In Spain, wave of protests over price hikes puts a damper on recovery

Following the crisis caused by the coronavirus, the Spanish economy is expected to post two years of strong growth that will take it back to pre-pandemic levels. And the foundations seem more solid now than after the previous financial crisis: the labor market shows 20 million people in employment for the first time since 2008; the European Union has rolled out a recovery package set to bring €70 billion to Spain, and interest payments are down despite growing debt thanks to the European Central Bank’s bond-buying program.

But that’s where the good news ends. According to Brussels, Spain is the only EU country where economic activity will not return to pre-pandemic levels before 2023. Meanwhile, the energy and supply chain crises are affecting citizens and pushing inflation up to levels not seen since 1992.

The recovery seems to be right around the corner just when people’s patience has reached its limit amid a blend of different realities and expectations. This is taking the form of growing street unrest: truck drivers have called a three-day strike over Christmas to complain about rising diesel prices; metal workers in Cádiz have been putting up street barricades to protest inflation spikes that are cutting into their salaries; auto workers have called a demonstration in Madrid on Monday over factory shutdowns caused by car chip shortages; consumer associations have already organized several marches against rising electricity bills, and even hairdressers have been staging sit-ins to demand lower value-added tax rates. The common thread is the rising cost of living and, for the self-employed, of running a business.

Truck driver strikes

A three-day trucker strike has been called for December 20, 21 and 22, right in the middle of a key sales campaign. The fact that the stoppage has been announced well in advance, however, indicates there will be enough time for industry representatives to sit down with government officials and hammer out a deal to prevent a move that would be ruinous for business.

Carriers will bring several complaints to the table, including the introduction of the Eurovignette, a road toll system, in several European countries; the need for safe rest areas, and above all the steep rise in fuel prices. Only large transportation companies are managing to pass this cost on through higher fees. As for self-employed drivers, who make up the majority, they are paying the higher cost without any offsetting measures.

A perfect storm in the auto sector

The Spanish labor union CC OO was planning a protest on Monday in front of the Industry Ministry in Madrid. Union leaders said they want measures against “the perfect storm” affecting the auto sector, which contributes around 11% to Spain’s gross domestic product (GDP). It is a similar message to the one conveyed by Anfac, the carmaker industry association. “We have all the same problems as the rest of the industry, and what’s more, the added technological and regulatory pressure to change products and manufacturing plants,” said Anfac director general José López-Tafall.

Cádiz: ground zero for metal workers

Before the coronavirus crisis hit, the economically depressed city of Cádiz, on Spain’s southwestern coast, was already suffering from low-income jobs and much higher unemployment than the Spanish average: 23.16% versus 14.57% according to the latest EPA workforce survey. The new adverse conditions have inflamed the historically combative metalworks sector, where 30,000 employees from 6,000 companies, according to industry estimates, went on an indefinite strike a week ago. There were scenes of fury when street barricades were set on fire and riot police were sent in to quell the protests while traffic slowed to a crawl in Cádiz and the surrounding Campo de Gibraltar.

Unions want the rising inflation to be reflected in their salaries, while industry leaders say companies cannot handle such a rise and are instead offering 2% salary hikes over the next three years. The conflict could be a sign of things to come in other sectors of the Spanish economy.

Soaring electricity prices

Consumer groups have been staging small protests for months, but the issue of rising electricity bills has now escalated to the point where dozens of associations and around 1,800 people showed up for a march in Barcelona around two weeks ago. While not a huge number, it is enough to worry the government because of the issue’s potential for creating widespread citizen discontent.

So far, the executive’s tax cuts have come up against price hikes in the global markets for natural gas and carbon dioxide emissions. In Spain, household electricity prices in October were 63% higher than a year earlier, according to the National Statistics Institute (INE). And even energy-intensive industries that benefit from other types of contracts have noticed the hike and warned the government that, unless it offsets these costs, many small companies run the risk of going under. Sidenor, a metalworks company in the Basque Country, last month announced a 20-day closure of its plant in Basauri due to soaring energy costs.

Farmers struggling with production costs

Rural Spain is up in arms again. After protesting on the streets of several regional capitals in early 2020 over the low prices that intermediaries pay for their products, growers and breeders are planning new marches in December. “The hikes have been brutal and they affect everything,” said Miguel Padilla, secretary general of COAG, Spain’s largest industry association.

Production costs have grown across all parameters for farming and breeding operations over the past year: electricity has gone up by 270%, tractor diesel by 73%, fertilizer by 48%, water by 33% and seeds by 20%, according to industry data. And while consumers are paying more to reflect these hikes, producers have not seen a similar increase in what they are paid by intermediaries. “There needs to be a fairer distribution of the value of goods in the food chain,” said Padilla.

While no date has been set for the protests, industry leaders said some of them might coincide with the transportation strikes between December 20 and 22.

In the northwestern region of Galicia, which produces 40% of Spain’s milk, dairy farmers say they are being “strangled” by soaring production costs. The Unións Agrarias union has estimated this rise at 25%. Representatives from Agromuralla, a group that has staged tractor protest rallies around the city wall of Lugo, said they are now paying twice as much for electricity. Dairy farmers note that supermarket customers are paying more for their milk cartons yet they themselves are being paid the same, while incurring in higher production expenses. “All we are asking for is compliance with the Food Chain Law, which says that no link in the chain may charge less than what it costs to produce,” said Félix Porto of Unións Agrarias.

Late retirement

With pension reform high up on the government’s agenda, pensioner groups are trying to have a say in ongoing talks with unions and business associations. There is a preliminary agreement to link retirement checks to inflation, but these groups are now trying to extend the protection further and calling public protests to back their demands.

There have been marches in the Basque city of Bilbao for the last three years to demand a minimum monthly payment of €1,080 and for the repeal of reforms introduced between 2011 and 2014. The most recent demonstration, which was also the largest to date, took place in Madrid this past Saturday. Protest leaders also demanded that the retirement age be set at 65 again, down from 66 for people who contributed for fewer than 37 years and three months to the Social Security system.