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Winnipeg Free Press - PRINT EDITION
Spaniards jeer new cuts
Civil servants protest en masse as new austerity measures pass
PHOTOS BY Andres Kudacki / THE ASSOCIATED PRESS Demonstrators protest in front of riot police in Madrid, Spain, on Friday prior to the government approving a new austerity package. (CP)
A demonstrator challenges police officers during Friday�s protest. (CP)
MADRID, Spain -- Spanish civil servants, many dressed in mourning black, took to the streets Friday in angry protest as the government approved new sweeping austerity measures that include wage cuts and tax increases for a country struggling under a recession and an unemployment rate near 25 per cent.
Spain is under pressure to get its public finances on track amid concerns in the markets over the state of the country's banks and the wider economy.
"Spain is going through one of its most dramatic moments," Deputy Prime Minister Sáenz de Santamara said after a cabinet meeting at which sales-tax hikes and spending cuts were approved.
Admitting the austerity measures were "neither simple, nor easy, nor popular," she said the government would try to enact the measures "with the maximum justice and equity."
The conservative government has come under mounting criticism that the austerity measures are hitting the middle and working classes the hardest.
"The government should go after the big companies that don't pay tax and bankers that have committed fraud and have run this country to the ground," said Pablo Gonzalez, 52, who works for the Madrid regional government. "Instead, we have to pay."
The aim of the latest package of measures is to chop $79 billion off the budget deficit through 2015, the biggest deficit-reduction plan in recent Spanish history.
Though the increase in sales taxes, which risks slowing consumption and worsening Spain's recession, will take effect Sept. 1, other reforms will be left for later in the year, including a plan to speed up the gradual raising of the retirement age from to 65 to 67.
Meanwhile, Economy Minister Luis de Guindos announced the creation of a new mechanism to help Spain's 17 regions finance themselves more easily. Some, such as Valencia in the east, are finding it increasingly difficult to tap capital markets for much-needed cash.
The latest bout of austerity is prompting widespread opposition, not least from civil servants. In Madrid, several hundred government workers blocked traffic briefly in different parts of the city. In Valencia, several hundred Justice Ministry workers shouted "hands up, this is a stickup" at a protest rally.
The civil servants -- whose wages were cut five per cent on average in 2010 in the first round of austerity cuts -- are usually paid 14 times a year. The government is now axing an extra payment made just before Christmas. The prime minister, his cabinet and lawmakers will also suffer the cut. At the local, regional and central level, there are around three million public servants in Spain.
In the Puerta del Sol in downtown Madrid, about 500 civil servants gathered, about half dressed in black. Some women wore veils, as if at funerals. Protesters blew whistles and horns. Civil servants are often ridiculed in Spain and seen as lazy, clock-in and clock-out types with the luxury of lifetime jobs. But many earn as little as $1,250 a month.
Isabel Perez, a 40-year-old librarian, said "our wages have already been cut and now they take away the Christmas payment. I don't make it to the end of the month as it is. The extra payment gave some relief. We're not exactly millionaires." She earns $1,600 a month and had already faced a yearly $400 wage cut by the Madrid regional government.
The latest austerity package has come after Spain won approval from the other 16 countries that use the euro for the first $37-billion tranche of a bailout of up to $124 billion for its troubled banking sector. Spain also managed to secure an extra year to meet a European deficit-reduction target of three per cent of GDP. The size of Spain's economy in 2011 is estimated to have been $1.5 trillion.
Investors' response has been lukewarm, and the yield on Spain's benchmark 10-year bonds, a measure of investor wariness of a country's debt, remains very high at 6.61 per cent, up four basis points for the day.
-- The Associated Press
Republished from the Winnipeg Free Press print edition July 14, 2012 B17
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