Cuts for 3,5 billion euros, restructuring of local administrations, 600 million less for ministerial expenses and a VAT increase of 3 percentage points. These are the most urgent measures that the Spanish premier Mariano Rajoy has outlined and which will soon be implemented. "I know that the reforms I have announced are not pleasant, but they are necessary", Rajoy said, recalling that the Iberian country owes Brussels almost 10 billion euros, "basically our GDP".
LOCAL ADMINISTRATION – Rajoy announced a restructuring of the organization of local governments that will lead to savings of 3,5 billion euros. It also plans to reduce the number of regional and municipal councilors by 30% and fix the salary of mayors and various members of the municipal council in proportion to the size of the locality. In addition, municipal enterprises will be reduced or eliminated. Above all, it will strengthen the role of controllers to improve local public finances.
PUBLIC EMPLOYEES – The Government will reduce the number of days off available, reduce union delegates, increase mobility and equate the conditions of temporary incapacity to that of the rest of the other workers. Finally, civil servants will lose their thirteenth salary at Christmas. Rajoy has asked Congressmen and Senators to add to this pay cut. Furthermore, he has foreseen a further cut of 600 million in the expenditure of the ministries which he will concern in the reduction of subsidies and current expenses. Finally, a 20% cut is foreseen in subsidies for political parties and trade unions.
IVA – The Spanish premier also announced an increase in VAT, which will go from 18% to 21% (and from 8% to 10% at the lowest rate), excluding basic necessities, which will remain at 4% .
UNEMPLOYMENT – As far as the labor market is concerned, a reshaping of the unemployment subsidy system is envisaged. One of the most important points is that anyone receiving benefits will have their sixth month benefit reduced by between 60 and 50%.
