Perhaps many of the more than three million public employees affected by pay cuts announced by the Government this weekend come to the cinema in search of escape. There will be entertained with the latest version of Robin Hood, the British hero who robbed from the rich to give to the needy, the antithesis of how are now a large part of officials to the Prime Minister, José Luis Rodríguez Zapatero.
In the film, starring Cate Blanchett and Russell Crowe, economic issues are also addressed: the Crown is ruined after embarking on costly adventures beyond their means; urge to do something to restore financial equilibrium. Some suggest debt with foreign banks, not to mention, raise taxes on the wealthy, impossible! y. .. the idea that ultimately triumphs is a military arm and force everyone to contribute, under the premise that “loyalty means that everyone must pay their share in defending the kingdom.” Of course, it suggests this is the villain of the film. How will Zapatero government employees and pensioners?
“The cut is fine with me because I am very concerned that we metiéramos in a spiral like that of Greece and how they were attacking the euro. But the art of politics is to do things without a high social cost. I believe that the forms have been careless, you have to protect pensioners and can not compare a senior official with a base, weighs Elena, professor and head of department at a public university.
The general secretary of the Workers’ Commissions, Ignacio Fernandez, accused Zapatero on Thursday to follow the dictates of “the demands of financial markets.” His counterpart in UGT, Candido Mendez, expressed its “opposition and refusal” to cut the Moncloa that aims to save 15,000 million euros between 2010 and 2011 and bring the public deficit from 11.2% to 6% of GDP. The effort is equivalent to 1.5 percentage points of GDP and has been evaluated positively by the international banks. Both unions, although they maintain the executive’s outstretched hand, have called a strike in the public sector for the next 2 June.
The opposite reaction to unions is that of experts. “In a world of uncertainty, the signals work. What the Government has done is to advance in two years the planned adjustment and this is very important. We need to be aware of that situation was extremely serious,” said José Carlos Diez Chief Economist Intermoney.
The announcement of the executive has effectively moderate debt differential between Spain and Germany, which is now close to one percentage point. This alleviates the cost of finance for the Treasury and Spain needs quiet to be funded with ease, as their financial needs are overwhelming. A study by UBS estimates the country’s total debt by over 350% of GDP, one of the highest relative levels in the world. Most of this debt is not public but private. Although spending has been triggered by the crisis, the State ended 2009 with a debt to GDP ratio of 53.2%, according to Eurostat, well below most of the EU.
Another story is that of households, their indebtedness has spent 20 years in 20% of GDP to 90%. In non-financial companies, the debt stock has tripled to 150% of GDP. Banks also have a higher debt to the Treasury. For all that is necessary to have funding capacity, “as emphasized by Francisco Perez, director of research at the Instituto Valenciano de Investigaciones Económicas (IVIE). “In two years the fall in government revenue has been brutal, were more linked to the cycle of what is believed and the structural deficit is also higher than thought: it spends more than it is entered in a systematic way and that is sustainable only if someone is willing to financiarte unlimited. A vision is not, “concluded Francisco Perez.
Will it be enough?
For Mario González, a researcher at EAE Business School, the measures are “a right step,” effective in tackling the deficit, but “insufficient” to resolve debt problems. “In relative terms represents 3% of the budgets for state government, local and state, which was about 456 500 million euros in 2009,” says Gonzalez. “At the end of last year, the amount of public debt was approximately 560,000 million euros, so the cuts sought in this case is even less than that 3%. I expect more effort,” warns the researcher.
Mario Gonzalez believes that the budget should be reviewed in all matters affecting less to economic growth.
Professor Gayle Allard, IE Business School, agrees that the proposed adjustment is “a purely temporary” and should be accompanied by other structural reforms, “to prevent future crises affect us much.” Among other actions, Allard proposes to reform the unemployment benefit, to prioritize the search for work on the profile of care that currently characterized predominantly support the strike in Spain. Long ago that economists calling for a change of this aspect, the problem is that the current situation does not seem suitable for implementation. For Professor at Instituto de Empresa, another key is to negotiate collective agreements governing the organization and working conditions in enterprises, to make it centralized, European-style, or completely decentralized (Anglo-Saxon settlement) Spanish avoiding the mixed model. The final assault of this comprehensive reform would go through the public system where, according to Allard, “there are too many ministries and too many officials.”
The impact on growth
The consensus states that Spain needs economic growth rates of GDP of at least 2% to generate employment, which does not seem likely to happen in the coming years. Standard & Poor’s anticipates that the average real growth (discounting inflation) from Spain between 2010 and 2013 is 0.6% short of what is needed to decisively improve the outlook. The Government itself has already acknowledged that the latest measures will affect growth in the short term. “The negative economic impact is undeniable,” confirmed Mario Gonzalez.
Construction companies are emerging as the first losers in the austerity plan, because that will be cut 6.045 million in investments (although the figure could be revised) will mainly affect the Ministry of Development, but it is expected that the Strategic Plan for Infrastructure and Transport (PEIT) offset some losses.
But beyond the numbers are people. The crisis has raised unemployment to 4.6 million people, these are the big hit. In many private companies have implemented numerous wage and self-downs have seen their margins fell precipitously. The tide was coming over to officials and to pensioners, who have not received the news with joy. “It feels really bad,” confirming Albert, a retired police officer. “He contributed much over many years and now I am very angry,” he stresses.
In the group of officials also rife indignation. “Zapatero has spent the money on things like the 400 euros would vote for him or Plan E has not created any wealth. They have managed five times the road you pass every day What is that? Feel that We have been fooled, “complains James, high school teacher in an institute. There is no clean solution to the crisis, all contain a potential harm. But the worst option for the Government would no doubt do nothing.
