Lorenzo Amor is president of the National Federation of Self-Employed Organizations (ATA) of Spain, the largest in the country, as well as vice president of the CEOE employer association. Love parses for 20minutos the 15 months of the coronavirus pandemic and how the resulting economic crisis is affecting the self-employed sector.
Give us an assessment of how the coronavirus pandemic has affected the self-employed sector.
The pandemic has severely punished the self-employed, among other things because most are concentrated in the service sector. It has punished the self-employed and small companies more than large companies, which have had more resources to withstand the crisis.
Nobody expected that it could last more than 15 months and that has caused a terrible psychological, financial and economic exhaustion. There are thousands of freelancers who have been left completely naked, giving everything, even pawning or getting rid of some of their properties in order to maintain the business.
Thousands of freelancers have been left naked, giving their all, even pawning or disposing of property to keep business
But the membership data seems acceptable …
The statistical data do not tell the reality of the situation because if one analyzes the affiliation data we have something more than a year ago, but we have 450,000 self-employed persons receiving the benefit for cessation of activity and we do not know how many of them will be able to continue.
There have been many casualties, of people who have not been able to endure, and fortunately they have been compensated with discharges. But many people have suffered from cash flow problems. There is a ray of hope with vaccination and in some sectors there is a rebound in membership, but this reactivation is going to be uneven.
Which sectors of the self-employed are having the worst of it?
Fundamentally those that have to do with culture, entertainment, events, sound, audiovisual, animation, fireworks, souvenir shops and some sectors of the tourism field. However, others who have had a very bad time, such as the hotel industry or commerce, are slowly recovering.
Those who are having the worst time are the freelancers of culture, entertainment, events, audiovisuals, animation, fireworks, souvenir shops …
How are they resisting?
The unemployment of the self-employed is like a minimum income, it is little. Many are holding out because they have nothing else and most of them unfortunately will not be able to continue. When the end of the year comes we will see the reality, now facing the summer we will have a significant rebound, but in October a complex situation will come. There has been a lot of indebtedness, many freelancers have spent their savings, they have asked family members for help, there are many postponements, moratoriums and all that has to be paid.
What sectors of the self-employed have best weathered the crisis derived from the pandemic?
Construction has little noticed the crisis. Also part of industry and even essential commerce. Also insurers. For example, so much health insurance has never been done as it has been in these 15 months.
Let’s go back to that psychological fatigue. Is it more accentuated compared to previous economic crises?
It is the worst of exhaustion, the psychic and the psychological. Many months have passed and the business fabric is not ready for a new reversal. If in certain places there is a closure due to infections, many will have to hand over the keys to their businesses because they cannot mentally anymore. Last July 2020 it was said that we had defeated the coronavirus, practically a year ago. It was not true.
Last July 2020 it was said that we had defeated the coronavirus, practically a year ago. It was not true.
I like to be cautious. It is true that vaccination is advancing, that we are gaining immunity, infections and mortality are reducing, but we see how de-escalation in the United Kingdom can be spoiled by the Indian strain. Therefore, we must be very cautious. Many freelancers would not be prepared for a turn back.
Are they receiving direct aid?
To date, no self-employed person has received the direct aid that was announced on March 10. They do not have them in their accounts. They are neither there nor probably will be until well into July. The Canary Islands have not started them and it is the one with the most endowment.
To date, no self-employed has received the direct aid that was announced on March 10
The first to be charged are those of Madrid, Castilla y León and the Valencian Community, which will probably be the ones that can collect in June. But in many other Autonomous Communities they will not do so until July. The decree is very cumbersome, it has many trips. It only covers expenses or debts until May 31. It is not a decree of aid, it has nothing to do with what they have done in Germany, France, Italy or Great Britain, where they have given direct and unhindered aid.
How is the negotiation on the contribution of the self-employed and the fees they must pay?
What we have reminded the Government is that the mandate of the Toledo Pact establishes that the contribution of the self-employed must gradually and flexibly approach their current income.
With the Government we are talking about how to implement a new system. Certain agreements have been reached on how this system should be, when it should come into force, what this gradual and flexible way would be like … but what we have not reached any agreement is on how many tranches and what type of contribution. Surprisingly, in a draft pension agreement we find a series of tranches and some contribution tables. We said that this had not been negotiated and the Government has withdrawn it.
The Executive is proposing a pension agreement. We do not know if it will see the light, but in this Pension Reform Bill the contribution system for real income will not go, which will have a differentiated bill and that will allow time for us to negotiate it.
Is raising taxes and contributions in times of crisis a right or wrong measure?
Of course raising taxes in times of crisis is much worse. What is important to note is that in Spain there are regions that some say there is tax dumping, such as Madrid, where with the lowest taxes more is collected than in other regions that have the highest taxes.
Raising taxes in times of crisis is much worse
A few days ago we learned of a report with prospects for 2050 where it was pointed out that in Spain the underground economy is above 20%, we practically doubled the European rate. Precisely in those autonomous communities where there are fewer taxes, the weight of the underground economy is less.
For example, in Madrid it is 13%, in Spain 23% and in Europe the rate of the shadow economy is 12%. It does not occur to any businessman to raise prices when he has no sales. It seems to me a very absurd resource when the politician who is in the Administration raises taxes to collect more. That never has the desired effect.
What do you think of the labor reform that the Government intends to carry out and that would repeal points of the previous one of the Government of Rajoy?
What we should know is what is to be reformed because there are differences between what has been sent to Brussels and what is being communicated. What we consider to be improved are the youth unemployment figures to shame us, with almost 40% unemployment.
We must improve the youth unemployment figures, which are to shame us with almost 40% unemployment
I believe that temporary employment should also be improved and this taking into account that the person who has the most temporary employment in our country is the Public Administration itself. But from there talking about the counter-reform I do not understand. Flexibility has given good results, everything that can be improved must be done, but beware of ideological approaches that can damage job creation.
Finally, what do you think of the new electricity bill?
The self-employed are the big losers from the increase in energy because we pay it twice, as a professional user and as a family user. It is very difficult for a bar, a business, an industry, to be able to use the early morning rates. We open when we open, which is when there are customers, not at 4 in the morning. We open for the day in 99% of the cases. You have to reflect.
Energy costs have skyrocketed. We are paying 44% more than a year ago. I look at the countries around us and in Spain the electricity rate is taxed at 21%, in other countries its VAT is much lower. They could start there, even if it was momentary.