Zapatero said Spain's economy will grow less than 2 percent in 2008, compared to the expansion of 3.8 percent in 2007.
The government will hire 30 percent fewer workers and freeze wages for senior public servants, said the prime minister, who expected an economic recovery in the country in mid-2009.
The wages freeze will affect Zapatero and other senior positions in the executive branch and in state-owned companies, but not in the legislative or judicial branches.
Zapatero has an annual wage of around $138,000
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