The Spanish government has approved its national budget for 2013. The government hopes the austerity budget will meet the deficit reduction goal agreed with the European Union. However, social partners have criticised a number of aspects of the proposals, and unions called for a national strike on 14 November 2012 in protest at cuts to social expenditure. Employers say the budget will hit productivity, while unions say it will mean more Spanish people slipping into poverty.
The Spanish government has approved the national budget for 2013. The aim of the budget is to meet the deficit reduction goals agreed with the Eurogroup, targeted at 6.3% of gross domestic product (GDP) for 2012, 4.5% of GDP for 2013, and 2.8% of GDP for 2014.
These goals were revised in July 2012, when the European Council gave Spain an extra year to fulfil them in recognition of its unique adverse economic circumstances. However, the Council has demanded Spain introduces immediate austerity measures to underpin the credibility of its consolidation effort.
Against this background, the government has approved a national budget which calls for the most significant adjustments to its finances since its transition to a democratic government in the late 1970s. The changes are even greater than those made when Spain entered the European Monetary Union.
The largest cutbacks in expenditure fall upon the Ministry of Health, the Ministry of Public Affairs and the Ministry of Public Works. There is also to be a dramatic decrease in expenditure on education and training programmes. An article (in Spanish) in national newspaper El País says that funding for programmes aimed at disadvantaged students will be cut by 68%. Expenditure on active labour market polices is to be cut by approximately 34%.
Pensions will be allocated the largest share of social expenditure resources, taking 38% of the total budget, according to information from Spanish Confederation of Employers’ Organisations (CEOE).
Spending on unemployment benefits will be reduced by €1,087 million, although the majority of observers – including Spain’s social partners – are predicting an increase in the unemployment rate. However, the government considers that its plan to cut unemployment benefit, reducing the benefit from 60% to 50% of a worker’s last wage, will still deliver the predicted drop in expenditure.
The CEOE’s assessment of the austerity measures was published in a report (in Spanish, 686Kb PDF) drawing attention to the negative impact of the national budget on enterprise activity.
The report criticised the budget for making the deepest cuts in areas linked to productivity such as infrastructure and training. The employers also said the government had not fulfilled its commitment – announced in Fiscal Strategy 2013–2014 (189Kb PDF) sent to the European Commission (EC) – of decreasing the social contributions paid by employers by one percentage point.
The employers went on to criticise the lack of structural reforms in public administration to reduce public expenditure, as well as the unrealistic macroeconomic framework which foresees a decrease of 0.5% of GDP by 2013, compared to the 1% or 2% predicted by the international institutions.
Meanwhile, the General Workers’ Union (UGT) and the Trade Union Confederation of Workers’ Commissions (CCOO) have focused their criticisms on the cutbacks in health and care services and education. They stress the negative impact cuts will have on social cohesion. At the same time, the UGT stresses in an article (in Spanish) on its website that, according to the Living Conditions Survey, 35% of the unemployed are at risk of falling into poverty. The union criticises the decrease in unemployment benefits spending.
Both unions called for a general strike on 14 November 2012 to protest against the national budget. It was widely supported, particularly in the transport sector, and CCOO issued a document (in Spanish, 410Kb PDF) explaining the reasons for the strike.
Pablo Sanz de Miguel, CIREM Foundation