Austerity explained

The spending cuts being implemented throughout Europe are generating protests on a scale unseen in the last 30 years. In large part, people are unhappy at the spending reductions in key areas such as health and education. They see them as arbitrary, in that they have not been agreed with the electorate, and because they imply a reduction in services and quality of life over the coming years - which may never recover. This is what prompted the strike by public sector workers in the United Kingdom on Thursday; this is why voters in Greece have been protesting, and this is the reason why teachers in Spain are staging walkouts. Now public sector workers in Catalonia are planning strike action against the wage cuts being proposed by the regional government there.

The Catalan government is leading the way in making spending cuts, arguing that its debt and deficit leave no option but for urgent and drastic action. The cuts in health spending have already sparked protests, but the plans to cut bonuses, reduce staff and training, along with other benefits that are being proposed for public sector workers, will prompt widespread and continual industrial action. The decision to reduce the regional budget, prompted by the inability of the Catalan regional government to finance itself, will see living standards fall, along with access to key services. Something has clearly gone wrong somewhere along the way when it is the wider population that is protesting, and not just those immediately affected by the suggested cuts.

What is being proposed in Catalonia can be seen as a template for what the Popular Party (PP) administration - which takes office on December 23 - will have to do if it is to comply with the so-called stability pacts agreed with the rest of the European Union. Whatever economic policies incoming Prime Minister Mariano Rajoy has up his sleeve - so far he has revealed nothing about his plans - he will be spending most of his time working out ways to reduce public spending, raising taxes and cutting wages. A central pillar of labor reform will be a reduction in wage bills, particularly those of the state.

So far, the cuts have not been applied across the board, affecting the welfare state in different ways. In general, they have been applied to bring structural spending under control, meaning less investment and no increases in pensions or public sector wages. The next round of cuts will be tougher to administer, and will be about limiting the damage to the health and education sector. Above all, the message that balancing the books means people dying for lack of medical attention in state hospitals must be avoided.

The government will need to sensitively handle the joint task of managing a shrinking economy, one that is dependent on a currency whose future is now in question. It will not be enough to just commit to spending cuts. The reasons behind the cuts must be clearly explained to the electorate. It will not be enough to simply tell the regions that they must balance their books: details must be provided on how spending is to be brought under control.

Similarly, before resorting to reducing health and education budgets, regional and national governments should look at ways of reducing their own costs. The electorate understands the need to reduce spending; but it also understands that there are priorities that must be respected.