Wednesday, 12 May 2010

Spain braced for 'austerity' unrest

SPAIN faces social unrest as new Greek-style austerity measures are imposed, warn media reports.

Says The Independent: "Under pressure from Brussels and the White House, Spanish Prime Minister José Luis Rodriguez Zapatero made an about-turn yesterday, announcing a barrage of painful measures to curb his country's ballooning deficit.

"The new austerity package – aimed at averting a bigger version of the Greek crisis, but likely to anger the Spanish unions – includes a 5 per cent pay cut for Spain's 2.5 million public sector workers this year, scrapping the €2,500 (£2,100) "baby cheque" for new mothers and a €6bn cut in public investment.

"Spaniards surviving on minimum pensions kissed goodbye to promised cost-of-living increases yesterday, while unpopular cuts to state medical expenditure, payments to people caring for elderly parents and international development projects were also announced.

"Until now, Mr Zapatero has managed to avoid the type of unrest that has brought thousands on to the streets of Athens, despite a unemployment rate of 20 per cent and an earlier round of austerity cuts.

"This was in part because he managed to preserve social benefits and protections in the face of repeated calls by economists and business leaders for labour reform.

"Following yesterday's announcement, however, union leaders issued veiled threats of taking to the streets. 'The behaviour of the trade unions has been and is impeccable during these times of crisis and will continue to be so, but [yesterday's] announcement is a turning point,' Ignacio Fernandez Toxo, president of one of Spain's largest trade unions, told reporters.

"He said he expected citizen reaction to be 'massive'. The union leader warned that cuts in salaries and pensions would be counter-productive to Mr Zapatero's objectives, because they would dampen consumption and cause even more unemployment."