The Government continues to take improvised measures, which are contradictory to each other and which seem to be unaware of how the economy works. There is no strategy. And the most serious thing is that Pedro Sánchez -probably tied by Podemos- continues to refuse to adopt any decision that really helps companies and freelancers. With this performance so different from the rest of the EU, We are headed for economic disaster, with countless bankruptcies, a triggered unemployment and a public debt (yesterday the President fell out of his mind with the Eurobonds) unaffordable.
If health crisis management has been an example of lack of planning, improvisation, fudge and lack of reaction capacity, which has led us to mandatory confinement, measures to moderate its impact on the economy are not lagging behind. It started with favor ERTE instead of the State directly paying part or all of wages as in other countries, and with so many gaps, bureaucracy and contradictions that employment services have collapsed, many applications are being rejected, as Bolsamanía denounces today, and many companies prefer to fire directly.
To avoid this situation created by himself, the Executive has decided directly prohibit dismissal; actually ban it no but make it more expensive by default. And the final fireworks is prohibition of commuting to work with a strange permit that the employer pays and that the worker must recover with his vacation or overtime, but with lots of very confusing exceptions. This weekend we have witnessed the height of improvisation and contradictions, which culminated in a battle within the PSOE-Podemos coalition that delayed the publication of the Decree until almost 12 o’clock at night, which forced a moratorium one day
“It will be a measure that will generate an unprecedented huge impact on the Spanish economy, especially in sectors such as industry. This hiatus can lead to a deeper crisis in the economy that could become social “, business organizations complain. Because what the government is roundly refusing is to attend to the clamor of companies and freelancers that are being exempt or, at least, defer payment of taxes, contributions to Social Security, rents, wages, credits, suppliers, etc., as has been done in most European countries. If they cannot enter anything because of the Executive’s measures, they should not pay anything either, they argue.
BUSINESSES PAY IT ALL
The Minister of Finance reiterated this refusal yesterday and recalled the only solution offered by the Government: request a credit with State guarantee to pay the State. Certain guarantees, by the way, that the Executive tries to reduce to the maximum (like the ERTE) to avoid the strong impact on the deficit that the foreseeable massive default of these credits will have.
After this crazy collection of patches, corrections and improvisations, the only thing that is clear is that the employer or self-employed must continue to pay all those expenses and wages even if it is on credit; if you have to close by government order, you have to pay the special leave to your employees and you’ll see how you get it back if that; You can also try an ERTE, if you are lucky and you admit the cause of force majeure; And in that case, you will be mortgaged not to fire in six months even if your income is not recovered. And if you prefer not to risk and fire now, you will have to pay the maximum compensation.
The prestigious blog There is right reflected yesterday that “perhaps it makes sense to avoid layoffs during the alarm period, but if at the same time the message is that the approval of ERTEs will be tightened, what is being said to millions of companies and SMEs is that bankruptcy it is their inevitable destiny. (…) most direct and quickest way to give liquidity to companies is to suspend tax and quota payments of Social Security – postponing them without interest – and it has not been done. “
“Maintaining or tightening confinement until the curve goes down may or may not be necessary, but in any case It is not a rational plan, it is a blind bet -perhaps to please certain government partners- who clearly do not have other better ideas. Which does not mean that they do not exist, it simply means that they do not think of it, that it is not the same, “he adds.
DO NOT SPEND … AND DO NOT UNDERSTAND THE ECONOMY
It seems that the Government’s performance is guided by the principle of spending (and not entering) as little as possible; This is evident from Sánchez’s statement that “we cannot get out of these crises with more debt” and from his futile efforts to get the EU to launch Eurobonds or Coronabonds, until it has assumed reality. Apart from the fact that it would have been much cheaper to do massive tests at the beginning of the infection, these measures have a very high cost for public coffers. And they will not be enough to avoid a very serious recession like the one predicted by Goldman Sachs, with massive bankruptcies and a brutal increase in unemployment, which will further increase that cost.
It is not surprising that Northern countries do not want to pay it, especially considering that we have been failing to meet public deficit targets for 10 years. What they do allow us is give direct subsidies to companies, which the Executive does not even consider, and ask for a rescue from the MEDE, which surprisingly is not in Sánchez’s plans either.
However, the most worrying thing is that the Government seems to ignore how the economy works and that jobs are created by companies. So naively wait for an immediate ‘V’ recovery after the break, as if nothing had happened. The Minister of Labor said on Sunday that “we workers have to do our part”, as if she were a worker and not a minister. What transpires a mentality in which the businessman is the enemy and, therefore, he is not even given water. And that leads to disaster.