MADRID – In the run-up to the next legislative period, the Spanish Entrepreneurs’ Circle (Circulo de Empresarios) proposes a number of measures in an Open Letter.
El Economista summarises the proposal. The measures have been sent to the main political parties in recent months. On the labour front, President Manuel Pérez-Sala proposes to reduce the severance pay for permanent contracts from 33 to 20 days. He also wants to increase the compensation for temporary contracts from 12 to 15 days. With a levelled cost difference between the two contract forms, this change would ensure more stable employment contracts.
The Entrepreneurs Circle believes that the recent labour reform, initiated by Labour Minister Yolanda Díaz and agreed in the social dialogue, “far from solving the problems, has slowed employment growth, hidden unemployment and damaged flexibility.”
“Austrian backpack model”
Another proposal put forward by the Círculo is the introduction of the so-called “Austrian backpack model” (an idea also shared by Feijóo in his proposal to rule with the PP). This “backpack” would accumulate employees’ unemployment insurance contributions, which they then take with them when they switch employers. If the employee has not used this unemployment benefit coverage at the end of his career, it would serve as a reserve fund for the pension.
Retirement age
Regarding the retirement age, Círculo proposes to use a voluntary increase, together with an incentive mechanism similar to the current system. It also calls for the promotion of private savings and investments after the reduction of the tax benefits of individual pension plans.
Also read: 70% of workers in Spain are not prepared for retirement
The Círculo de Empresarios also advocates a pension system in which participants do not have personal pension funds and their pension is calculated on the basis of theoretical accrued assets and returns, together with indexations and life expectancy indicators.
Balance in public finances needed
“There is a need for a balance in public finances, out of responsibility and solidarity with the new generations, and to reduce the level of public debt,” says the Círculo de Empresarios. Current government spending is close to 48% of GDP, while entrepreneurs are proposing a significant reduction of this percentage to 40% of GDP, by “setting priorities” and using resources “efficiently”.
“It is essential to improve the efficiency of the tax system; tax revenue in Spain is below the EU average, despite higher tax rates, due to high unemployment, the size of the informal economy and the complex structure of VAT,” the organisation emphasised.
Also read: Spanish government collects most taxes from employees
That is why the organisation has proposed reducing employer social security contributions, removing special taxes for banks and energy companies, abolishing the wealth tax and simplifying the design of the VAT by adjusting the rates to the structure of production.
Efficient fiscal policy needed
In addition, they insist that fiscal policy must be prudent, rigorous, effective and efficient to stimulate stable growth. “We cannot spend unlimited amounts of money on ideological, populist or ineffective policies, because by doing so we damage the financing capacity of our welfare state and pass current spending on to future generations,” the organisation’s chairman stressed.
Housing
In the field of housing, the Entrepreneurs’ Circle believes that the government should pursue a policy that is compatible with the fundamental rights of citizens as laid down in the Constitution. That is why they propose to expand the supply of building land, promote the construction of affordable rental housing and find public-private partnership models for cities with a housing shortage. In addition, administrative procedures must be speeded up to reduce costs for developers and consumers.
Energy
Furthermore, in the field of energy, the organisation believes that any form of market intervention should be avoided or kept to a minimum. Moreover, it is necessary to work on social acceptance of the energy transition and to reach a consensus between the government, the business community and society.
