Catalan President announces a 5% cut in public salaries to meet 2012 deficit targets

The Catalan Government had already approved a 3% reduction of public salaries during the current year, which will now be increased to 5%. However, the President of the Catalan Government, Artur Mas, explained that the measure would be cancelled if the Spanish Government approved a similar reduction, in order not to harm public employees with two salary reductions. The People’s Party supports Mas but the Left-Wing opposition parties have criticised the measure and have said that there are other ways to reduce the deficit. Mas demanded that the Spanish Government include the funds it legally owes Catalonia in its budget for 2012 which would avoid further cutbacks.

CNA / Gaspar Pericay Coll

March 12, 2012 11:46 PM

Barcelona (ACN).- The President of the Catalan Government, Artur Mas, announced on Monday a 5% reduction of public salaries in 2012, which means increasing the previously announced 3% reduction. The measure has been adopted to reduce public spending and meet the deficit targets for the current year. However, Mas explained that if the Spanish Government approves a similar measure for all public employees in Spain, then the Catalonia’s Government would not implement today’s announced salary drop, as the measure will also affect employees paid by the Catalan Executive. Furthermore, Mas said he wants to avoid causing pain to public employees with an additional salary reduction. However, he has asked the Spanish Prime Minister, Mariano Rajoy, to include  the funds it legally owes Catalonia in the Spanish Government’s budget for 2012 –which will be presented at the end of March. The Spanish Government is legally obliged to pay Catalonia several funds from the last 4 years, but some of this money has not been paid despite promises to do so. Considering the amount of the money owed (more than € 2.2 billion only in 2011), the Catalan President has requested the Spanish Government to include it in its 2012 budget in order not to stretch the Catalan Government’s finances even further, which would oblige Mas to make further cutbacks. The opposition is divided. The Conservative People’s Party (PP), which is led by Rajoy, has given its support to the Catalan Government, which is run by the Centre-Right Catalan Nationalist Coalition ‘Convergència i Unió’ (CiU). However, the Left-Wing parties have criticised the salary drop measure since they consider there are other ways to balance the budget, mainly increasing the revenues.

The President of the Catalan Government has announced that, in order to meet the deficit targets for 2012, further adjustments will be needed. Mas has announced that public spending will need further reductions beyond the already foreseen, since the economic forecasts are worse. The Catalan Government had chosen reducing public salaries as a way to reduce public spending in 2012, after it reduced the budget of public services in 2011. However, the previously announced 3% drop would be insufficient, and Mas announced it would be levelled at 5%. This way, the 5% salary reduction that might be implemented in 2012 would be carried out split into two payments: as previously announced, the first reduction of 3% would be through the summer extra payment, and the remaining 2% would be implemented in the Christmas extra payment. Both bonus payments (summer and Christmas) are part of the regular and fixed salary, as it is divided in 14 payments and not 12. Making the final adjustment at the end of the year gives the Catalan Government room to modify it depending on the Spanish Government’s decisions.

In fact, Mas explained he would cancel today’s announced 5% reduction if the Spanish Government adopts a similar measure that affects all public employees throughout Spain, since it will also affect the employees directly paid by Catalonia’s Government. The Catalan President also demanded the Spanish Government to pay the money it legally owes Catalonia. If it does not pay what is legally obliged, including funds from the last 4 previous years, the Catalan Government will have to undertake further budget cutbacks in order to meet the deficit objectives. For instance, in 2011, the Spanish Government omitted to pay Catalonia more than €2.2 billion, as a way to transfer its deficit, and thus the blame, to the Autonomous Communities. Some of the arrear payments correspond to 2008.

Therefore, Mas emphasised until the Spanish Government presents its own budget –expected at the end of the month- he does not know if the Catalan budget will need to be reviewed. At the end of March, the Catalan Government will know which exact revenues Madrid is willing to pay Catalonia, and if they include a measure relating to public salaries. Nonetheless Mas expects “a serious attitude” from the Spanish Government, “since serious governments do what is required to pay for their debts”. 

The opposition is divided

The leader of the People’s Party in Catalonia, Alícia Sánchez-Camacho has “guaranteed” her party’s support to the Catalan Government to approve the 5% reduction of public salaries. However, she acknowledged that the Spanish Government’s budget is still to be decided in order to know if further adjustments are needed in Catalonia. The PP and CiU agreed to approve the Catalan budgets for 2011 and 2012. Camacho emphasised her party “will approve all the required measures to meet the deficit target”, set at 1.5% of Catalonia’s GDP.

However, Left-Wing parties have criticised the measure. The main opposition force, the Catalan Socialist Party (PSC) asked to increase revenues. The PSC’s Spokesperson, Jaume Collboni, warned that “if the Catalan Government continues with its budget cut policy without increasing revenue, the result may be irreversible in some areas”, since the already implemented budget cutbacks “are already chewing the bone of the Welfare State”. He asked for greater measures against fiscal fraud, increasing taxation on the largest fortunes, and adopting new taxes on non-renewable energies. The Spokesperson of the Catalan Green Socialist Coalition (ICV-EUiA), Laia Ortiz, denounced “all the times that things do not end the right way for the Catalan Government, public workers are punished”. Finally, the Secretary General of the Left-Wing Catalan Independence Party (ERC), Marta Rovira, has asked the Catalan Government to adopt measures “through social dialogue”. Rovira asked Mas’ Government to be different from the Spanish Government and “hold a social dialogue”, “discussing with trade unions and workers”. However, she said “probably the salary reduction is neither the only nor the best way of acting”.