Government aid for workers and businesses
“The crisis is temporary,” stated Prime Minister Pedro Sánchez
PM Pedro Sánchez insisted that help is being made available for civil society, small, medium and large businesses, the selfemployed and the social economy.
Sr Sánchez said on Tuesday the state will take the impact of this blow, ‘which is bringing the Spanish economy to a complete halt’. He said residents have to ‘assume that this crisis is temporary and must be treated as such… so we must all make it easier for each other to accept this difficult period’.
The PM called for a ‘chain of solidarity’ because after the economy grinding to a halt, ‘the reconstruction of the country will have to be confronted’.
Last Thursday the government approved an initial aid package, which included another line of €400 million from the official credit institute (ICO – a public bank) for the tourism, transport and hospitality sectors. An emergency national budget will be presented in Parliament ‘once the virus has been definitively beaten’, because ‘currently it is not possible to evaluate the impact of the epidemic on GDP or employment’.
Self-employed
Everyone who is self-employed and suffering severe losses, including those who have set up a company (societarios) and employers, can access an emergency payment (prestación) for stopping their activity, and will be exonerated from paying social security contributions.
Self-employment sources consulted by state news agency EFE indicated that this payment, which would last one month but could be extended, will be calculated according to 70% of the regulatory base amount they pay in contributions or, if they have not paid contributions for the minimum period to be entitled to this, according to 70% of the minimum base amount.
The beneficiaries will be self-employed people whose businesses have been suspended by the state of emergency or whose takings from the month previous to their application had dropped by at least 75% compared to the average of the previous six months.
This expands and simplifies the existing payments available for the self-employed who stop their activity, and is available even if they have not been making contributions for the minimum period.
Sr Sánchez explained in the press conference afterwards that these payments have been made compatible with exoneration from paying social security contributions and also for those self-employed who are using an ERTE to temporarily lay off any employees they may have. He insisted it should be a priority to use these measures instead of sacking workers.
Self-employment sources indicated that contributions will count as having been paid during the time which this payment is received so it will not affect how long they can claim for stopping their activity in the future. However this extra payment is not compatible with any other social security benefit. To apply for it, self-employed people must be up to date with their social security contributions or if they were not on the day they stopped their activity then they must pay any outstanding contributions within 30 days.
The payment can be applied for from the Mutua that covers professional risks for the selfemployed or from the public employment service (SEPE).
Temporary lay-offs (ERTE)
Many businesses have used a procedure known as an ERTE to temporarily lay off employees for the duration of the crisis, and the government has agreed to simplify and speed these up so that all affected workers are entitled to claim unemployment benefit, and that the period they claim it for will not be deducted from what they have accumulated already.
Businesses will also be exonerated from paying contributions for the duration of the time they have workers affected by an ERTE.
“I call on businesspeople – do not sack your workers, this is a temporary crisis,” stated Sr Sánchez.
Companies only have to send a report to the labour authority citing that their losses are due to the government’s measures, which will be processed within seven days.
The right to claim unemployment benefit has been extended to include those who had not accumulated enough social security payments while they were working to be entitled to it under normal circumstances.
The time for which claimants can receive the benefit will not expire if they have already reached the maximum they were entitled to and it will be automatically extended.
Furthermore, workers who can demonstrate that they have to spend time caring for others due to the government’s measures or the effects of the coronavirus are entitled to adapt or reduce their working hours by up to 100% without this being a cause for disciplinary measures or being sacked.
These exceptional circumstances can include school or residential home closures or the absence of a usual carer for children or dependents.
Exactly how much these reduced hours might be compensated with a social security benefit has not been established. Those who are able to work from home are authorised to do so based on their own assessment of whether the risks of coming in are too high.
Mortgages
A moratorium on mortgage payments for primary residences has been made available to those households most affected by the crisis.
Sr Sánchez said this is available to borrowers who have become ‘economically vulnerable’ due to the emergency, as well as to guarantors in the same situation. According to EFE, the draft decree says this applies to those who lose their jobs, and business owners or professionals whose income or sales drop by at least 40%.
To qualify, the mortgage payments, plus fees and basic utilities must total 35% or more of the total household income.
Once the application has been made with the necessary documentation to prove entitlement, the bank will implement it within 15 days. As long as the moratorium is in effect, the bank cannot foreclose or demand payment of any instalments or charge additional interest. This is initially valid for one month but could be extended. Borrowers who claim the moratorium without meeting the requisites can be held responsible to pay compensation and costs, the draft says.
Sr Sánchez said this will protect the most vulnerable families, as will last week’s decision to suspend any evictions until 2024.
“No one will lose their house in this crisis and no one will be evicted from their house,” he assured.
The Spanish banking association (AEB) has said they will carry out these measures quickly, adding that they have also made €60,000m available to provide the self-employed and small and medium businesses with the liquidity they need to continue.
Consumer associations were positive about the government measures, with ASUFIN saying that using public funds means that financial institutions cannot take advantage of the situation by providing loans or refinancing debts, which would result in additional interest costs for those affected.
ADICAE called for the moratorium to be extended to consumer loans, credit cards and deferred payment schemes, which are a ‘significant burden’ on household budgets. Valencia government has set up a free helpline for businesses and the self-employed who have questions about work-related matters related to the state of emergency on 900 35 31 35.