Misc 01/09/2020

Fewer than 5% of Spain’s self-employed workers are on Covid benefit

Gig workers must show their income has dropped by 75% if they wish to sign on

Pau Rumbo
3 min
PROFESSIONALS TITULATS  Una imatge d'un despatx d'arquitectes, un dels col·lectius afectats per la pujada de l'IRPF.

BarcelonaMonday was the monthly reality-check day for Spain’s three million self-employed workers: even if they can benefit from a partial exemption, they still had to pay their social security contribution regardless of their turnover this month. Since the Covid-19 crisis broke out, for many of them this monthly payment has become an uphill struggle, financially speaking.

Only 148,000 gig workers (fewer than 5 per cent) meet the conditions set by the State to receive a benefit that will see them through the pandemic: being able to show that their turnover last month was 75 per cent lower than the average of the last six months. On Monday those who did were paid a new benefit set up by the Spanish government to support struggling self-employed workers. Many others who have been unable to return to work or have lost a significant chunk of their business do not meet the requirements to apply for this benefit. According to Spain’s ATA (National Federation of Self-Employed Workers’ Associations) they are the ones who have drawn the short stick and their business is truly in jeopardy. ATA has estimated that they number about 280,000 people, nearly 10 per cent of all self-employed workers in Spain.

A total of €154 million has been paid out on Monday to the 148,000 workers who were entitled to the special benefit, so a little over one thousand euros a head. This sum is much smaller than what was paid in April to nearly one million free-lancers, when the benefit was first brought in. This is happening as the number of self-employed staff in Spain keeps growing: Economy VP Nadia Calviño has announced that between April and 27 August an additional 60,000 workers have gone self-employed in Spain, 19,000 in August alone.

Stringent requirements

28-year-old Maria is an example of someone who hasn’t been able to apply. She is a makeup artist who had been doing mostly weddings for some time, a business that has ground to a halt due to the pandemic, with many couples putting off their big day because of the limitations imposed on the number of guests at receptions. Maria’s turnover has dropped by 50 per cent, a catastrophic percentage for her pocketbook, but short of what is required to apply for the Covid benefit. She says that she “had 35 bookings lined up this season” but “so far I’ve only managed 10”. She has only got two dates booked in September. To make matters worse, Maria was banking on doubling her revenue this summer because she had begun to offer hairdressing services, too.

Laura has not received a penny, either, even though she was able to show that her income has dropped by 75 per cent. A 27-year-old photographer, Laura went self-employed just two years ago, so she was allowed to pay a reduced social security rate: only €60 a month. But by doing so, she was ineligible for the Covid-19 benefit. As she pays such a small monthly amount, she intends to remain self-employed till the end of the year, even though she has no bookings coming up in the next few months.

According to a mid-August survey published by ATA, self-employed staff have seen an average income drop of 60 per cent. 80 per cent of them report that their business has shrunk. ATA president Lorenzo Amor complains that the workers he represents “are lagging behind” and he insists that “we need to put a stop to it for Spain to do well”. The other large association of self-employed workers, UPTA (Union of Self-Employed Workers and Professionals), points out that “self-employed workers” enjoy “far worse working conditions” than ordinary employees. UPTA president Eduardo Abad argues that self-employed staff are the “spark plug of the Spanish economy” and they are capable of “driving the economy’s locomotive”.

Risk of going under

ATA warns that many self-employed workers might end up shutting up shop for good. 71 per cent of the survey respondents stated that they would struggle in the event of another lockdown and 28 per cent of them claimed that they would definitely have to close down (49 per cent thought it was possible and 22 believed they would have to streamline their business).

Ramon is among those who have thrown in the towel. At age 60, this solar panel technician is struggling to make ends meet. On the one had, he was making additional voluntary payments to the social security kitty in order to receive a higher retirement pension, but he was also trying to pay off some debts with the taxman that he incurred during the 2008 recession. He was paying a surcharge, as mandated by law. Now he has no income and relies on his children to survive. He is entitled to no benefit. His elderly mother-in-law lives at home with him and she draws a widow’s pension. Ramon reckons he won’t be able to go back to work for another two months.