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Published: Thursday December 12, 2013 MYT 8:10:02 PM
Updated: Thursday December 12, 2013 MYT 8:10:52 PM

Spain's slow recovery yet to be felt in austerity worn capital

MADRID (Reuters) - Hundreds of street lamp and traffic light maintenance workers plan to go on strike in Madrid on Thursday, the latest in a succession of public sector worker walk-outs to hit Spain's austerity-fatigued capital city.

After five years of on-and-off recession, Spain's economy is showing the first signs of recovery, mainly fuelled by an uptick in the country's exporting companies.

Yet the optimism emerging in business circles hasn't yet trickled down to Spain's cities, which are still reeling from a crash in employment rates and cuts in local government spending that have reduced services ranging from hospital care to street cleaning and halted public works projects.

Madrid - once the shining emblem of the country's economic surge of the 1990s and early 2000s - has now become a prime example of how painful and slow Spain's recovery will be on the ground.

Madrid's spending budget, not including payments on debt, has been slashed by almost a third since 2008, as Spain struggled to bring down one of Europe's highest public deficits. Investment per inhabitant dropped by around two thirds from 2008 to 2011 more than any of Spain's major cities and while remaining largely unchanged in Barcelona, Spain's second-largest city.

Next year the mayor proposes a slight hike in spending, but budgets for tourism, the arts and sports will all be cut again. One out of five among Madrid's working population is without a job - better than the national average, but dismal considering the city's unemployment rate was just 8.3 percent before the economic crisis began five years ago.

The result has been a steady outpouring of popular discontent. In November street cleaners and park workers put brooms down for 13 days, leaving the city with overflowing litter bins, dead rats and pigeons on the roads and piles of autumn leaves blocking the drains.

The city is also plagued with on-off strikes by public transport workers, protests by nurses and doctors over the partial privatization of hospital management and threatened walk outs by park workers and protests by workers in blood transfusion centres. Many of the city's public buildings are in disrepair, and proliferating pot-holes have made city cycling a risky business.

Madrilenos aren't the only casualties of the city's woes: even though tourism rose this year on Spain's popular beaches, visits to Madrid fell by about a fifth in August from a year earlier, the worst on record for the city and compared to a more than 12 percent rise to Catalonia, home to the more popular seaside city of Barcelona.

"Before the crisis, Madrid was a very clean city with well kept parks. And it was always so full of life, the streets full of people, no matter what night of the week you went out. Now, it's dirty and you almost never need to reserve for restaurants anymore," said Elena Ines, 46, who sells lottery tickets on one of the city's main shopping streets.

CUT-PRICE CONTRACTS

Thursday's strike by some 720 illumination maintenance workers is being prompted by the city's decision to award a new contract for everything having to do with city lights, including control of street lights and traffic lights and illumination of fountains and statues.

Union representatives say they fear that the contract will be awarded to the company that has agreed to cost the city the least amount of money - including by cutting worker salaries. There is no indication yet who will win the contract - and that cost cuts will follow. But unions say that past tenders for street cleaning and hospital laundering services have resulted in deep cuts in wages.

Two affiliates of the foundation that recently won a four-year hospital-bedding laundry contract for 46 million euros, saved the Madrid region 36 million euros from its previous deal, the region said. Many of the savings came out of worker salaries.

"They've offered us lower than minimum wage of 620 euros a month, a 60 percent cut for many of us. We just can't handle this. It's impossible," said Francisco Ronco, head of the workers' association that launders bedding for 19 hospitals in the Madrid area.

Dionisio del Torro, responsible for Madrid maintenance workers for Spain's largest union CCOO now fears a similar fate for lighting crews. "We've been protesting outside city hall as they discuss conditions and are expecting to begin an indefinite strike once they're announced," del Torro said.

The shine started coming off Madrid on September 8, when the city lost its bid for the Olympics for the third time after running for the 2022 games, despite already having built most of the necessary infrastructure.

Then, because of a rise in airport fees, low-cost airlines EasyJet and Ryanair have cut flights at Barajas international airport.

Some 4,500 bars and cafes, the heart of social life in a city where friends prefer socializing outside the home rather than in their cramped apartments, have been closed in the last four years, more than a third of those in 2012 alone, according to industry association La Vina.

Retail sales in Madrid have fallen by more than 20 percent in the last six years, compared to 16 percent nationally.

Celinda Garcia, 56, who runs a delicatessen in a middle-class district in Madrid, says that, while on paper, the economy is improving, her clients are cutting spending more than ever.

A few years ago it would have been unthinkable for her customers to pay for food staples with luncheon vouchers - a popular fringe benefit in Spain which workers use to pay for their main, sit-down meal in a restaurant at 2 p.m. Now her till is full of them.

"Many have started paying for bread, milk and ham with luncheon vouchers, much more than last year. They're taking restaurant tickets their employers give them and using them for the basics," she said.

(editing by Alessandra Galloni and Janet McBride)

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