Drastic cuts across Europe

Paris and Berlin, along with all of Europe’s Mediterranean region countries will be called on to make heavy sacrifices that will overhaul social policy.

Greece: blood and tears

It was a tragic opera filled with blood and tears, written by the European Commission and executed by the Socialist Prime Minister, George Papandreu. To recover €24 billion, Greece has frozen salaries and pensions for the next three years. The government has also reduced the salaries of public servants by 20 percent and welfare payments by 10 percent. Moreover, the legal age of retirement was raised to 65. The government has plans to increase taxes on certain goods by 23 percent.

Spain: the butchering of socialism

The notion of “holy suffering” lost its romantic charm after José Zapatero announced his anti recession plan. Adiòs €2,500 bonuses (approved three years ago but canceled starting in 2011). New measures include an intervention on the health care system, cuts to regional budgets and freezes on pension and public servants salaries. Members of the government bureaucracy will see a five percent reduction in salaries. Larger cuts were made to the salaries of deputies and members of the government, some of whom saw their salaries shrink by as much as 15 percent. Financing for large projects will be reduced dramatically. The only project that will go ahead as planned is the construction of the highway between Madrid and Valencia. Economic development projects will also see less funding.         

Portugal: higher taxes but fewer benefits

More cuts everywhere including in Portugal. José Socrates has announced government spending will be reduced by four billion Euros. To achieve this will mean higher value-added taxes (VAT) and higher income taxes but also fewer government programs. Overall the VAT will rise to 21 percent, while taxes on the restaurant industry will go from 12 to 13 percent and taxes on necessity goods will jump from five to six percent. Politicians and civil servants will see their salaries decrease by five percent. Transfers to local government will be reduced by €100 million and funding for public infrastructure projects has been postponed. The transfer of six billion Euros in assets will occur over the next four years.

France: Sacrifices à la Sarko

Under the Sarkozy government saving and sacrifice go hand and hand. The French budget will be reduced by €95 billion between now and 2013. On the table a partial block on the turn-over of civil servants and reforms to the pension plan. The age for legal retirement will be raised, however, for those who have already reached the age of 60 benefits will not change nor will the age change for people who worked in a particularly physically intensive industry. The new legislative proposals to deal with the crisis also concern the public sector. New measures include increased taxes for high income earners and a freeze on public spending for the next three years.

Germany: Cuts start with the non profit sector

“Where can we cut spending?” asked Angela Merkel, while she tried to work out how to save the German government €60 billion by 2015. She has said that no sector will be spared and Germany’s welfare state will see some big cuts. The public sector will see less subsidies and higher local taxes.  As for now, however, the only confirmed decision is that Germany’s civil service will be reduced from one year to six months in August, 2010. This could mean the eventual decline of a program that started in the mid 90s and has created volunteer opportunities for over 138,000 young Germans.