Spain: After austerity, the rescue? | by Sofia Tipaldou

by Jun 20, 2012All Articles

spain-rescueThe pain in Spain is falling mainly on the poor, says Sofia Tipaldou, but they are resisting on a wholly new scale
It’s  happened again. Now it is Spain’s turn to get rescued. After half a year of austerity from the ruling centre-right party, Partido Popular (PP), the die has been cast.
The Figures: Mariano Rajoy’s government won an absolute majority in the parliamentary elections on November 2011 with promises to decrease the risk premium, to create jobs, and above all to recover the lost trust in Spain. Shortly after, the government announced cuts of €16.5 billion. On June 9, Rajoy asked the EU for a banking bailout of €100 billion. In between, his party followed a series of unpopular austerity measures that were justified as necessary in order to avoid an economic bail-out.
The labour Union CGT estimates that cuts to public spending in 2012/2013 will be no less than €55 billion. Spanish public debt in December 2011 was €1.78 billion, only 16% of which is public, whereas the remaining 84% is private. Public spending this year has decreased by 4.3%, and the government  predicts cuts in everything except pensions and public administration. However, pensions are increasing at a rate which is 0.8% below the rate of inflation – a cut in real terms.
The state will pay more to bankers and debt holders (€ 28.848 million) than to unemployed (€ 28.503 million). Public spending on unemployment will decrease by €2 billion; whereas unemployment will increase by 630,000, according to the government. Public spending on job creation will be cut back by 21.3%, whereas bonuses to private business will be raised by 6.1%. Public spending on health will be decreased by 6.8%. Education spending faces a staggering cut of 21.9%.
The History
The chronic phase of the Spanish catastrophe began in February 2012, when the PP adopted a controversial labour reform. The new labour law makes sacking workers easier and cheaper and seeks to reduce wages for the sake of competitiveness. It weakens collective agreements by enabling employers to settle contracts individually with each employee over his or her salary. In March, Mariano Rajoy announced a fiscal amnesty for the year 2012, in order to recover up to €2.5 billion that has not been paid in tax. The government will only receive the 10% of the recovered money. At the same time as tax increases were announced everywhere else – including the judicial system – corporations were let off the hook.
In May, the government passed the biggest reduction in social services Spanish democracy has seen: €10 billion cut from education and health.
The next decree the government issued reached a nationwide record; it was the 20th governmental decree passed without any previous discussion in Parliament. The decree was for increase in university fees of up to 66% and the establishment of a tax payer contribution for the purchase of medicine. This was only the start.
On 21 April 2012, the government published urgent measures relating to education. This will mean more students in classrooms, more working days for school teachers and stricter rules for maintaining public scholarships. Opposition party PSOE described the measures as the biggest attack on public education in Spanish democratic history, and estimated 40,000 professors would be dismissed as a result.
In a similar spirit, on 24 April 2012, the government published a decree on the National Health System. Previously, the Spanish health system offered free services to all citizens and foreigners who live in Spain. From now on, young people below 26 who have never had a job will only be assisted in emergency cases – this in a country where the youth unemployment rate reaches 40% – and “irregular” immigrants will receive medical assistance for births and emergencies only.
The new law also foresees personal contributions to medicines, of up to 60% of the cost, as well as a €1 charge for every prescription. Even pensioners will have to pay 10% of the cost of medicine.
In Spain, education and health have stopped being public, universal, and free.
And the reforms have not stopped there; the government is also attacking housing. The first step was to dismantle the Public Society of Rent and to stop giving economic motives for real estate owners to offer unsold properties for rent. Then, the government stopped benefits to help young people below 30 to pay their rent (renta de emacipación). In May 2012, the government proposed a series of changes to “revitalize” the housing sector, which include non state interference in rental contracts and reducing the duration of contracts from 5 to 3 years. It will also be much easier for landlords to evict tenants, reducing judicial intervention as much as possible. At the same time, house sales will have a 50% tax exemption until the end of 2012.
Finally, in June 2012, the government adopted a measure that allows for the privatization of public radio-television (RTVE). This risks the right to information that is one of the basic elements of democracy, and puts around 20,000 jobs in danger. About 15% of journalists (50,000 people) have lost their jobs since 2008. Unemployment in media sector is 35%. Before that, the PP passed a decree that permits the nomination of the RTVE’s presidential board without the agreement of the opposition. This move was met with severe criticism. The opposition argued that the government wants to turn public television into an instrument of propaganda and political manipulation just like PP’s last governing president, José María Aznar, did.
Public response
The biggest labour unions responded to labour market reforms with a massive protest that attracted about 1.5 million people across the country. Their demands were not listened to, so on 2nd March , the unions called the eighth general strike in the history of Spanish democracy. People flooded the streets in hundreds of cities: 170,000 in Madrid, 275,000 in Barcelona, 98,000 in Valencia, according to the newspaper El País. The labour unions managed to paralyze the majority of big industries. They demanded changes of the new law and left the new government a one month margin to renegotiate it. The government’s response came through the Minister of Employment: The ‘reforms’ will not be stopped.
Some 57 people got arrested throughout the country for public disorder, 47 of which were in the Spanish capital. In Barcelona two parallel demonstrations took place. The demonstration called by the CGT-CNT union clashed with the police that resulted in 74 detentions and 80 injuries. Shortly after the riots in Barcelona, the Catalan Interior Minister asked for more severe legislation that would stop the “urban guerillas”. The government responded with new proposals for amending the Penal Code with harsher  sentences of street vandalism. It will consider all calls though the media for acts that “gravely alter public order” as participation in a criminal organization. The minimum sentence will be two years imprisonment. The government also wants to criminalise every form of active or passive resistance, including threats, intimidating remarks, and throwing dangerous objects.
The biggest labour unions criticized this as policies ‘of repression…and intimidation by the government meant to limit freedoms and to deny the democratic rights of citizens’. The unions also blamed the Spanish and Catalan governments of linking the trade union and civic response against governmental policies to riots and urban violence.
On 14 April, people once again took over Barcelona’s central square to protest against the cuts. The protest was called by the Association of Neighbors (FAVB), the labour unions and the left parties. The crowd also demanded liberty for the two detainees of the March strike that were still held in prison and the resignation of the Catalan government’s counselor of Internal Affairs, Felip Puig.  Banners read ‘Franco is back’, ‘Protest is not terrorism’, and ‘They will not make us shut up’.
The last nation-wide protest was on 1st May  under the slogan ‘Work, Dignity, Rights’. The major labor unions called 80 demonstrations in 60 cities to protest against the cuts, the health reform, the labor reform, fraud, the ‘silencing laws’. In Madrid about 100,000 people came out on the streets, with a similar number in Barcelona. The demonstration attracted less people than in February and March, but more than Mayday demonstrations in previous years. The president of the labour union UGT declared that Mariano Rajoy wants to impose Thatcher’s policies and demolish public services, whereas the vice-secretary of the central-right PSOE in Valencia declared that the rights achieved in the last 30 years are in danger as well as the social dialogue.
In April 2012, the unemployment rate climbed to 24.44% , the second highest since 1994, creating an army of 5.65 million unemployed. Some 729,400 people have been without a job in the last year. Nevertheless, the government is happy to announce that unemployment will not rise higher than 25%.
One day after the Spanish €100 billion rescue – a word that Mariano Rajoy refuses to use, desperately trying to convince the public that it is ‘economic help’ or a ‘loan under good conditions’ – the Spanish Prime Minister declared that it was the reforms of his government that helped Spain avoid ‘the real rescue’: an intervention from Brussels. Can we really interpret this as good news?
Source: Counterfire
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