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The Spanish National Confederation of SMEs, abbreviated as “CONPYMES”, has denounced the manifold serious challenges faced by the Member State’s entrepreneurs due to the current economic environment. In a recent article published by its President, he even claims that none of the successive Governments from 1978 onwards have supported growth of SMEs, except for a single opposition member who happens not to be in politics any longer.
Only half of all set up companies in Spain survive more than three years after their creation, and most of them do not achieve any growth whatsoever, particularly in terms of employees. The average Spanish enterprise employs 4.7 people, compared to 6 in the EU, that is, 28% more; if the comparison is made with Germany, the average size of the Spanish company in terms of employees is half.
This prevents Spanish companies from reaching a size that would enable them to reduce average costs and achieve synergies and economies of scale.
Not only a lack of size, but also the number of companies registered with the Social Security system has suffered a decrease in Spain between 2024 and 2018: by 2% for all SMEs (those with 1-249 employees), and by more than 3% for microbusinesses (1-9 employees).
In terms of results and cash-flow during 2023, 53% of Spanish SMEs closed their accounts with losses and 46% had serious liquidity trouble. During the past two years, tax pressure, growth of social contributions and the increasing price of raw materials have contributed to soaring total expenses by 19.3%.
On the other hand, access to credit is more difficult for them, due to the progressive escalation in interest rates up to 4.5% in order for the Euro area managers to fight inflation.
If we take a look at tax pressure on SMEs in 2023, Spain with its 25% corporate tax rate ranks 31 out of 38 countries belonging to the Organisation for Economic Co-operation and Development (OECD) in terms of tax competitiveness.
Public procurement is an extra area for Spanish SMEs’ deep concern. Despite the fact that they amount to 99.9% of the corporate fabric in the country, they are only being awarded one fourth of all contracts tendered by public authorities in the different levels of the administration (four, according to Spain’s superfluous territorial system).
This quadruplication of red tape is, of course, a supplementary factor of anti-competitiveness and a permanent barrier for business expansion. Entrepreneurs frequently complain about their need to hire experts in order to guide them through the regulatory jungle.
Cash-flow of Spanish SMEs is currently hindered by legislation and practice, with larger companies charging on an average of 84 days, while paying their smaller suppliers on an average of 187 days. The public administration shows similar late payment bad practice towards SMEs. One could easily see here not just a threat to SMEs’ liquidity, but also an example of disloyal competition, coming both from the private sector as well as from administrative contracting parties.
The energy bill provides for an additional headache for Spanish SMEs: They pay for their electricity consumption an average of 300 €/MWh, compared to 150-200 €/MWh in France, the Netherlands and/or Portugal.
All in all, these are profound grounds for clear improvement. CONPYMES is fighting on behalf of all associated undertakings and should therefore be awarded a well-deserved place in national social dialogue, as well as participate in employment matters discussion at EU level. This would entail the progressive curation of the Spanish economy, whose backbone is none other but SMEs. However, is the Spanish Socialist-Communist government ready to do so, or will it continue to treat entrepreneurs as fiends, in order to favour big business and suppliers coming from third countries outside of the European Union?
Source of image: Conpymes