In line with its austerity commitments to the European Union (EU), Spain’s New Socialist Party (PSOE)-Schmal government is making social concessions forced on the working class amid the COVID-19 pandemic and inflationary spiral. Started withdrawal. Caused by NATO against Russia in Ukraine.
In early 2020, as the pandemic spread across Europe, the European bourgeoisie faced its worst economic crisis since the 1930s. European authorities designed an 800 billion euro Next Generation EU rescue fund as workers shut down key industries and forced governments to impose early lockdowns to stop the spread of the virus. Madrid was allocated 140 billion euros in 2019, equivalent to 11% of its gross domestic product (GDP), making Spain the second-largest recipient after Italy.
The fund primarily consisted of benefits to businesses, boosting the stock market, and measures to increase the wealth of the super-rich, but the ruling class also received benefits in the form of wage subsidies, electricity bills, housing allowances, etc. forced workers to make certain concessions. , and tax cuts to avoid social rebellion.
In Spain, the PSOE-Podemos government (2019-2023), the predecessor of the PSOE-Schmal government, covered the wages of 3 million workers, more than one-sixth of Spain’s workforce, through a furlough scheme.
Later, in response to NATO’s war against Russia in Ukraine, affiliated labor unions (Podemos-affiliated Workers’ Committee (CCOO), Union of Social Democratic Labor (UGT)) were unable to suppress the growing number of strikes and protests. I felt fear. , the coalition government of PSOE and Podemos has implemented a series of measures to combat rising inflation, which reached a peak of 8.3% in 2022.
These include the introduction of price caps in electricity markets, the extension of rent controls first introduced during the COVID-19 pandemic, reductions in public transport costs, the temporary imposition of a wealth tax and the elimination of windfall taxes on profits. This includes levies, etc. of banks and energy conglomerates.
At the same time, the government launched a long-term attack on living standards, including the approval of pension reforms that led to a fixed retirement age of 67, and the approval of a labor law that cut legal protections for workers in the workplace. It also worked with union bureaucrats to impose pay increases that were below the rate of inflation.
The PSOE-Sumar government is now preparing to withdraw all previous concessions and impose billions of euros in austerity measures.
In December, EU economy ministers agreed to restart the Stability and Growth Pact. Current rules require countries to keep government deficits below 3% of gross domestic product (GDP) and public debt below 60% of GDP. These rules were temporarily suspended during the pandemic.
The new deal, proposed by Spain, which holds the EU’s rotating presidency, and approved by Germany and France, allows countries with debt ratios above 90% to reduce their debt by 1 percentage point each year. For Member States with debt ratios between 60% and 90%, the required reduction will be 0.5% per year.
The new rules will give member states greater freedom in military spending to ensure that the EU’s imperialist powers continue down the path of militarization. Investing in the defense industry would extend the period a country has to balance its public accounts from four to seven years.
Spain’s Economy Minister Nadia Calvino praised the deal, saying the rules were “more realistic, correspond to post-pandemic realities and also incorporate the lessons learned from the great financial crisis.”
The truth is that, far from turning the page on the austerity measures imposed across Europe after the 2008 global capitalist crisis, the deal seeks to achieve draconian austerity through tax increases and spending cuts on health, education and infrastructure. It means.
For Spain, whose current debt is 109.9% of gross domestic product (1.5 trillion euros), a 1% reduction would equate to 15 billion euros this year. The cuts are expected to last until 2025, as long as debt exceeds 90% of GDP and the budget deficit exceeds 1.5% annually.
After the meeting, Spain began withdrawing some of the temporary concessions it had been forced to make since the pandemic. The company announced that gas value added tax (VAT) will return to 21% from the current 5% in April 2024. The value added tax (VAT) on electricity will jump from 5% to 10%, and the regulated tariff (TUR) on gas will also increase. It reaches an average of 8.19%.
The government has implemented some measures, including subsidies for public transport for minors and young people, and a reduction in value-added tax on staple foods (bread, flour, milk, cheese, eggs, etc.), oil and pasta from 10% to 5%. expanded subsidies. However, these are scheduled to end in June, according to reports. Spain’s AIReF fiscal authority has already warned that Spain will only comply with deficit limits in 2024 if the majority of these subsidies are completely withdrawn.
Reversing the food tax cuts will push people into poverty, who have already faced a 15.7% rise in food prices over the past year. Olive oil increased by 55.6 percent, sugar by 50.2 percent, flour by 37.6 percent, butter by 37.5 percent and milk by 30.9 percent. Other staple foods are also becoming more expensive. Eggs are 27.1% more expensive. yogurt, 25.6 percent; potatoes, 20.5 percent; cheese, 20.3 percent; and chicken, 16.6 percent.
The government also announced that it will allow energy companies to offset windfall taxes when they invest in renewable energy projects. This essentially means a tax cut for some of Spain’s biggest companies, given that energy companies have to invest in this sector anyway to compete in the global market.
The windfall tax, introduced after energy companies such as Ivedrola, Endesa, Naturgy and Repsol posted record profits of 12.5 billion euros ($13.8 billion) in 2022, up 41% year-on-year, must be paid. It was introduced in an attempt to deal with growing public anger. Energy prices in the same period rose by 88%.
Madrid also announced the start of major labor reforms as part of its commitment to the EU. The latest changes affect subsidies for long-term unemployed people who have exhausted their unemployment benefits or are ineligible for them. The company has approximately 759,900 employees, of which approximately half, or 361,600, are over 50 years old.
So far, they have received 480 euros ($523) per month for up to 30 months. Unemployed people under the age of 45 will also be able to take advantage of the subsidy, with unemployed people under the age of 52 receiving a benefit of €570 ($622) for the first six months and €540 ($590) for the next six months. USD). After 12 months, it will return to 480 euros ($523). However, the main aspects of the reform will affect long-term unemployed people aged 52 and over, who are the largest group of subsidy recipients. Pension insurance premiums will remain at €480 and contributions to the pension scheme will be reduced by up to 25%. In effect, this means pensions for hundreds of thousands of workers will be cut.
These attacks are just the beginning. The text of the recent reform states that “within six months, within the framework of social dialogue, the government shall [between businesses and the trade union bureaucracy] A global strategy for employment of the long-term unemployed […] The aim is to facilitate their reintegration into or retention in the labor market. ”
This year’s multibillion-euro austerity measures will add fuel to the flames of working-class protests that have already begun to spread. Over the past month, tens of thousands of workers in more than 30 different sectors, including nurses, airline service workers, Amazon workers, and hospitality workers, have been hit hard by low wages and the global cost of living crisis. They are going on strike in protest.
It will further worsen the deterioration of social conditions and bring more workers into direct conflict with the state and the PSOE-Sumar government. According to a recent report, there are 12.3 million people in Spain at risk of poverty and exclusion, equivalent to 26 percent of the population. Almost 9 per cent of the population, some 4.2 million people, live in deep poverty, living on less than €560 a month, which is less than the widely encouraged increase in long-term unemployment benefits for under-52s. Almost half of Spain’s citizens have difficulty making a living. Meanwhile, a third can’t afford to take a week’s vacation a year. Meanwhile, profits of the 35 largest companies traded on Spain’s Ibex 35 stock exchange rose 22% last year, the highest since 2009.