemented to reduce the public deficit but those policies avoid reducing the public deficit so new austerity policies are adopted. How long and how far this “liar’s game” will go? Meanwhile the countdown of the social time bomb is going on.

jueves, 20 de septiembre de 2012


The blog restarts the activity after two months “out of duty” and we’ll try to put an end to a former question: what happen when the right to perceive regular unemployment benefits (“prestaciones”) ends? What are the choices for unemployed people with no incomes?

The answer is not easy; there are several different aids in cash under the umbrella of the so called “subsidio por desempleo”. Some of them are targeted to specific groups as rural workers from Andalusia or Extremadura, prisoners after their release, Spanish immigrants in no-European countries which decide to come back home… Now we’ll summarize the most usual cases. But first of all, some preliminary comments:

  • There are an increasing number of unemployed people which don’t perceive neither “prestaciones” nor “subsidios por desempleo”.
  • In August, the Spanish Government has strengthened the conditionality to access to “subsidios”.
  • The most of the times “subsidios” are linked to be the only income of the household. What does it mean? Let see! A young unemployed perceives a 426 € monthly amount “subsidio” so he decides to come back to his parents home. At this moment he’ll lost his “subsidio”.
  • The amount of the “subsidio” usually is the 80% of the Public Index of Multiple Incomes (IPREM).

Amount (2012)
Unemployed, under 45 years, finished their unemployment benefits (prestaciones por desempleo) and family responsabilities
18 – 24 months
426 €
Unemployed, over 45 years, finished their unemployment  benefits (prestaciones por desempleo) and family responsabilities
24 – 30 months
426 €
Unemployed, over 45 years, finished their unemployment benefits (prestaciones por desempleo) and no family responsabilities
6 months
426 €
Unemployed, without previous right to perceive unemployment benefits and no family responsabilities
3 – 6 months
426 €
Unemployed, over 45 years, finished their unemployed benefits (prestaciones por desempleo) and family responsabilities
21 months
426 €
Unemployed people over 55 years old
426 €

So to be a Spanish unemployed isn’t a good business. Furthermore, more and more Spanish unemployed are under the poverty threshold.