Spanish public sector set to shrink

Spain will cut the number of high-level positions in the public sector and reduce the number of state-run companies, a move that will save the government 16 million euro annually.

>The public sector reduction announced by the government Friday will involve merging or closing 29 state-run companies - out of a total of 106 - and eliminating 32 senior posts.

The Spanish government's measures will reduce public sector labour costs by 4% and will also involve elimination of 80 executive positions and 450 seats on the companies' boards of directors.

The plan was unveiled on the same day when Prime Minister Jose Luis Rodriguez Zapatero said unemployment has now reached 20.05%.

Economy Minister Elena Salgado, while presenting the government's plan, said the unemployment situation in Spain is 'serious'. The number of jobless people grew by 286,200 in the first quarter of 2010 to a total of more than 4.61 million.

Unemployment has seen its worst during the country's budget crisis, which the Zapatero government is trying to tackle with measures such as those approved during the Cabinet meeting Friday.

Elimination of the high-level public sector posts will be carried out over the next three months, while the shutting down of state-run firms will be completed by the end of 2010.

The measures are part of a strategy to reduce the budget deficit to 3% of gross domestic product by 2013, a minister said.

The EU's budget deficit ceiling for member countries is 3% of GDP.