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Spain’s royals take pay cuts in austerity drive
MADRID—Spain’s king and crown prince are to take a pay cut as part of the latest round of austerity measures meted out by the country’s government as it attempts to control its deficit during a recession. King Juan Carlos and Crown Prince Felipe are cutting their yearly salaries by about seven per cent—to about €272,000 (US$334,000) and €131,000 (US$160,000) respectively—in line with the new austerity package, the Royal Palace said. The royal family has about €8.3 million budgeted for it this year, down two per cent from 2011.
Spain is enacting more austerity in an attempt to convince skeptical investors it has a strategy to deal with its public finances and its banks, which are being bailed out with up to €100 billion from the other 16 countries that use the euro. Yesterday the country tapped bond market investors for €3.6 billion (US$4.4 billion) in the first debt auction since unveiling its latest package of cuts. Its ability to raise the short-term money at lower interest rates represented a rare bit of good news for the conservative government, which is facing mounting opposition to its austerity plans.
The Treasury sold €2.6 billion in 12-month bills at an average interest rate of 3.9 per cent, down from 5.07 per cent in the last such auction on June 19. It also sold €961 million in 18-month bills at a rate of 4.24 per cent, which was down from the previous rate of 5.10 per cent. Demand exceeded supply by more than two and nearly four times, respectively.
Spain’s main IBEX stock index rose about a half a percentage point following the successful auctions. However the country’s borrowing on its benchmark ten-year bond ended the day at 6.78 per cent—dangerously close to the seven per cent level that saw Greece, Ireland and Portugal apply for full-blown bailouts.
But Economy Minister Luis de Guindos seized as the auction as good albeit not earthshattering news. “I think it has been relatively positive. This shows that Spain still has access to markets,” he told reporters. The king and prince are acting voluntarily in cutting their salary, the Royal Palace said.
The Spanish royal family’s public profile has taken a battering over the past year. The king triggered a national uproar when news leaked out that he went on an expensive elephant-hunting safari to Botswana in April, while his son-in-law’s financial dealings are under investigation.
Rallies against the government are becoming daily affairs. Civil servants whose salaries are being cut blocked major avenues again Yesterday. And as the debt auction was under way, riot police cordoned off the entrance to a sprawling police facility to prevent 100 plainclothes police officers from disrupting a graduation ceremony for some 1,200 cadets about to enter the force.
The demonstrators were protesting the elimination of one of the 14 paychecks that most Spanish civil servants get each year. The one being axed comes right before Christmas. As National Police chief Ignacio Cosido addressed the graduating class and highlighted their task of “guaranteeing harmony, social peace and respect for all citizens rights,” police demonstrators in plainclothes a few hundred metres away all but drowned him out by blowing plastic horns.
Demonstrators yelled out, calling him “a scoundrel.” The starting salary of a National Police officer is about €1,400 a month, which is slightly above average in Spain. Lorenzo Nebrera, a police union spokesman, said officers get their uniform and service weapon but have to pay for the rest of the equipment, like bullet-proof vests, “handcuffs that work” and flashlights.
“In the end, all these cuts sap morale among the police because they feel that conditions out on the street are more and more dangerous, and if these cuts continue the safety of the police will be jeopardised,” Nebrera said. “It is an added risk for a job that is already dangerous.”
Nationwide protest rallies against the austerity measures are scheduled for tomorrow. Finance Minister Cristobal Montoro said yesterday that civil servants on monthly salaries of €962 or less would receive the extra payment. The exemption will benefit some 15,000 of Spain’s near 3 million civil servants, he said.
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