Catalan government cuts public health and education spending

The Catalan government has announced cuts in health and education spending to decrease its public deficit by €2 billion in 2011. However, the plan to reduce the deficit will not achieve goals set by the Fiscal and Financial Policy Council, which asks the autonomous communities to bring down their deficit to 1.3% of gross domestic product this year. The Catalan government has asked Spain’s central government for €1.35 billion, while unions and employers have demonstrated against the cuts.

Background

In 2010, the Spanish government implemented drastic and unpopular measures to reduce the public deficit due to pressure exerted by the financial markets and the debt crisis that was affecting several European countries (ES1006011I). These measures began to work and the deficit dropped to 9.4% of gross domestic product (GDP) at the end of 2010. The government then agreed in its Fiscal and Financial Policy Council to set new goals, aiming to reduce the public deficit of the autonomous communities from 3.9%, the average across all of them, to 1.3%.

However, some autonomous communities such as Catalonia have rejected these measures, and criticised the central government for delayed payments from the ‘competitive fund’. The fund was created in 2009 to compensate the wealthiest autonomous communities, who pay less per citizen than the national average, once other mechanisms for regional redistribution of resources are applied. The Catalan government is claiming €1,350 million from the competitive fund in 2011. Nevertheless, the central government argues that payments from the fund can be postponed until accounts are settled, which means payments will not be made until 2013.

Catalan government proposals

Catalonia is the first autonomous community to announce measures to cut its public deficit, even though these measures have not been specified in the public budget of the region and must still be enacted. According to the ruling conservative nationalist party, Convergence and Union (CiU), the plan involves decreasing expenditure on public health and education in order to cut the deficit to about 2% of GDP. In Spain, each autonomous community is responsible for its public health and education systems.

Cutbacks in health spending

As far as the cutback in health expenditure is concerned, the budget will be 10% lower than in 2010. The most significant measures proposed by the Catalan government are:

• simplification of the administrative structure (worth 25% of the total cutback). The main goal is to reduce and simplify the executive structures of both the public health administration and the public health sector;

• cutbacks in investment in new equipment. In 2011, the investment budget will be 20% lower than in 2010;

• cutbacks in pharmaceutical expenditure, representing 11% of the total cutback;

• cutting the cost of health services. This is the most controversial measure as it directly affects the working conditions of employees and the medical attention given to patients. Measures include new restrictions on taking patients to hospital, the reorganisation of working time of health workers, the non-renewal of temporary workers’ contracts and delays in cutting patient waiting lists. These reductions will also affect the Public Utility Hospitals Network of Catalonia. In consequence, some private hospitals, such as the Plató hospital (see ERM fact sheet), have already announced redundancies affecting workers with open-ended contracts.

Cutbacks in education spending

With regard to cutbacks in education, the most significant measures are:

• an increase in the number of hours that teachers will have to dedicate to teaching each week, from 23 to 24 hours. Reduced working time established for teachers older than 55 years will be temporarily suspended;

• modification of summer wages for temporary teachers. From now on, temporary teachers who have been hired for at least nine months up until 30 June will be entitled to the wage corresponding to July, but will not receive the wage corresponding to August;

• modification of the extension of daily teaching time from five to six hours a day in public schools, as enacted by the previous government. The result is that in public schools, lessons will be one hour a day shorter than in semi-private schools (those that receive a state subsidy), where the parents pay for the extra hour. In order to combat school failure, the government will not apply this reduction in the most disadvantaged socioeconomic areas;

• not replacing teachers who leave the profession;

• cutting the 2011 university budget by €140 million.

Response from the unions

The regional federations of the General Workers’ Confederation (UGT) and the Trade Union Confederation of Workers’ Commissions (CCOO) have strongly criticised the Catalan and central governments for imposing such drastic cuts in spending. The unions argue that their efforts have been limited exclusively to cutting welfare state expenditure and they have overlooked other measures that could increase revenue.

Unions are opposed to the elimination of the Succession Tax, a measure recently taken by the Catalan government. They are also against the implementation of employment reduction measures in a period marked by the persistence of high unemployment rates. UGT estimates that the cutbacks in health spending will affect 7,200 workers.

Workers showed their disapproval of the budget cutting measures in two demonstrations held on 14 April and 14 May, called by both unions and 200 civil society associations and professional unions in the health and education sectors. Police estimated 30,000 people took part in the last demonstration, while organisers estimated 200,000. Despite these protests, the Catalan government is determined to apply the cost-cutting measures.

Pablo Sanz De Miguel, CIREM Foundation