Defender of the free market and freedom in corporate decision-making, President of the Spanish Confederation of Small and Medium Enterprises (Cepyme), Gerardo Cuerva rejects the use of SMI as if it were “a social policy”. He also warns that “we are doomed to be an uncompetitive country”, predicts that SMEs will have very bad times, and admits that he is concerned about the equality of Spaniards and the separation of powers.
What do you think of the government’s new proposal to increase the minimum interprofessional wage (SMI)? How does it affect?
SMI is not and should not be a social policy. This is an indicator. In the case of Spain, there are currently 46 provinces where the SMI is higher than the average salary of SMEs in that region. In fact, for SMEs SMI already represents 70% of the average salary. Therefore, we have a very serious competition problem. I see this Government confusing society with the fact that SMI is a social policy. But the best social policy is to have a job, not to increase wages by royal decree. Because where does this end? Intervening in the economic system. It is no longer possible for the SME to support further increases in the minimum wage.
So, is this competition problem also caused by the fact that SMI is increased equally everywhere, without taking into account regions and sectors…?
The minimum wage is not the salary of Madrid or Barcelona. In Spain, productivity has decreased by 3.8% in the last five years. There are countries such as Ireland where it increased by 25 percent. Without going further: In Portugal, which has a social democratic government that attaches importance to business and competitiveness, productivity increased by 4.6% in the same period.
What shape would be good to place the SMI in?
This question is harmful. Inflation should be a function of productivity, employment and the economic situation. Because this is an indicator. SMI is not what a Spaniard needs to live. If there are places or regions that cannot be reached, social policies need to come into play. If we intervene in salaries, this is actually an intervention in the economic system. We will also put an end to the more than 4,500 collective bargaining tables that calculate salaries for every region and every sector.
In this case, collective bargaining is fatally injured.
If we talk about social dialogue as a whole, this Government questions that. It suggests things that have not gone through social dialogue. How do we reduce the working day to 37.5 hours: it doesn’t matter the sector, the region… everything doesn’t matter. Will we reduce working hours by royal decree? I don’t know where the social dialogue is. The social peace provided by social dialogue sets an example to the world. 180 million hours were lost due to strikes in the 1970s; However, it could not reach 12 million in 2018.
Productivity fell 3.8% over five years. increased by 4.6 percent in Portugal
This is an issue that also reflects tensions within the Government.
Now we are faced with the issue of subsidies and baskets. And there is an open conflict between one part of the Government and the other. I very much agree with the Ministry of Economy’s concern that Sepe is not working and needs to be fixed. So what is regulation? More subsidies? Why don’t we work to find jobs for people? Why do we want to put this country under the subsidy regime?
The government said this would be the legislature of effective full employment…
Be careful not to fall for the theories I heard from some professors that we will end unemployment with more public employment… What we need to do for employment is to strengthen companies: there are better, bigger, more competitive, more companies. productive. This will bring more employment and better jobs. This is the way, not the royal decree. In Spain, companies need to increase their size one step further. There are very small-scale companies in our country. Below the European average. If we approach the average European size, around 1.2 million new jobs would be created, which would mean an increase of 5% of GDP and an increase in income of more than 20 billion. We identified 100 obstacles that hinder the company’s growth.
All of this can also be transferred to social contributions that directly affect employment.
Completely. In recent years, the minimum bases of social contributions have been increased by 50 percent and the maximum bases have been increased by 20 percent. With this situation, the company is no longer competitive. The Institute for Economic Research (IEE) recently published a study stating that labor costs have increased by 17%. Productivity is also falling… We will not be a competitive country. Let’s have companies that do not resist and throw them out of the market.
Is this possible with panorama? SME Survive?
The measures implemented today are not immediately effective. Whatever you sow today, you will reap years later. And as the years go by, we are told that small and medium-sized Spanish companies will be more affected. It won’t be competitive. Either you believe in the company or you will have a very bad time.
The communist wing of the government thinks only public companies are possible
Experts say 61 percent of European funds go to the public sector.
The perception of SMEs is that the funds do not reach them. Only 15% of the last kilometer has been covered.
So, is the lack of funds only due to the inefficiency of the Management?
A lot of things come together. At Moncloa it started with a very centralized design… Four things happen for the SME: The bureaucracy of access to funds is too complex, the deadlines are too short, the typology of the program is too specific and most of the time the SME is not detected because in an SME the human resources department, There is no administrative department, legal department, finance department… But the biggest problem is co-financing. The company had to undertake 70 percent of the investment and Europe had to undertake 30 percent. However, the SME and the Spanish company were not in a position to start projects for which they would finance 70%. We are working with the government on this issue.
You said you identified 100 obstacles that prevent companies from growing, which are the most important?
There is a very striking situation that even the Bank of Spain mentioned, which is the 50 employee syndrome… When you increase from 49 employees to 50, the number of new liabilities that arise at the same time is exaggerated. These obligations relate to union representation, labor measures, invoicing, benefits you can no longer benefit from… The Bank of Spain said that when 49 workers were reached, new companies were established but growth no longer continued.
“We are determined not to be a competitive country and to push companies out of the market.”
How do you envision this legislature?
The government has clear ideological heterogeneity. It is difficult to reach an agreement in the medium and long term. I think it is very complicated to approve structural policies for the good of Spain for the next 15, 20 or 30 years. But what worries me is that we are playing with the principle of the rule of law and the separation of powers or the equality of Spaniards can be introduced.
There is also an agreement to encourage the return of companies that left due to the process to Catalonia. Is it possible?
If we fail to provide certainty and stability to the country and Catalonia, it is difficult for the company to return. As a result, the company will be in the friendliest, most accurate and safest environment to carry out its activities.
Why is there any more need for harassment against businessmen? Is it softening? Will it soften?
We shifted the focus of attention away from the businessman as we spent several months engaged in another discussion (assignment, agreements). However, it should not be forgotten that in the past months, both companies and businessmen have been harassed by their names and surnames. If we want to move forward, this is not the way.
Will Catalonia’s debt forgiveness affect activity?
Here we must start from the equality of Spaniards wherever they reside. If we risk the fundamental principle and separation of powers that we gave ourselves in the 1978 Constitution, we will enter a complex and unstable system. Beyond that there is debt. What’s not worth it is “okay, I forgive you”… So who pays for this? Someone’s going to pay for this, right? I don’t know how the accounts will turn out if we risk equity and the debt situation is this high. Is this coffee suitable for everyone? Can we afford this?
Are there any public or private organizations currently recommending against investing in Spain?
They say some investment funds classify Spain as non-investable. The Spanish brand may be damaged. However, the most unfortunate thing is that the investments remain in the drawer. I know some situations where the investment may remain in the drawer because the rules of the game change every day.
As a result of the case, there is a certain debate about whether the state should have a greater involvement in the capital of companies. Telephone.
I believe in free competition, I believe in the free market, I believe in freedom of business, and I believe in private activity as the axis of progress. Probably this Government wants to change the system with this interventionism. I am concerned that part of the government, even a social democratic and communist part, is beginning to think that only public initiative is possible for progress. I do not believe in that. I believe that public activity is compatible with private activity. The company must create sufficient resources that ultimately make the welfare state possible.
There is also a new European regulation that will shorten payment terms.
Late payment is a very serious problem that Spain has. SMEs face a very serious problem because they invest 2.4 billion euros to finance commercial debt. We cannot allocate that money to innovation, digitalization, salary improvement… The average payment period continues to lengthen. It has now exceeded 82 days… And there is a certain task there.