BUDGET CUTS

Rajoy announces extension of 400-euro subsidy for worst-off unemployed

PM had been under pressure to change plans to scrap "Plan Prepara" "Keeping this small allowance makes sense at very difficult moment," he said

King Juan Carlos (l) meets with Rajoy on Tuesday.
King Juan Carlos (l) meets with Rajoy on Tuesday.Ballesteros / EFE

Prime Minister Mariano Rajoy announced on Tuesday that his government is going to extend a 400-euro monthly subsidy that is currently being handed out to 200,000 of Spain’s more than five million unemployed people, and was due to end this week. The public aid program, known as the Plan Prepara, was introduced by the preceding Socialist government.

Rajoy said that he considered the Popular Party (PP) administration’s decision to keep the checks coming to those who fall under the program “a fair move,” and stressed that this was the second time that public aid has been broadened with the aim of “helping those who do not have jobs find work.”

Nevertheless, the prime minister said that Plan Prepara is not meeting its goals and pledged to work on ways “to try to improve it.”

“The government has taken many drastic measures, many people’s taxes have been raised, and there have been adjustments in many sectors, so we believe that keeping this small allowance makes sense at very difficult moment such as this one,” he said.

It was another turn-around for Rajoy, who last month said that Plan Prepara would be eliminated as part of a set of budget-cutting measures. Participants in Plan Prepara are among the neediest in terms of state support, given that to qualify for the scheme they must have already exhausted their regular unemployment benefit, and have annual income of less than 75 percent of the minimum wage (7,696 euros). In exchange, recipients join a program aimed at getting them into the job market.

The PP administration had been under pressure to keep the subsidy from many quarters. Socialist leader Alfredo Pérez Rubalcaba, who had been waging a public campaign in favor of extending the program, claimed victory on Tuesday via his Twitter account.

“It was worth it. Pressure forced the government to extend the 400 euros to thousands of families who need it. This was justice,” he wrote. Socialist Prime Minister José Luis Rodríguez Zapatero began the program in February 2010.

It wasn’t immediately clear on Tuesday exactly how long the unemployed will be able to draw from the fund, but reports suggested that the scheme would run for at least six more months. The details of the measure, which Rajoy announced after meeting with King Juan Carlos in Palma de Mallorca, will be approved by the Cabinet next week retroactively from Thursday, the day that the money budgeted for the plan would have run out.

Tuesday saw Rajoy’s first meeting with at the monarch’s Marivent summer palace. Prime ministers traditionally take a break from their August vacation to travel to Palma de Mallorca to meet with King Juan Carlos.

No further bailout

The prime minister also told reporters that he and King Juan Carlos did not speak about a full European rescue package for Spain because “there is nothing new about this since the last time I spoke with him after appearing before the media on August 3.”

“Our main concern continues to be in the defense of our citizens, and until we know the decisions that the European Central Bank [ECB] is going to take we will not make any further moves,” Rajoy said.

Spain is waiting for the ECB to outline the conditions attached to a pledge made last month to intervene in the open market and undertake other non-conventional measures to relieve pressure on the sovereign debt of distressed European nations. ECB president Mario Draghi conditioned future bond purchases with the requisite that euro nations would have to first formally request assistance from the European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM), but the details of those conditions have yet to be ironed out.

The prime minister will have a busy schedule over the next few weeks, meeting with European leaders including German Chancellor Angela Merkel, who will travel to Madrid on September 6 with a delegation of businessmen. Later this month, Rajoy will meet with European Council president Herman van Rompuy to argue for the need for the creation of a banking and fiscal union “as soon as possible, possibly by the end of December.”

Rajoy also told the king that the PP government plans on making some 90 billion euros in budget cuts over two years, beginning in 2013.

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