The Spanish parliament has narrowly approved budget cuts of 15 billion euro designed to help tackle the country's large deficit.
The measures were passed by a majority of just one vote, and that was only achieved when a party that opposes the spending cuts chose to abstain.
Spain's finance minister says public sector workers will have to endure a 5% pay cut next month for the good of future generations.
Pensions will be frozen next year.
Trade unions have already called a strike in protest at the austerity package, the BBC reports.
