Spain slashes pay for state executives

Spain will slash pay for heads of state companies by around a quarter as part of its crisis spending cuts, the government has said.

Pay will be limited to €105,000 for the heads of the biggest state firms, €80,000 for medium-sized ones and €55,000 for the smallest, Deputy Prime Minister Soraya Saenz de Santamaria told a news conference.

“Today we are taking a further step in our austerity policy of cost containment,” she said, announcing that the government has drawn up a Bill setting standardised criteria for public executives’ pay.

“We are setting limits on pay, slightly lower than those that are being introduced in the private sector for comparable companies”, Ms Saenz said.

She declined to give a figure for the total amount of savings the reform aimed to make, but added: “Since we are talking about cuts of between 25 and 30 per cent, I can assure that the amount is quite high.” The measure will affect dozens of state firms such as mining interest Hunosa and shipbuilder Navantia.

It is the latest in a series of urgent measures by the centre-right government which took power in December after winning a big parliamentary majority in November elections on promises to cut unemployment and the deficit. It has already announced spending cuts worth €8.9 billion, tax hikes of €6.3 billion and a tax fraud crackdown which it says will save €8.2 billion.

The government has acknow-ledged Spain is heading this quarter into a fresh recession, having emerged from one only as recently as in 2010. Unemployment reached nearly 23 per cent at the end of 2011.