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The Spanish crisis

posted 31 Jan 2011, 10:54 by Admin uk   [ updated 5 Mar 2011, 05:44 ]

by Jesús M. Pérez & Jordi Escuer in Madrid

  Spain went through an economic boom from 1996 to 2009. Production rose 73.4%. The labour force grew by about 50%, unprecedented in its history, from 12.9 million workers (including the self-employed) in 1997 to 19.15 million in 2007. There were nearly 15 years of growth which was uninterrupted even during the international recession of 2000-01. During this period the Spanish bourgeoisie enriched itself more than ever :    

  • Thanks to the privatization of companies in vital sectors such as communications, energy, banking and transport;  


  • Through intensifying the exploitation of all workers, in particular by massive use of cheap labour with the arrival of more than 4 million immigrants, a new phenomenon in a country where  previously workers had had to emigrate to look for work;  


  • With the use and abuse of European structural funds, these came to represent 1% of annual GDP for some years;


  • With the internationalization of their investments, especially in Latin America,


  • And finally became rich through property speculation which lead to a fivefold increase in house prices.


We can not understand what is happening today in the Spain if we lose sight of the consequences of that boom.

Under this apparent general increase in prosperity of those years, there was an enormous increase in social inequality. The enrichment of the bourgeoisie was occurring at the expense of deteriorating working conditions and wages of the working class. Real reduction in average wages, partial social counter reforms,  a level of around  two million unemployed (at the best time to Spanish capitalism can offer their employees) and other cuts in  labour rights, have marked all these years.
However, the increase in inequality was made more palatable due to various factors including, for example, more members of each family unit working, the reduction of the prices of many consumer goods, access to credit at low interest. Despite the obvious inequalities, economic growth created a social atmosphere of unlimited prosperity and the idea that sooner or later and it would benefit all classes and strata of society. This was the material basis on which the policy of “Dialogue and Social Pact” rested together with the almost permanent absence of any mobilisation by the trade union leaders.

First effects of the crisis
However the crisis currently afflicting the capitalist system worldwide, which, if it continues to deepen, could overshadow the crisis of 29 and the Great Depression that followed, has changed everything.
The so-called Spanish “welfare state”, despite the achievements of the struggles after the fall of the dictatorship, has never reached the average level of the European Union, with a chronic deficit of some 70,000 million Euros ( 7% of GDP). While social spending increased in absolute terms during the boom, it rose much slower than the rate of economic growth, meaning a smaller and smaller share of the country’s wealth, and falling far short of actual needs of the majority of society. Now with the crisis, all the promises of a better “welfare state” via the social democratic policy of public spending have no place and  are swept under the carpet.
Despite  Rodriguez Zapatero constantly repeating that he would never ever cut workers rights, on May 12, 2010, he announced a strong plan of adjustment; a reduction of salaries of public employees by 5% on average, freezing pensions in 2011, the VAT hike, the reduction of aid to care workers and other measures to attack  precisely those who have less. The Unions called a strike of public sector workers, which had a weak following.
In June, taking advantage of the summer, the PSOE government approved a new labour reform, supposedly intended to promote stable employment but, in fact, making sacking cheaper and easier. To make matters worse, they even subsidized dismissals with public money. Arguing that it is unfair, that there are workers on precarious contracts  while  others have permanent contracts, they equalise by reducing to the lowest denominator. They also introduce private  “employment” agencies converting unemployed workers into a new source of revenue for private companies.

The general strike 29S
The union response was to call a general strike  three months later , once the measures were already approved and underway. Despite the difficulties, job insecurity, the delay in convening, low prestige of union leaders, poor preparation, etc.-there was a successful turnout on September 29, especially in the industrial sector where the stoppage was close to 100% . In other sectors, services, transport, public sector workers … the support was much smaller and very uneven. Possibly between 5 and 6 million workers on strike, much less than what the union leadership claimed (10 million), but a very important figure. The street demonstrations were massive. In Madrid  alone there were around half a million people .
Union leaders called the strike with the idea of making the government retreat on its labour reform and force a return to negotiations. From this point of view, and as expected, it was a resounding failure because Zapatero not only did not retreat but, under pressure from European institutions, international rating agencies and, above all, the Spanish big bourgeoisie presented on December 1, a new Plan of Adjustment and set the date (January 28, 2011) to approve a plan to reduce pensions, including raising the retirement age to 67 years. The unions’ response was some timid protests on Dec. 18, with far less participation than the general strike.
It is no coincidence that the new Plan Adjustment of public expenditure was submitted just days after Zapatero met with the presidents of the 37 largest Spanish companies in La Moncloa, and consists of:
 - Eliminate the subsidy of 426 Euros for the unemployed who had run out of unemployment     insurance benefit (up to two years). So far 743,000 workers had received this at a cost of 1,400 million Euros. It is quite clear what the priorities of the Government are, while they removed 1,400 million Euros from the unemployed, the big construction companies were treated to the same amount to cover the financial deficit in highways construction, mainly speculative around Madrid .
 - Privatization of Aena, the public company that manages airports and air traffic control towers.

-  Privatization of State Lotteries (30%).
- Tax benefits are granted to SMEs (Small and Medium Enterprises), because, according to Economy Minister Salgado, ” the private sector must lead the economic recovery.” The  Workers Commissions union (CCOO) states that these benefits will not be only for SMEs, but will be widely applied in the interests of big business.
- Increased tobacco taxes.

The “social pact” is not an alternative
All this shows is that nothing can be expected from the policy of the Social Pact. The path of “social dialogue” is dead, no matter how much the union leaders might wish it to be otherwise. The reality that prevails is a chronic unemployment of 4.5 million unemployed, 20% of the workforce, the one million three hundred thousand households in which all members are unemployed, the 40% of youth between 16 and 25 who are  unemployed, the poverty that affects 20% of the population.
The labour reform of June last year is already having harmful effects on workers. Its application in many enterprises is increasing dismissals. But also, according to the National Statistics Institute (INE), in the third quarter labour costs fell for the first time in 10 years, due to lower costs of dismissal. At the same time the daily hours worked  has increased by 1.1%. This is what the employers wanted and what they are getting.
The immediate outlook is a worsening of the economic situation. According to the bosses of the ETTs (Temporary Employment Agencies) the peak  of unemployment will be reached in the first quarter of 2011. Whenever it is, what this means is that for the bourgeoisie, the worst is not over, but yet to come.
The pressure on the Government of Zapatero not only comes from the Spanish bourgeoisie. The European bourgeois presses as much or more, for fear of what might happen  to Spanish banks. The Euro zone banks, especially German and French,  have lent  470,000 million Euros to the Spanish banks. This has created conditions for a dangerous and unpredictable bubble with debt speculation.
That is why the Government is determined to carry out the cuts in benefits, by whatever means possible, and to reform  collective bargaining. So far, collective agreements marked minimum working conditions for all workers. They were mandatory for employers and could not be changed without the signing of a new agreement. The June labour reform has laid the groundwork, to be finalised with the introduction of the normative, so that companies can  practically freely break away from the agreements and/or wait till they have run their term and then the agreement becomes null and void in the absence of a new signed agreement. In short, measures that strengthen the employers against the workers, giving each company the ability to impose more severe working conditions. Most companies have paralysed the collective negotiations while they wait for this reform to be implemented.
The unions threatened another general strike but it is also clear that they did not want it, because they are afraid to enter the path of struggle and the consequences for them of a total confrontation with the government. Toxo, Secretary General of CCOO in an Assembly of Delegates on December 14 said “I do not know if we have to strike. We prefer not to. ” At the time of  writing, the union leaders are negotiating with the Government and hoping to achieve a great social pact, jointly with the employers and even the right-wing party (Partido Popular), on pensions and other issues. If it is signed, it would be a grave error by the leaderships of UGT and CCOO as it would inevitably mean a drastic cutback in social rights. This attempt by the leaders of the UGT and CCOO to return to the politics of social pacts with the Government  in other words, returning  defeated to the negotiating table and accepting the measures imposed, is due to their lack of a political alternative. Doing this would convert the general strike of September 29 into a defeat and transmit to the working class the message that their effort had  been for nothing, besides further decreasing the prestige of union leaders and hindering the necessary recovery of the workers’ movement.

Electoral prospects
Due to its policy of cutting social spending and attacking workers rights, the PSOE will pay a high price. It is causing  deep and widespread unrest, especially among its own electorate. In May this year there will be local and regional elections, and in 2012 General elections. All the opinion polls point to a underlying process of weakening support for the PSOE . The main symptom is the loss of support from their own base. Some polls say the PSOE maintains only 40% of its voters. The problem for the left and the workers is that most of the votes lost by the PSOE will go to abstentions, which would present municipalities, autonomous regions and the state government to the rightwing PP on a plate.
What has become clear is that struggle is  the only alternative. Not just the union struggle, but also   a political alternative is required. Union struggle is essential but not sufficient. If we are not able to defeat these policies at the polls we can not win, as evidenced by the experience of France and Greece. Toxo, in the same Assembly of Delegates cited, lamented on several occasions “that workers had been without representation in Congress, with the rare exception of IU.” That means, we must finish with Zapatero’s government but without this inevitably giving way to a right-wing government of the PP. There is only one way to do it: IU alone can not represent the 5-6 million workers who went on strike, it now has about a million votes and two deputies, and it would be necessary for IU to form a left electoral front with the unions (UGT and CCOO, CGT …) and all the forces they bring together , including those socialist activists unhappy with the pro-bourgeois policy of the government. This would be able to pick up  votes that otherwise  were condemned to abstain, and could even mobilize new voters.
A good result for this front would cause confusion and division in the ranks of the PSOE, and basing itself on a policy of mobilization  it could form core support in every factory, neighbourhood and school, channelling energies that otherwise would be wasted it could develop a strong political current. This in turn could generate a new environment, giving confidence to the workers in their strength and fighting ability to face the tough battles ahead to defend our interests. The counter reforms have only just begun. If the working class has a proper political expression will emerge as a sweeping force opening the door to a new political era in the struggle for social transformation.

Jesús M. Pérez y Jordi Escuer. Madrid