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07.14.12

Spain’s Austerity Hits the People, but not the Pols

As Spaniards suffer under austerity measures, the country's leaders are raking in lavish salaries and perks. Mike Elkin reports from Madrid on how the resentment is starting to boil.

Spain is approaching a boiling point. On Friday, the Spanish government unveiled an $80 billion austerity package, its fourth since Prime Minister Mariano Rajoy took office in December. This latest series of budget cuts and higher taxes did not sit well with the population. Spaniards lashed out against authorities in the streets and via social media. Civil servants of all types—police officers, firefighters, train personnel, and ministry office workers—who have all had their salaries cut for the second time in two years, filled the streets, blocked railways, and marched on Parliament.

Citizens are angry. Spain's banks, largely responsible for the property bubble that has now burst and crippled the economy,, are set to receive a European bailout worth up to $125 billion. Taxpayers, however, must now pay more for fewer social services and with smaller earnings.

“A united people will never be conquered!” the crowds chanted outside the governing People's Party (PP) headquarters in Madrid on Friday night.

One of the consequences of the economic crisis is that Spaniards are now scrutinizing their political leaders more closely than ever. Spain's political class, infamous for having no qualifications or work experience other than being a “professional politician,” enjoys cushy lifestyles and privileges that no other occupation (perhaps outside the royal family) can match.

Members of Parliament in both chambers, for example, earn as much as $175,000 per year depending on their responsibilities. While these salaries will be part of the same cuts announced on Friday, MPs also receive around $2,200 per month for living expenses, as much as $185 per day in meal expenses while on official business, a cellphone, and a laptop. MPs can expense public transportation, yet also receive nearly $3,700 in taxi vouchers per year and have official cars and drivers (gasoline and any traffic fines are also covered).

Political groups within Parliament (usually divided by political party) also receive subsidies from the government. In the Congress, each group receives $420,000 per year plus nearly $24,000 for each MP. In the Senate this year, the PP's 163 senators received $4.3 million, while the Socialists' 66 senators received $1.8 million. Both Senate subsidies have risen over 1,000 percent since they were introduced in 2006.

Spain’s political class enjoys cushy lifestyles and privileges that no other occupation (perhaps outside the royal family) can match.

Undersecretaries, ministers, parliamentary speakers, and regulatory chiefs receive 80 percent of their salaries for two years after leaving office. But prior to Friday, when the government changed the rule, this severance package was compatible with any other salary they received, which is prohibited for other civil servants. The prime perks, however, go to the former prime ministers. According to the Former Heads of Government Statute, the ex-PMs receive two assistants, a stipend for office costs and social events (including rent), a car and driver, a security detail, and free tickets for state-run transportation. In 2008 Parliament extended these benefits to spouses and “persons united by a mutual relationship of affection” if the ex-prime minister died.

In addition, although the exact amounts depend on the yearly budget, Spain's four ex-prime ministers receive a lifelong salary, around $86,000 per year. And these men are now the only people in Spain who can work for a private company while at the same time receiving a state pension. Former Socialist Prime Minister Felipe González earns $155,000 per year as a board member at power company Gas Natural Fenosa, while the PP's José María Aznar reportedly makes around $245,000 per year as an adviser for energy giant Endesa. Aznar also sits on the board of Rupert Murdoch's News Corp.

In February, the PP and the Socialists—the only parties to have provided prime ministers since 1982—struck down a motion from smaller parties to limit former prime ministers' pensions and eliminate them if the person is drawing a private salary.

At issue is not just whether Spanish politicians abuse the system, it's whether the system is designed to be abused. Transparency, if you can find it, is the exception, as are both political and criminal consequences.

“Take a look at Friday's reforms and you'll see that the government wants to lower salaries of local council members, but they can't tell us how much they'll save because they don't know,” said journalist Daniel Montero, who covers politics for Interviu magazine and who wrote a book in 2009 on political perks and corruption. “Each town hall makes set salaries depending on the annual budget, but these figures aren't channeled into a bookkeeping system. You would have to go to each town hall one by one to figure it out. There is no obligation to be transparent, so that's why there are cases where a local mayor earns more than the prime minister.”

As this type of information leaks, Spaniards are learning more about their elected officials. And they aren't happy. According to a poll by the Pew Research Center in May, satisfaction with the country's direction fell from 50 percent in 2008 to 10 percent this year. A June survey taken by Spain's Center of Sociological Research (CIS) showed that only 4.4 percent thought that the political situation in Spain was good or very good. The Pew data also illustrates just how fed up Spaniards are with the status quo. When Pew asked people in eight European countries to rate these nations, Spain's lowest score came from Spaniards. They also voted Spain as the most corrupt.

“Politicians say that we need to win back the world's confidence, but they were the ones who lost it in the first place,” Montero said. “Ordinary working Spaniards didn't shake the markets' confidence, it was the politicians who bankrupted the country and then had to ask for money abroad that did it.”