JOB FRUSTRATION: Demonstrators raise their arms as they fill Madrids Puerta del Sol after midnight. Tens of thousands of Spaniards angry over joblessness protested for a sixth day in cities all over the country, and the government looked unlikely to enforce a ban on the demonstrations, fearing clashes. 	Picture: Reuters
JOB FRUSTRATION: Demonstrators raise their arms as they fill Madrids Puerta del Sol after midnight. Tens of thousands of Spaniards angry over joblessness protested for a sixth day in cities all over the country, and the government looked unlikely to enforce a ban on the demonstrations, fearing clashes. Picture: Reuters

The socialist pain in Spain

Time of article published May 23, 2011

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When Prime Minister Jose Luis Rodriguez Zapatero took power seven years ago, he and his Socialist Workers Party set out to perfect the welfare state in Spain. The goal was to equal – or even surpass – lavish social protections that have long been the rule in Spain’s Western European neighbours.

True to his socialist principles and riding an economic boom, Zapatero raised the minimum wage and extended health insurance to cover everything from sniffles to sex-changes. He made scholarships available for all. Young adults got rent subsidies called “emancipation” money. Mothers got $3 500 (R24 200) for the birth of a child, toddlers attended free nurseries and the elderly won stipends to finance nursing care.

How times have changed.

With the global economic crises that followed, Zapatero’s main concern has changed to hacking away at government spending. The icon of socialism just concluded a pact with labour unions and business leaders to freeze pensions, push back the retirement age from 65 to 67, trim union bargaining rights, cut civil servants’ pay by 5 percent – including his own – and suspend the childbirth bonus. The alternative, he warned, was bankruptcy.

“We are going to have to do this whatever it costs,” he declared, “and whatever it costs me.”

Cost him it did. Faced with a dramatic decline in opinion polls, Zapatero announced last month that he will not seek a third term. But in protests ahead of local elections this weekend, demonstrators have expressed their continuing frustration with the socialists and the austerity measures.

Spain has not been alone in making such agonising choices. Across Western Europe, long cherished social welfare programmes have come under the scalpel as governments seek to dig out from under deficits and debts pushed to dangerously high levels by the 2008-09 financial meltdown.

For conservative governments, the squeeze has come naturally. After heavy government outlays to rescue banks and keep economies percolating in 2008 and 2009, President Nicolas Sarkozy in France, Prime Minister David Cameron in Britain and Chancellor Angela Merkel in Germany have made fiscal discipline their political battle cry, faithfully echoed by the EU bureaucracy in Brussels.

But in Spain, the trimming has been especially painful because it is being carried out by a socialist government whose ideology, leadership and support base all cry out for unbridled welfare spending.

Although Zapatero has defended the switch as ineluctable if Madrid is to remain solvent, many who voted socialist in the past have detected the smell of treason.

Labour unions called a general strike in September to denounce the new policies as unfair. The large protests dramatised a broad unease, particularly among the millions of union strikers who also belong to the Socialist Workers Party – and thus were demonstrating against their own champions.

“It is a socialist government but they are implementing the same policies as Sarkozy in France, Merkel in Germany and Cameron in Britain,” complained Fernando Lezcano, a spokesman for the Worker Commissions labour union. “This directly affects the welfare state.”

The demonstrators last week seemed to view the unions as just another part of a socialist establishment that had let them down.

“Let those who caused the crisis pay the bill,” read one of the signs held aloft amid thousands of demonstrators marching through Madrid.

Manuel Garcia Jimenez has joined the ranks of Spain’s disappointed.

A faithful socialist supporter, he voted for Zapatero in 2004, eager to end the conservative Popular Party’s eight-year reign, and again in 2008, delighted with the welfare state Zapatero seemed to be constructing during his first four-year term. With a son about to attend university, he particularly appreciated the government’s decision to make scholarships available for anyone who needed one.

Now, however, Garcia, 52, has begun to wonder whether his support was misplaced, having seen his salary cut by 20.75 percent. A mid-level official in the Housing Ministry, he was one of Spain’s 2.5 million public employees who beginning in June saw their paycheque shrink as part of Zapatero’s drastic budget cuts.

The slash cost Garcia about $210 a month, he said.

“It’s not just temporary,” Garcia lamented. “It’s fixed, and it will be hard to get back.”

But the resort to cutting government workers’ salaries, he said, was something of a breach of trust.

It rapidly becomes clear that something unusual has occurred in Spain when the country’s main business organisation endorses the socialist government’s recent policies and the country’s main labour unions condemn them.

For Juan Rosell, who heads the Spanish Confederation of Business Organisations, Zapatero’s moves were inevitable responses to a swift expansion of government debt that had generated finger-wagging from credit agencies and driven up the interest rates Spain was having to pay to get buyers for its bonds.

The $950 billion deficit had become 64 percent of gross domestic product and Economy Minister Elena Salgado predicted Madrid would be paying $38bn in interest payments this year.

“There is no other alternative,” Rosell said. As a result, many of the programmes are still new and can be downgraded without shocking the country’s 47 million inhabitants, he explained.

In addition, he said, Zapatero’s resort to budget-cutting, forced on him by a deficit spinning out of control, was part of a growing trend in Western Europe that has left-wing political parties slipping rightward toward the centre in response to economic pressures from the global crisis that traditional ideology can no longer address.

But senior officials in Zapatero’s government insisted they are not abandoning their ideology, only calling a time-out while they sort out the deficit problem enough to keep credit ratings at a respectable level and avoid the fate of Greece or Ireland. “We have been faithful to what we believe in,” said Maria Luz Rodriguez, the deputy employment minister.

Mario Bedera, the deputy education minister, said the cutbacks were designed not to end Spain’s welfare programmes but to contain spending enough to preserve them for future years. “We have had to go against principles that we had always defended,” he explained, “but in a way that will preserve the welfare state.”

Scholarships continue, he said, and Rodriguez noted that 80 percent of the country’s 4.3 million unemployed still get benefits, a protection that costs more than $40bn a year and is on a level never before enjoyed in Spain.

The unemployment rate, which has ballooned above 21 percent and is still rising, was in large measure a fallout of the bust in an overleveraged housing market that employed two million workers. But it also arose as a result of the squeeze on government investment and a policy of not replacing many public employee retirees. – Washington Post

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