Spain leader vows hard line as hundreds of thousands protest austerity

“This is not going to stop,” says Fermín Bouza, sociology professor in the Universidad Complutense de Madrid, and an expert in voter sentiment and public opinion.

“People were faced with an economic crisis, and they threw out Socialists. They would have replaced any party. Spain has always swung between center-left and center-right, but now that they were faced with a more conservative government, they are balking.”

The hard road to austerity

Spain, like the rest of Europe, over the decades built a strong welfare state, with inexpensive education, free healthcare, unemployment benefits, and a robust pension system. But the global financial crisis that started in 2008 burst the real estate bubble that fueled Spain’s formidable economic growth for more than two decades. Millions of unskilled laborers lost their jobs. Spain needs not just economic growth, but an entire makeover of its economic model.

The previous government implemented one of Europe’s strongest austerity drives, cutting public salaries, extending the retirement age, raising taxes – all to cut the deficit from 11 percent in 2009 to 8.5 percent in 2011. But a lagging global recovery is forcing even stronger austerity measures that are eroding Spain’s welfare state.

Rajoy will cut between 30 billion and 40 billion euros in 2012 to reach the EU revised target of a deficit of 5.3 percent of gross domestic product, up from a 4.4. percent target set in 2009. Final figures will be released tomorrow. 

Of all the measures, the changes to labor policies introduced in January have been the toughest sell. Spain’s 5.3 million unemployed, in a population of 46 million, is Europe’s highest by far. They basically allow companies to fire employees more easily, quickly, and cheaply than before, which the government admits will increase unemployment in the short term, but spur job creation in the long term.

“Spain already had a dictatorship. People forgot too quickly what it was to live without rights,” says Tamar Awad, a 31-year-old architect in the march. “It will create more jobs, yes, but they will be precarious and that is not the way to recover."

Squaring off with the unions

Indeed, labor disputes are not new.

“Spain is an old country with a long history of labor struggles. People will not easily accept this reform,” Dr. Bouza, the sociology professor, says. “People would accept it if there was no other choice, but they believe there is one.” 

The country’s biggest labor unions have given the government until May 1, Europe’s Labor Day, to revise its labor reform or face more strikes.

Bouza says unions in Spain are trying to buy time to allow a resurgence of support for the left unfolding elsewhere on the continent, particularly France and Germany, to take root. Their hope is that with more regional support from neighbors, Spain's Socialists and unions will be in a stronger position to negotiate with Rajoy. 

What seems certain is that while Europe makes up its mind how to return to growth, pressure on Rajoy from all sides is only bound to increase.

What happens after that is uncertain, but Ms. Awad is not optimistic. “This won’t change. It’s not just Rajoy and the [Popular Party]. It’s the Socialists, and the other parties. And also the unions, which are so politicized. They don’t represent the majority.”

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