What is the price of austerity? The railway chaos

Good morning!

How is the week going? I hope it is being helpful and you have not been affected by some of the cancellations or delays in trains. It’s been a chaotic weekend. On the one hand, a suicide attempt caused the cancellation of dozens of trains in Atocha, which affected 14,000 travelers. On the other hand, an accident in a tunnel that crosses Madrid added more problems to rail traffic.

It was not a normal accident. The Minister of Transport, Óscar Puente, explained that the train derailment was caused by one of the Adif workers to “avoid any risk” at the station and prevent it from “eventually” colliding with another train. This tunnel has become another example of how cuts and poor planning take their toll on public services.

The tunnel was proposed as a key to railway liberalization and to accommodate new private operators. The first studies to launch the tunnel date back to 2001, with Francisco Álvarez Cascos as Minister of Development with José María Aznar. But it would not be until the arrival of Minister Ana Pastor (PP) when a completion date was given in 2016, although its inauguration was delayed more than six years until 2022.

The financial crisis intersected with liberalization plans and the condition of austerity was imposed starting in 2009. Since then, public investment in transportation infrastructure has plummeted until 2018. In the case of the railway, investment falls more precipitously in the period 2013. -2018, according to an Airef report.

“Many of the questions that you are going to raise have the answer in the investments made between 2012 and 2018, years after the crisis, in which the development of key sectors of our country was reduced, including infrastructure and transportation,” Minister Puente argued in the Upper House. You are right. The investment materialized in the railway network exceeded 3,990 million euros in 2023, while in 2016 it remained at 1,694 million. This 2024, until August, the 3,000 million will have been exceeded.

The challenge is to recover the time invested. It is not going to be easy or quick, even less so when the winds of austerity begin to blow in the EU. We are talking about infrastructures that, in some cases, are already more than 20 years old and to which the necessary investments have not been made in the name of cuts, despite the fact that their use has increased with new companies and the user population has grown. . The public companies, Adif and Renfe, are trying to recover the lack of spending from previous years, which is at the origin of the railway chaos, with investment projects that total 30,000 million, but will take several years to be executed.

And without taxes it is not possible to have public investments…

Every time he speaks the bread rises

I have serious doubts that eight-year-old children beaten by life will be able to have the opportunities that others of us had in a few decades.

Josu Jon Imaz
— CEO of Repsol

The cry for the future of children by the CEO of Repsol, Josu Jon Imaz, is not motivated by inequality, nor by poverty, nor by the lack of opportunities for the most disadvantaged or by the excessive price of housing. . Apparently what can affect the future of our children is not climate change, but the special tax that your company has to pay. In an article in La Vanguardia with the title Industry or populism (any similarity with the electoral motto of Isabel Díaz Ayuso in the elections to the Community of Madrid?), Imaz assures that the special tax on banks and energy companies are “populist measures” within a strategy of “lack of social recognition of the value of the company, the regulatory overlaps, the suffocation of the industry, the prohibitions instead of incentives and the suffocating fiscal measures that penalize the generation of wealth and employment” that, “under the mantra of social welfare, seriously compromise the model future of this country.” Well, special taxes on banking and energy companies raised 2,859 million in 2024 (corresponding to fiscal year 2023). It does not seem that this tax has affected Repsol’s performance much: in 2022, the oil company obtained the largest profit in its history, 4,251 million, while in 2023, profits were the third best, 3,168 million euros.

What really lies behind the expletives and attacks of Repsol’s CEO is the defense of his business interests, which, as we see, are not being affected too much, although they have even threatened to take investments out of Spain. Now that the Government is considering making these special taxes permanent, the attacks are intensifying and the Government’s parliamentary weakness makes the solidity of the political position more complicated. At the moment, a former minister and now governor of the Bank of Spain asks that the banking tax be changed so that it “discounts provisions” and is “neutral”, that is, that it is lowered and paid by all entities. Meanwhile, others already see it finished. The president of Iberdrola does not see the future of the tax on energy companies as “clear.”

The graph

We must give value to public policies that help to somewhat reduce the economic inequality suffered by citizens in Spain. The 2021 labor reform represented a radical transformation of the labor market. One of the burdens that was effectively reduced for the first time was the abuse of temporality. Temporary contracts were not only a source of job instability and uncertainty for workers, they were also a formula that kept wages low. With the fall in temporary employment, the lowest salaries have increased. On the other hand, despite the doomsayers of the most rancid neoliberalism, the significant increases in the interprofessional minimum wage (SMI) between 2018 and 2022 have been fundamental in increasing the salary of people with the lowest income. Thus, in those five years, the 10% of people who earn the least have seen their salaries increase between 35% and 25%. They continue to earn little, but the economic policy decision has given them greater capacity to face the challenge of inflation. Here we explain how the salaries of the lowest paid workers skyrocketed after the cut in temporary employment and the increases in the SMI.

When it comes to increasing regulation, you only have to look at artificial intelligence (AI). Other companies are also threatening to leave Europe without the latest advances in this technology if regulations that are not in line with their interests are maintained. But you only have to listen to AI experts to understand that this technology, with its depth and possible consequences, has to be clearly regulated. In this sense, David H. Autor, professor of Economics at the Massachusetts Institute of Technology (MIT), specialized in labor issues, warns that “artificial intelligence can make the human work experience obsolete.”

The data

is the forecast for the growth of the Spanish economy in 2024 by the International Monetary Fund (IMF). The multilateral organization has raised its expectations for our country’s GDP by five tenths since the previous forecast. This increase is in line with two of the main private analysis centers, BBVA Research and Funcas, which have raised their projections for our country to 2.9% and 3%, respectively, or the OECD, which has already placed its estimate at 2.8%. Thus, the figures from the Government’s latest macroeconomic table, which points to a growth of 2.7% this year, begin to fall short. With this GDP our country will lead the main economies of the eurozone, where Germany’s weakness stands out, and achieves a turnaround that was unthinkable a decade ago: Spain pays less than France for its debt.

Entrepreneur

The different powers between administrations and the abandonment by public powers of rural centers cause situations such as the one that the municipality of Àger, in Lleida, is suffering. This town depends on a Catalan distributor Eléctrica del Montsec, with a long history of complaints, disciplinary proceedings and fines. The National Markets and Competition Commission (CNMC) asked the Government to intervene a year ago. The complex jurisdictional imbroglio leaves a group of “captive” clients in the hands of this company. As a last straw, they have suffered double collection of their invoices. Here we explain what it means to be “captive” of terrible electrical service.

Public Good

Sometimes improving legislation can cause undesirable effects if it is not done properly. This is the case of the Abortion Law. The coalition government of the previous legislature expanded sick leave due to abortion, the final stretch of pregnancy (39th week of gestation) and painful periods with “special” protection. Sick leave never has to give information about the worker’s illness. However, those that enjoy special protection come with a code that allows them to be identified, so companies can know if a leave is due to an abortion or a painful period. This violation of privacy can be terrible for women. This is the case of Silvia (fictitious name), who explains to elDiario.es how, as a company worker, she received the reason for her leave due to abortion. The agency sent a report to her employers, where she explained that she had had a pregnancy termination: “Everything was already very painful and this made it worse, it is a very big invasion of privacy: I felt like the most vulnerable person in the world.” In these reports by Laura Olías we explain how a hole in the regulation allows companies to know the reason for sick leave due to abortions and the ordeal of a worker whose company received the reason for her sick leave due to abortion.

We like competition

In this section we bring you a series of articles from other media that we found interesting:

That’s all for this Thursday. See you next week. I remind you that you can write to us at [email protected] with your proposals, complaints or ideas and follow us on the X network.

Good week!