Anti-austerity strikes roil Europe, but many see cutbacks as inevitable
In Spain, anti-austerity strikes led to minor violence and arrests, but many Spaniards appear to have begrudgingly accepted austerity measures to help cope with crippling debt.
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Benefits already cut
The government already cut public wages by 5 percent and raised taxes earlier this year. It has announced more tax increases and plans to reform the pension system and to raise the retirement age to 67 from 65, all with the support of the main political parties. The labor reform approved by the government also makes firing easier and reduces labor costs.Skip to next paragraph
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The government won’t replace almost 200,000 public jobs once people retire in the following years, in an effort to repay the public debt that soared amid the recession.
The government tried holding off on reforms, but it buckled under EU pressure, especially as investors and financiers worried that Spain would drag the rest of the Continent to default on its debt.
The Socialist government of Prime Minister José Luis Rodríguez Zapatero, once considered a champion by the country’s unions, has pledged not to allow Spain to default on its debt. The country is now paying around half of the premium to borrow money that it did at the height of market nervousness earlier this year, although it’s still more than many European countries pay.
Indeed, the rating agency Moody’s could downgrade Spain’s credit Thursday when it completes a review of its economy. The government will also spell out details of the 2011 budget proposal, which nearly forced early general elections after none of Mr. Zapatero’s parliamentary allies supported his proposal. The right-leaning Basque nationalist party rescued the embattled prime minister in exchange for more governing autonomy.
Spain faces tough choices
The government attempted to delay fiscal cutbacks but now faces a crucial moment in which reforms are essential, say economic analysts.
“As the crisis deepened, the fiscal stimulus ran out of steam and financial markets started losing faith. But even without the debt pressure, the government had to rectify. It’s the same elsewhere,” says Mr. Oliver.
The unions are demanding the government back down from its austerity measures, but few expect it will.
"That would destroy Spain’s credibility internationally and raise the cost of the debt seriously,” says Florentino Felgueroso, an economist in the Universidad de Oviedo who specializes in employment. “Worse yet, it would make our welfare system unsustainable. This is a sort of long-term social policy, even if it doesn’t appear that way.”
Many strikers insist that they are not against Zapatero or his government, but against the reforms.
"This is going to hurt them politically and I know this will help the right. Maybe the government won’t even make it to the next elections because of our strike, but Zapatero did this to himself," says Regino Martín, a government employee who was waving his union flag. “He will backtrack, you’ll see.”