Spain’s regional adjustments begin in Catalonia and the Basque Country

By Julia Pastor, in Madrid | Barely two days after the general election, the president of the Catalan government Artur Mas announced a sharp cut in pay in 2012 for civil servants and officials in this autonomous region, in order to reach a GDP of 1.3% and meet the EU economic requirements.

“If Catalonia wants to do its homework, there is no alternative choice but to make further sacrifices through harsh adjustments,” Mr Mas said.

The adjustment package will be complemented by public officers renouncing to their extra pay, sale of some public assets and an increase in university tuition fees. Also, public transport and water bills will be increased, and a health prescription fee will be introduced as a sort of health service co-payment in order to prevent what the Catalan president described as abuses.

With the salary reductions, according to sources from the Catalan executive administration, also known by its Catalan name ‘Generalitat’, president Mas hopes to save about €600 million. The salary adjustments will be applied to its 231,013 employees.

Catalonia’s cuts immediately gained criticism. Fernandez Toxo, CCOO labour union’s secretary general said the measure is

“a genuinely unexpected blow, a democratic abuse, and fraud against the voters.”

Other regions such as Andalusia and Aragon have distanced themselves from the Catalan austerity package, and have stated that they do not agree with the priorities of the Catalan cuts.

So far, the Basque Country (‘Euskadi’ in Basque) is the only region that looks as if it is set to follow the path of labour adjustments. Euskadi’s president Patxi Lopez also spoke of the need to sacrifice and make an effort to ensure employment stability, and announced his intention of negotiating with unions a plan to save €100 million in labour costs. Lopez’s plans include eliminating premiums for voluntary retirement of civil servants through the suspension of the replacement contracts, the extension of active duty after the age of 65, and the suspension of the career accrual (the career would be recognised but not paid in 2012).

Likewise, he will review the extra pay due to illness (temporary disability) by reducing the current 100% established by law. In exchange, the Basque government is willing to convert the interim workers into civil servants with no change in the salary scales.

The ‘lehendakari’ (the Basque word for president of the Basque government) has been quick to disassociate his proposal from the measures taken in Catalonia, though, and has said

“it is far from the Catalan budget cut model and from what the People’s Party is doing wherever it rules.”

Both regional governments have assured that the measures are temporary and only affect 2012. The Catalan government also explained that salary reductions will only affect a part of some of the June and December payrolls, not the whole payroll, and if the new Spanish government implements a similar measure, it will withdraw its own.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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