Wage cuts would pose no problem if not for the inflationary policy of the ECB, which keeps prices high. It goes without saying that raising taxes in the face of an economic depression is an extremely bad idea. However, this is how 'austerity' generally works in euro-land. The burden of government is not reduced at all, instead it is increased even further. It is apparently fine for the European political class when the private sector shrinks, just as long as Leviathan's size remains unchanged. That this cannot possibly work out seems not to have occurred to anyone yet.
Unemployment in Spain is now at the highest level since records began in the early 1970s and exceeds even the unemployment rate of depression-wracked Greece: