The first-ever Spanish coalition government had only been in office two months when the Covid-19 pandemic reached the country and a lockdown was enforced. The emergency plans meant the agreed budget has had to be put on ice while and public expenditure is directed at providing for the most vulnerable and to offering some economic support to freelance workers. The government knows the deficit and public debt will increase, and the right-wing will use any chance to undermine a government it already accuses of espousing a Venezuela-style socialism. The cabinet faces an enormous challenge in its attempts to handle the crisis without embarking on the path to austerity, as happened after 2008, causing a structural crisis from which the country has not yet recovered. JUANJO RIVAS reports from Madrid.
UN Special Rapporteur Philip Alston visited Spain between 27 January and 7 February and issued a report on extreme poverty in the country. He highlighted the extension of severe poverty, high rates of unemployment – which are chronic among the youth – a housing crisis of huge proportions and a lack of social protection. He laid the blame for the situation on the destruction of social services and stated that the lack of funding and an unfair tax system are behind the growing inequality. Between 2007 and 2019, entrepreneurs increased profits, but state income from taxing profits was slashed by a half. Alston also denounced what he described as a broken system of social provision, the lack of social housing and a social benefits regime so discriminatory and inefficient that the poorest sections of society end up excluded, facing situations he described as ‘truly outrageous’.
The new national minimum income scheme to protect people in severe poverty only reaches 25% of those in need. Despite being the fourth largest economy in the eurozone, Spain is below the European average in the proportion of state budget set aside for public health care, family support and disability benefits. As soon as the lockdown was lifted in June, courts started issuing eviction notices, showing the mercilessness of a system that allows social housing to be sold to ‘vulture funds’ such as Blackstone. Homelessness is rising, the number of households without income is increasing and 29.5% of children are at risk of poverty or social exclusion. Mass redundancies and delays over state benefits have forced thousands to queue at soup kitchens and food banks run by NGOs or neighbourhood solidarity networks.
Small wonder workers are organising to fight back after the lockdown, as large corporations move towards relocating business and planning to lay thousands off. On 23 July, thousands of employees demonstrated outside the eight Spanish plants owned by aeronautics giant Airbus, after it announced the sacking of 1,600 workers. On 14 June, there were mass protests in Galicia after the aluminium manufacturer Alcoa threatened to close down its factory there, with a loss of more than 500 jobs. Following the decision by car maker Nissan to close down its Barcelona factory – its largest plant in Spain – with a direct loss of 3,000 jobs, in June the workforce started an indefinite strike with street protests, barricades and blockades on motorways.
However, while sections of the working class are dumped into poverty, capitalists manoeuvre and the rich are getting richer. Sections of the upper class have held street protests wrapped in national flags, against what they describe as a ‘social-communist’ goverment, infuriated by suggestions of a tax increase on large fortunes. The Spanish elite has always been attached to Franco´s regime: very patriotic about extracting wealth from the country, but rather more reluctant when it comes to paying any in in the form of taxes. The very best example is former king Juan Carlos I, whose offshore accounts in tax havens have been revealed to be filled with commissions in cash from business with Saudi Arabia.
In Spain only 17% of nursing homes for the elderly are in the public sector, while 68% are private corporations which take advantage of juicy contracts with regional administrations. Caring for the elderly has become a €4.5bn-worth business, and increasing profits has led to worsening working conditions and cuts in protective equipment and medical provision for residents. When emergency units were overflowing with cases of Covid-19, the government in Madrid issued an order not to transfer elderly people from nursing homes to hospitals. As a result, 80% of the deceased in March lived in nursing homes and were denied admission to hospital. Between March and April, 10% of the elderly living in old people´s homes died and 40% of caretakers got infected with Covid-19. Relatives have presented a lawsuit against the president of the Community of Madrid, the region’s administrative council, for denial of assistance and negligent homicide.
The EU has approved an emergency fund to help those countries most affected by the crisis, on the basis of turning aid into profitable returns. Spain will receive a package of €140bn over six years – equivalent to 11% of GDP – of which €72.7bn will be direct transfer and €67.3 bn in credits to be repaid. When the Netherlands demands reforms in the Spanish system of pension schemes, what underlies it is the fact that their own system depends on investment trusts whose most important assets are treasury bonds from South European states. That is to say, the more in debt Spain and Italy are, the higher the profitability of their bonds and therefore the Dutch speculative gains.
Spain’s social democratic coalition government had promised to repeal the last labour reform but, there are already voices in the EU against it. Everything points towards a new wave of austerity plans, with financial aid subjected to ‘structural reforms’ (progressive privatisation of pension schemes and more room for private investment funds in the healthcare system). The Covid-19 pandemic is being exploited by the European bourgeoise to ensure it gets its money back, at the expense of the working class. The balance of forces within the government will determine how strong its political will is to resist.
