The Executive Branch Promotes Measures to Cut Public Spending

23 June 2010

In order to accelerate the deficit reduction to the maximum, the Spanish Government introduced a series of measures designed to trim public spending.

Measures which affect public programs such as Social Security are the following:

1.  Pensions: pensions will be frozen in 2011, except for non-contributory and minimum pensions.

2. Retirement: the transitional regime for partial retirement set out in Social Security Act 40/2007 of December 4 has been eliminated, which means that the current partial retirement program is being gradually phased and worker eligibility will be determined based on years of service and age. Therefore, in order to qualify for partial retirement now, the beneficiary must be at least 61 years old and meet other requirements of the Act.

Other cuts in public spending worth mentioning are the elimination of the “baby-check” as of January 1, 2011, the elimination of the retroactive nature of the Dependents Act’s benefit payments and the 5% average pay cut in public employee salaries in 2010, and the freezing of same in 2011.

Likewise, and in conclusion, it is noteworthy that in the Labour Roundtable (Mesa de Diálogo Social) held in the past few weeks between government officials and business and union leaders important advances were made in the negotiations towards a consensus on labour reform. As a result, various proposals have been made public such as the decrease in the company Social Security contribution proposed by business leaders.

For further information, please contact Javier Echeburúa: