Spain, a very weakened country

Spain was the European country that destroyed the most jobs in the first half of the year

Spain was the European country that destroyed the most jobs in the first half of the year.

The Spain of today is a highly indebted country, not very productive, with high taxes and that has lost the attractiveness of low wages and today has become a country of services. I reproduce here the opinion of an economist, Gay de Liebana, Spanish and add my comments

How damaged is the economy?

“In Spain we are out of date in public spending on Health. The countries with which we want to compare ourselves, although we cannot: Germany, France, Italy, Denmark, Sweden… have spending on health that represents 7 or 8% of GDP. And we keep 6%. I leave aside the private sector that works very well in Spain. But it is important that public health is well equipped.”

“The question is, why is public health not well equipped? Because there is a lot of expense for everything else. Not only in social protection (pensions and subsidies), but we also have a paripe of political industry. Before it was the caste, now we also have the new caste. We have a lot of caste and since there is no money for everything, spending on Health is reduced. There is no expenditure on Health because we have superfluous spending.”

“Spain is a country of services and the economy depends on services. We have put industry aside, we have relocated it and we depend on the ups and downs of construction and services with tourism and commerce as the main protagonists.”

“These days in Barcelona, ​​there are no people on the street because they are afraid of the pandemic. We have to recover normality and the health chapter is decisive. If we had industry, we would continue to manufacture and sell abroad. Industry is the least affected by this crisis. We see it in Germany, Ireland… Also in China, where it grows because it is the world’s factory.”

“We have to rethink our production model. For that, a Reconstruction commission was created in Congress that has been a joke like a cathedral. I don’t know what the hell they did because this would have to be rebuilt by now. In November, we are worse than in March. We lack seriousness.”

“The European funds thing is a tall tale. That of ‘now I look to the sky to see if the money falls’. First they have a tremendous bureaucracy. Then, when they are approved, the Commission has to ask for 750,000 million in the financial markets and I suppose that the ECB will make a gesture. Then you will distribute that money.”

“From here we will get a part of ‘free’ aid in principle and the rest in loans. But they will reach us in 5 or 6 years. That money is to act as a catalyst for a reform of our entire economy. Regardless of gender, which I don’t know what it has to do with it, this is to adapt the economy to the ecological issue and the digitization in which we are all involved. But for it to start up, there needs to be an industry, a factory, that people are prepared …”

“There will be some aid to adapt the economy to the 21st century. But of the 27,000 million of the Budgets, let’s see how much comes. Then there is how it arrives and who is going to distribute it. If everything depends on Iván Redondo, who is the one who has to supervise this interview, the funds … The poor man is overloaded with work. I would link that money to corporate employers, to companies … Not to the Ibex. Large companies also have to be protagonists, but that money has to reach any company, small, micro-companies.”

“We have covered the ERTE (temporary employment regulation file) with a blanket of bureaucracy. In other countries, in northern Europe, governments have asked companies how many workers they would have to put out of work and have paid a percentage of salaries to have a limit per month. The State has put money in because it is aware that it is a moment that even the European Commission has neutralized the public deficit.”

“In Spain, a grand mobilization of resources of 200,000 million euros was announced and in the end, according to the IMF, only 39,000 million of effective aid have been provided. Of these, there are 21,000 million which is the cost of the ERTE but which will be borne by the European Union itself, by the SURE program.”

“Of aid with cost, there is nothing. Help is what Merkel does: “freelancers present their invoices for 2019 and I pay them 75%.” The aid should have been implemented in exemptions rather than tax holidays. We must protect health and save companies because saving companies is saving jobs.”

In Spain some taxes have been raised and an increase in the Minimum Interprofessional Salary is going to be proposed …

“We are going in another direction. Everyone around us lowers taxes and lowers social contributions. In Italy, the tax wedge, labor taxes and social contributions have been lowered so that companies have less tax burden and there is more incentive to hire employees. Here the taxes go up.”

“Well, and they will say: ‘taxes go up but only on high incomes’. Who are the high income? The executive for Europe of a multinational based in Madrid that now tells the parent company that here it is going to pay more income and wealth tax and that the company has a corporate tax. In the decision center they will ask you: where do you want to go? “To Lisbon because there are less taxes and it is more comfortable.” What this measure does is penalize the presence of high-level professionals and high-level companies here.”

“Then they will increase the ‘Google rate’ for the collection that it will generate, which will be four dollars, they said that 800 or 900 million euros. But the ‘Google rate’ is a kick that you’re hitting where it hurts the White House tenant, be it Trump or Biden. Who has been the country that has decided to impose the ‘Google tax’ in Europe? Spain. Because it is not something at the European level, it is in Spain. So any Spanish product that wants to enter the US may have tariffs. Meanwhile, who pays the ‘Google rate’? Now they will tell me that I have a charge of the Netflix, Microsoft, Apple … in the end we pay it.”

All international organizations say that we are going to be in the queue of recovery. Will this crisis widen the gap that separates Spain from other European economies?

“What is going to happen is that Spain is going to become the pariah of Europe. I say this because today we are touching the unemployment rate in Greece and we have even exceeded it. Youth unemployment, with a rate of more than 40%, is number one in Europe. We have a training problem, among companies we are going to suffer a tremendous process of closures … We are going to emerge very impoverished from this crisis. I heard in July that we are going to emerge stronger from this crisis. But no. We are going to emerge very impoverished from this crisis. I heard in July that we are going to emerge stronger from this crisis. But no, we are going to emerge from this crisis shaken, bruised, and over-indebted. You have to know that this is reality and act, but you are not acting. Nothing is being done to cushion the blow and think about recovery.”

Looking to the future, what is the ‘post-covid’ economy going to bring us?

“First fear. For economic activity to return to pre-Covid joy, we have to wait until 2024 or 2025. There will be a psychosis among the population due to fear. This part is going to cost a lot. We have done an advanced course in brutal digitization. Teleworking has come to stay. We are going to change the way we work and interact. This leads us to training, to people’s skills. There is another problem and that is that on the one hand, we are going to live a process of deglobalization, although the Chinese are flying. But there is an unstoppable globalization process that is technological. We have to have people prepared with the right skills to get on this car. We enter a disruptive era.”

The problem with Spain in my opinion is that neither the big businessmen nor the people who invent things are admired nor are they a model for society. This happens not only in Spain but in all the European countries of the Mediterranean arc, where popular culture does not invite people to innovative work but rather jobs related to hospitality and tourism are encouraged.

A change in culture is essential, to favor the emergence of talent and the creation of new businesses in the longer term, where not only does public investment in these businesses pull, but also private investment is essential.

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