Employment support schemes helped Spain mitigate the worst effects of the pandemic after the first wave. Now the focus is on the recovery plan, says economy minister Nadia Calviño.
Q: What has been the impact of the coronavirus pandemic on the Spanish economy?
A: The Spanish economy was severely hit by the first wave of the pandemic, mostly due to the higher weight of the most affected sectors, such as tourism and transport. But there was a strong rebound in the summer of 2020 as the lockdown was lifted, and the positive trend was maintained in the fourth quarter.
Recent estimates by the Office of National Statistics, of a yearly gross domestic product (GDP) drop of -11%, are clearly below most forecasts, and confirm that the second and third wave of the pandemic have had a lesser economic impact. This is thanks to the different sets of measures adopted since March 2020, and the flexibility and resilience of a large share of the Spanish economy.
The pandemic has revealed the strengths and weaknesses of the Spanish economy
From the very beginning, we have tailored our response to the evolving needs derived from the evolution of the pandemic and its economic impact. The range of liquidity and employment support measures have especially targeted the most affected sectors. Of the €115bn mobilised through public guarantees, more than €42bn has reached companies in tourism, retail and transport. We can say the same for public support for short-term work schemes (known as ERTEs) and the special allowance for the self-employed, with an overall support of €40bn extended until May 2021, specifically addressing the most affected sectors.
Q: What has the government done to support businesses?
A: All in all, the measures implemented since spring 2020 have mobilised financial support of around 20% of GDP, and have been effective in avoiding a much sharper drop and the negative feedback loop with job destruction that we saw in the previous crisis. We will continue to adapt our measures in the coming months, for instance by extending credit payment moratoriums and focusing more on supporting solvency and not only liquidity. This will provide a bridge for companies, workers and households in the remaining period, until [the] vaccination [programme] and immunity allow for a reactivation of sectors that are still under partial hibernation.
Q: What action has been taken to safeguard employment?
A: Thanks to the fast reaction to the pandemic, and in particular to the furlough schemes in place since spring 2020, job losses have been minimised and companies have been able to reopen fast and reincorporate their workers in a very efficient manner. The past year closed with an average unemployment rate of 15.5% — only slightly above that of the previous year and well below all national and international forecasts, and without comparison with that of previous crisis.
The number of workers under furlough schemes has stabilised at around 700,000, despite the second and third waves of the pandemic. This is considerably below the peak of 3.4 million covered by the scheme last spring. Job creation in the second half of 2020 has allowed us to recover an important part of what was lost in the first semester, with a very positive increase in activity, especially among women.
This confirms that the short-term work scheme mechanism has been effective in protecting companies and jobs, and also as an incentive to recovery, with 80% of workers in ERTE returning to their jobs in the course of the year. Our priority for the coming months is to support the recovery, and boost growth and employment, so that all workers covered by this mechanism can get back to work.
Q: What are your greatest concerns regarding the Spanish economy?
A: The pandemic has revealed the strengths and weaknesses of the Spanish economy and has accelerated processes of structural transformation that can no longer be postponed. This is why the rapid and effective deployment of the recovery plan is essential to accelerate recovery in 2021, and also to set the path for sustainable long-term growth.
The plan includes transformative investments and reforms, aligned with our European agenda — including the green transition (making up 37% of investment in the coming years), digital transformation (33% of investment), social and territorial cohesion, and gender equality. These cross-cutting objectives are inserted into 30 components focused on projects and reforms with the greatest capacity to boost activity and employment.
We have already presented detailed plans in the areas of digitisation, energy and climate transition. We have launched several calls for interest in areas such as connectivity and 5G deployment, green hydrogen, industry transformation and electric mobility. We will start deploying investments on the basis of our national budget, and I hope the formal process at European level will allow funding to start flowing to the national treasury in the second half of the year.
