Spain is suffering its worst recession in decades
The protests come amid a European debt crisis that began in Greece.
Earlier, the European Union said talks aimed at bringing member states' finances under control had progressed.
European finance ministers also started setting up the $1tn (£690bn) financial package agreed last month to defend the European single currency and stop the debt crisis in Greece from spreading.
Testing public mood Tuesday's strikes have been called by Spain's biggest trade unions.
More than 2.5 million Spaniards work in the public sector, and
the trade unions hope hundreds of thousands will join this strike - from
hospitals and schools, fire stations and local government, the BBC's
Sarah Rainsford reports from Madrid.
With a budget deficit currently running over 11%, the government is under pressure from the EU to slash spending.
In May, Spanish Prime Minister Jose Luis Rodriguez Zapatero announced a 5% cut in public sector pay, starting this month. Salaries will be frozen in 2011.
There were also big cuts in public investment and development aid. Some pensions were frozen.
The cuts are part of a 15bn euro (£12bn, $18bn) package of austerity measures also meant to reassure the financial markets that Spain will meet its debts.
But the trade unions are angry that public sector workers are being penalised.
They accuse the Socialist party of reneging on previous promises, and taking desperate measures now - after insisting for months that Spain would be relatively unaffected by the economic crisis.
Sanctions This strike is the first chance to test how much public opposition there is to the measures, our correspondent says.
Chancellor Angela Merkel says Germany cannot live beyond its means
In recent months, Greece has been hit by mass strikes and
protests over austerity measures imposed to combat a debt crisis that
has shaken the 16-member eurozone.
Germany on Monday announced 86bn euros in cuts by 2014 - its biggest budget cut since World War II, and the latest in a series of austerity plans being hatched across the eurozone.
At a meeting of eurozone finance ministers in Luxembourg on Monday, the European Council president, Herman van Rompuy, said finance ministers had backed a controversial proposal of having national budget plans subjected to early EU-wide scrutiny.
Mr van Rompuy said there was also support for sanctions for countries whose debt levels and budget deficits are growing too quickly, or who had ignored previous warnings on their debt position.
In London, British Prime Minister David Cameron also warned of severe austerity measures to come.
Spanish public sector
workers are holding a strike in protest against an average 5% cut in pay
that comes into effect this month.
The cuts are part of a government austerity package aimed at
reducing the country's budget deficit, swollen by almost two years of
recession.
The protests come amid a European debt crisis that began in Greece.
Earlier, the European Union said talks aimed at bringing member states' finances under control had progressed.
European finance ministers also started setting up the $1tn (£690bn) financial package agreed last month to defend the European single currency and stop the debt crisis in Greece from spreading.
Testing public mood Tuesday's strikes have been called by Spain's biggest trade unions.
SPANISH COST-CUTTING PLAN
Continue reading the main story- 5% average pay cut for public workers in 2010
- Automatic inflation-adjustments for pensions suspended
- Payout scrapped to parents for birth of children
- Funding to regions cut by 1.2bn euros
With a budget deficit currently running over 11%, the government is under pressure from the EU to slash spending.
In May, Spanish Prime Minister Jose Luis Rodriguez Zapatero announced a 5% cut in public sector pay, starting this month. Salaries will be frozen in 2011.
There were also big cuts in public investment and development aid. Some pensions were frozen.
The cuts are part of a 15bn euro (£12bn, $18bn) package of austerity measures also meant to reassure the financial markets that Spain will meet its debts.
But the trade unions are angry that public sector workers are being penalised.
They accuse the Socialist party of reneging on previous promises, and taking desperate measures now - after insisting for months that Spain would be relatively unaffected by the economic crisis.
Sanctions This strike is the first chance to test how much public opposition there is to the measures, our correspondent says.
Chancellor Angela Merkel says Germany cannot live beyond its means
In recent months, Greece has been hit by mass strikes and
protests over austerity measures imposed to combat a debt crisis that
has shaken the 16-member eurozone.
Germany on Monday announced 86bn euros in cuts by 2014 - its biggest budget cut since World War II, and the latest in a series of austerity plans being hatched across the eurozone.
At a meeting of eurozone finance ministers in Luxembourg on Monday, the European Council president, Herman van Rompuy, said finance ministers had backed a controversial proposal of having national budget plans subjected to early EU-wide scrutiny.
Mr van Rompuy said there was also support for sanctions for countries whose debt levels and budget deficits are growing too quickly, or who had ignored previous warnings on their debt position.
In London, British Prime Minister David Cameron also warned of severe austerity measures to come.