Helping HAND
CEOE has been representing and defending the interests of Spanish businesses since 1977 in good times and bad.
What is the main mission of the CEOE and how do you carry it out?
The CEOE represents the Spanish business world. It brings together more than 4,000 business associations and represents some 40 million entrepreneurs. I would say that CEOE is the social agent that is recognized for the negotiation of collective bargain agreements. CEOE also presents opinions before the governments in the decision-making processes that affect private companies.
CEOE has announced that it will choose around 15 projects to use the EU funds. What must these projects have to be selected by CEOE and approved by Brussels?
The number of projects will range between 10 and 18. These projects must have an effect across the economy. It has to impact most of the regions and have to be projects that meet the criteria of the European Commission. The government has to present a draft by October but the legislation that will govern the recovery fund won’t be approved until January 2021. The advantage of having the draft prepared is that the European Commission will already have reviewed it before the funds’ approval. EU countries have requested an advance payment equivalent to 10% of the funds that would be allocated, and the expectation is to allocate EUR20 billion in recovery. CEOE believes these funds will help reactivate the Spanish economy. The focus of these funds will be investments that will spur efficiency across the public administration. For example, this could help digitalize the public administration and reduce public spending. These investments can be also focused on human capital and PPPs. In that area, CEOE has worked with PwC to develop 15 projects that can benefit the Spanish economy as a whole. These projects have to support SMEs, boost digitalization and ecological transition, and modernize the entire Spanish economy. These include initiatives such as the digitalization of SMEs, which can boost exports, for example. Another project is about the development of an infrastructure for electric vehicles across Spain.
What has been the impact of the ERTE temporary layoff mechanism?
The government said ERTE would cost around EUR5 billion a month, which we believe is not true. The real cost is about EUR1 billion, but for the government the ERTE temporary layoff mechanism is cheaper than ERE, which is the traditional layoff regulation in Spain. In an ERTE, the important part of social security is paid by the employer, while in an ERE it would be paid by the state in its entirety. We are developing a mechanism to avoid corporate bankruptcies that will happen anyway. The ERTE system has been helpful in avoiding bankruptcies, but it should not be renegotiated every two or three months, as it has been the case.
Is CEOE having different discussions on ERTEs and assistance to the tourism sector?
These are different topics but are part of the same strategy. Every European country has had a strategy based on three pillars: providing liquidity, which in Spain has been achieved through the ICO credit loans; ERTE mechanism; and everything related to tax moratoriums or payment delays. Spain normally spends all the funds it generates in buoyant times, so the consequence is that the country does not have enough resources to support the private sector during crises. As a result, other European countries have been able to provide more assistance to their respective private sectors. This is a lesson that we must learn: we should save funds that will later help us cope with recessions.
How will Spain’s GDP be impacted in 2020?
We developed two scenarios in a report with Deloitte. We expect the GDP to fall by 11% in the best-case scenario and 15% in the worst-case scenario. It depends if another state of emergency is declared, so we expect that any new outbreaks do not lead to new lockdown periods. The public deficit, as a result, will be in the two-digit area.