Friday, November 30, 2012


Spain's 1978, post Civil War settlement was not really designed for bad times. And these are terrible times. They must be; the government's just announced that it won't be increasing pensions in line with inflation next year. Just a 1% increase against 3% inflation. Doesn't sound a lot but it is if you're close to the bread line. It won't, of course, much affect the legions of Spanish politicians and businessmen who can afford to go and visit their cash in Andorra, Liechtenstein and/or Andorra.

The '78 system of Autonomous Communities (effectively regions) is creaking and groaning, as Madrid tries to impose economies on regional governments who've got used to spending big, particularly on themselves and their friends. Yesterday's appeal to the Constitutional Court was by Exremadura and Galicia about the planned suspension/ abolition of subsidies for renewable energy projects. Mainly solar, I guess. Today's resort to the Court is by The Basque Country, which says it will ignore Madrid's diktat that they don't give civil servants their month's bonus at Xmas. This is no way to run a country.

One of the problems, of course, is that some Regions have a better deal with Madrid than others. The Basque Country enjoys the greatest devolution – with its own Tax Office, for example – and Cataluña comes next. Not that you'd know from the regualr wingeing from there. There are inevitably regional jealousies even in the best of times but, as I've said, these are decidedly not the best of times. Building permits this year look like being around 50,000, compared with nearly 900,000 in 2006. The 'motor' of the economy has been taken off the road.

So, Whither Cataluña? The party - ERC – which came second in Sunday's elections, and which holds the key to the way forward, has said – with great specificity – that it wants a referendum on independence to take place on September 11, 2013. Which is earlier that that proposed for Scotland, I believe. But these are just opening shots in what will be a long skirmish, both within Cataluña and between Barcelona and Madrid. Just what the uninspiring Sr Rajoy wants as he tries to reform Spain while keeping the Brussels and IMF Mandarins happy. Not forgetting Mrs Merkel. Still, things could be worse; he could be the President of Israel.

Which reminds me – I think I have a solution to the Middle East problem. We should build on the “Two state” idea and divide the whole region into as many states as it takes to keep sane people isolated from the religious nuts on both sides. Jerusalem would belong to everyone. Can't think why this obvious solution hasn't been implemented.

Talking of wars . . . Here's a day-warming story from the last global conflagration: In 1942, a British pilot and his navigator flew a Bristol Beaufighter plane at window height down the Champs Élysée, dropped a French Tricolour on the Arc de Triomphe, then strafed the Gestapo headquarters. Impressive as this is, it would've been even more uplifting if someone hadn't got the timing wrong and they'd been able to attack their original target of the daily parade of Nazi troops. But the Gestapo HQ was certainly a morale-boosting fallback.

6 comments:

Sierra said...

2% below €1000 per month

Ferrolano said...

So Spanish civil servants won’t get their “Christmas bonus” – first, is it really a bonus, which I understand to be something given or paid in addition to what is usual or expected. Without doubt, the 14 payments received by Spanish workers during the course of a year make up their annual salary and is computed as such by the respective employers as part of a person’s compensation package.

Being both usual and expected, the elimination of the payment is just another 7+% pay cut which with the previous 5% reduction makes for a total of 12% which may be acceptable if you are on the top end of the pay scale. Unfortunately, a high percentage of these people are on salaries not too much above the minimum wage and these cuts coupled with the increase in VAT make for a miserable situation for those people who are trying to offer the rest of the population a civil service, ranging from the military to medical to the town hall.

Colin said...

Yes and last week I heard of a (new?) distinction among civil servants between funcionarios and (?)personal laboral who get paid less and are easier to dispose of. See here on this
http://economia.elpais.com/economia/2012/06/12/actualidad/1339528426_459542.html

Anonymous said...

Sorry, forgot to say the distinction is based on whether you have passed an oposión or not.

Colin said...

But what happens when these cuts take people below the minimum wage? Is there a limit to one's salary reductions?

Ferrolano said...

Unfortunately, it is possible to have sat and have passed an opposition and because of what work is available, end up being employed on a temporary basis, with the inherent risk of being fired when the organization want to let you go.

As far as salaries falling below the minimum wage, my contention is that any reduction may only applied against monies above that level. At the same time, rather than allowing companies to employ people with no payment, they should be obliged to pay at least the minimum wage.

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