A historical demand of the self-employed
Adjusting the contributions of the self-employed to Social Security to the real income is a historical demand by a group that has traditionally felt mistreated in comparison with employees, much more protected by labour legislation. The Spanish government has finally made public its proposal for a reform that should come into force in 2023 and would be put in place gradually until 2031. The idea is that the minimum quota, which now stands at €289, would be lowered to €200 for the self-employed who earn less than €3,000 a year, while for those who earn more than €49,000 it would be €400. Over the next eight years these €200 would be lowered to €90 and the €400 of the highest band would be raised to €1,220 a month. In between there would be a whole scale of fees depending on income.
The proposal is a first document to open the negotiation and is likely to undergo modifications. From the outset, however, it is positive that there is an effort to adapt fees to income, with the tax burden becoming more similar to that borne by other workers. Nevertheless, the bands and the length of the transition period could surely be further improved. Making a 10-year plan, when it is a peremptory necessity, is perhaps excessive. Surely five years would be enough time to make the change and move towards the final objective.
We must bear in mind that the lack of proportion between income and contribution is one of the factors that encourage the underground economy and, therefore, the sooner the economy adapts to reality, the better. Then, we must be aware that the self-employed have been one of the sectors hardest hit by the pandemic and the sudden halt of the service economy. Thousands of professionals who provided their services in the hospitality or tourism industries, to give but two examples, were left without income overnight, and in many cases have been forced to close their businesses. The aid plans for the self-employed, led by the Generalitat, have only been able to partially alleviate this tragedy.
Therefore, the self-employed have to be one of the main axes of economic recovery. This is why the reform the Spanish government is preparing, albeit positive, may come too late for many self-employed, especially after the lack of strong measures such as the suspension of contributions in the toughest months of lockdown. Between now and 2023 is precisely when the Spanish and Catalan economies' future is at stake and, therefore, specific plans will be needed for this group, facilities to recover their businesses and their activity, a temporary reduction in quotas, aid for financing, etc.
Only with a flexible and competitive productive fabric, in which the self-employed play an essential role in adapting supply to demand, will the Catalan economy be able to overcome the very hard test that the pandemic has meant and that we now have the challenge of overcoming. And now is today and not tomorrow.