The new austerity plan presented on_Wednesday affects public sector salaries, pensions and other social benefits
04.06.10 - 10:52 -
Drastic measures. Rodríguez Zapatero on_Wednesday morning. EFE
On Wednesday Prime Minister José Luis Rodríguez Zapatero announced a new, drastic plan aimed at reducing budget deficit by some 15 billion euros in 2010 and 2011. The package of cuts is designed to reduce this public debt from its current 11 per cent of GDP to six per cent during this period.
Those to notice the measures most will be public sector workers who will see their salaries slashed by an average of five per cent from June and frozen from then on. Similarly from the beginning of 2011 pensioners will no longer see their incomes adjusted according to inflation.
José Luis Rodríguez Zapatero had previously promised that the cost of the recession would not fall on the workers and that social rights would not be compromised. On Wednesday however he overstepped many of the boundaries that he had set himself and became the first Prime Minister since Spain became a democracy to order salary cuts. He did stress, however, that the cuts would be progressive and that five per cent was the average. Therefore those on lower wages would notice the measures less while members of the Government would see their incomes reduced by 15 per cent.
“It’s not easy for the Government to approve these measures”, stressed Zapatero, as he also announced that pensions would be frozen from 2011, except those classed as minimum or those exempt from tax.
Carers applying for benefits through the Dependency Law will also be affected in that payments will no longer be back-dated. This measure however goes hand in hand with a limit of six months for applications to be approved.
The other social cut, this time affecting parents-to-be, is the scrapping of the 2,500 euro pay-out to families on the birth of a baby. This measure will come into force on January 1st 2011.
The Prime Minister admitted that, while “essential” the cuts could lead to a reduction in demand which would affect the GDP. Therefore he explained that growth estimated for next year was likely to be a little under the 1.8 per cent already predicted.
In response to calls from left-wing groups for fiscal reforms as well as cuts in expenses, Zapatero explained that the Government had not ruled out other measures such as increasing taxes for those on higher incomes.
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The leader of the opposition, Mariano Rajoy, told the Congress on Wednesday that “the PP would never have brought in social cuts of this magnitude”. He also criticised Zapatero for rejecting measures he had put forward at their meeting on Wednesday last week but accepting them a few days later when they were imposed from outside, referring to the pressure from the EU.
On Thursday the Prime Minister met with the leaders of Spain’s main trades unions to explain the cuts which break an agreement made last_September for a 0.3% pay rise. On Wednesday union leaders had already criticised the cuts and the possibility of calling a general strike among public workers was suggested.
