As austerity bites hard, a once pliant Spain revolts

After four days of daily protests, some violently dispersed, Spain is bracing for a cycle of social unrest against the harshest austerity measures in decades. At stake is not only Spain’s economic recovery, but that of the European Union.

Prime Minister Mariano Rajoy, of the conservative Popular Party, pled yesterday for calm and sacrifice after hundreds of thousands marched against his labor reform on Feb. 19. He insisted he has no intention of backtracking on steep budget cuts that have only begun to be introduced. Even on the campaign trail, Rajoy warned of pain to come – and his party was still elected.  

But while Spanish and European authorities say budget cuts are necessary, experts warn the Spanish measures could be too much, too fast. A population already on edge could be galvanized to action. Social instability in a country the size of Spain, especially in rejection of European Union-imposed policies, could spread to other countries in the eurozone facing angry publics.

“The government’s legitimacy could soon be questioned on the street," says Jaime Pastor, professor of political science and an expert on mass mobilizations at UNED, a university. “The ghost of Spain turning into the next Greece is still there. If the trend is for Spain to follow that model, the European crisis is going to get worse."

Labor says 'enough'

Spain, with a population of 43 million, has an unemployment rate of 23 percent, by far Europe’s highest – and it’s only expected to increase. Half of youth are jobless. The Central Bank expects a recession of 1.5 percent for 2012.

Desperation is palpable and has become routine in Spanish cities. The 150,000 evictions of families so far in the crisis will more than double in 2012, according to banking consumers' association ADICAE, and there are more 1.5 million families without any wage earners, a number that will surge this year.

The changes in labor regulations and other government measures will initially be painful, but are meant to spur job creation and economic growth. By making layoffs cheaper and quicker and expediting salary cuts, they government says they will increase the competitiveness of the Spanish economy and foster job creation.

“The labor reform will generate significant conflict,” says Eduardo Rojo, a labor law professor in the Universidad Autónoma de Barcelona. “Good labor relations are good for public cohesion, and this reform tilts the balance between bosses and employees. I understand why the labor movement would be angry.”

But the country’s public deficit is around 8 percent, and has to be trimmed significantly, although how much is uncertain after the EU agreed today to review deficit targets. Based on the current target of 4.4 percent, ratings agency Moody’s warned in January that Spain would need to cut 40 billion euros in 2012 alone, compared to 28 billion in cuts spread out over the previous two years.

The 'Valencia Spring'

Europe is still divided over how to balance between austerity and growth in its economic recovery strategy, with countries like Italy and Spain leading a soft revolt of sorts demanding more breathing room to spur economic recovery.

Prime Minister Rajoy’s party, swept into office on a wave of economic frustration, holds an absolute majority in Parliament and has no need to compromise politically – but public pressure is a different story.

“It’s one thing to win an election, when people voted against one party and for something new. But it’s another thing when you’re talking about cuts in public services and reforms of labor gains which the majority of Spanish society takes for granted,” Pastor said.

The show of force Sunday during peaceful marches across the country against the government’s labor reform was unexpected, the biggest mobilization in years. Organized by the country’s biggest unions, backed by the main opposition parties, and spread across 57 cities, crowd estimates range from two million, according to unions, to as few as 150,000, according to police.

Teachers and health professional have been protesting since the beginning of the year. Other steps, including increasing the sales tax and massive government layoffs, are planned. The government has refused to disclose details until after a key regional election March 25 in hopes of avoiding having the ruling party booted from key posts amid public discontent, ignoring even EU pleas to push forward. 

A rare violent outburst in the Mediterranean city of Valencia on Feb. 20 has galvanized public opinion against the government, its measures, and its inflexibility. A few dozen high school students peacefully stopped traffic to protest spending cuts in education and changes to their schedule, but police broke up the gathering violently, which only swelled the protests. The two groups clashed in the city center, leaving 17 injured, mostly police. At least 40 have been detained since, including several minors.

Protests in Spain have been largely peaceful and a history of combative labor disputes ended two decades ago. The Valencia Spring, as it was initially dubbed on online social networks, clogged web traffic and newscasts, and the next day thousands of people, mostly students, marched throughout Spain against police brutality, although no more clashes were reported. The marches continued today.

“It looks like this is heading toward a confrontation because the government says it can’t budge. Things are going to get hot this spring,” Professor Pastor said.