Spanish Government Urged to Cut Local Bureaucracy Not Pensions

27 April 2012 (PLANSPONSOREurope.com) – Spain’s government should concentrate on cutting regional bureaucracy rather than pensions, according to Gala Prada, Head of Pension Funds at Fiatc Seguros.

Prada told PLANSPONSOR Europe: “We really need to get our house in order. They are cutting down on the wrong things like healthcare, pensions, education, etc. They (the government, but not only this government, but the former too) have to cut down the ‘political’ costs and there is precisely the only place where they are not cutting down. We have 17 regions or comunidades autonomas each of them with their own regional government, their regional legal system, tax system, their own delegations and municipalities. Some of them are extremely small in terms of population and GDP. It is nonsense. To keep this system up is extremely expensive. The numbers just don't add up. But of course, no one wants to be the one that gives up on anything. So, what do they do? They cut the social benefits.”

Prada adds that on a wider scale Europe now needs to promote growth and not austerity.

“I think this is starting to look much like Japan, where they first promoted fiscal austerity only to overrule it years later and then they started with huge government spending. At the end, it was much more expensive...If they had done it [government spending] in the first place instead of fiscal austerity they would have saved a lot of time and money. I think Europe is going down this path unfortunately.”

Graham Simons
editors@plansponsoreurope.com