11 Jun, 2010 @ 11:00
3 mins read

Bring an end to Spain’s black economy

IN a recent letter printed in the Olive Press (issue 83) a reader made a plea to PM Jose Luis Zapatero to finally clamp down on Spain’s infamous black market.

In the angry missive, the restaurant owner from Mijas wrote that out of 30 people who recently applied for a job as a waiter, 75 per cent refused to work unless it was cash up front… because they didn’t want to ‘lose their paro’, (or dole money).

It sums up clearly the problems facing the country and Andalucia today.

But, when I asked why doesn’t he blow the whistle, he said it would cause “one hell of a storm”.

Amid salary cuts, as well as budget and spending restrictions there is still one huge hole in the government’s finances – caused by rife cash-in-hand employment.

It is an issue that is evident in just about every part of Andalucia; people claiming unemployment benefit, while undertaking regular, blackmoney jobs.

One Andalucian town hall employee recently told me that he sees dozens of people – who all work unofficially – sign up for the dole.

He gave me a number of good examples including a cleaner, who is driving a new BMW 5-series.

But, when I asked why doesn’t he blow the whistle, he said it would cause “one hell of a storm”.

It is a storm nonetheless, which needs to be sailed through if Spain is to escape the horrific economic problems it currently faces.

If the labour laws were properly enforced across the whole of Spain, then millions of extra euros could be raised from tax on earnings.

I am no fan of the hard right policies of former British PM Margaret Thatcher, but it is clearly time for Zapatero and his government to toughen up and start taking one of the country’s biggest black holes seriously.

It is hypocritical to scrap baby benefits for mothers when Zapatero can’t even get his own tax house in order.

When times were good and money was flowing into Andalucia, via construction and tourism, there was no desire to officially regulate the contracts.

Now that Spain is facing a public-funding crisis, government bigwigs should be kicking themselves for not having implemented crucial labour reforms during a time of prosperity.

Black money is rife and officials are surely scratching their heads, wandering where to begin. However, it has to be done.

Current economic predictions for Spain’s economy predict that Zapatero’s new austerity measures – passed by just one vote in parliament – aims to reduce the country’s 11 per cent GDP deficit to six per cent by 2011.

The extra millions raised from cracking down on the black-money hole would go further in easing the deficit.

The problem is that the current austerity measures are causing substantial unrest.

The five per cent wage cut for civil servants has left trade unions feeling very twitchy indeed.

Already, public sector workers are due to strike on June 8 in protest at government cutbacks. Some town halls have seen sit ins from staff.

Furthermore, the General Workers Union and the Workers’ Commission have also threatened a general strike.

Even, Zapatero’s political counterparts have bristled at the public sector cuts.

One such mayor, Carmen Penalver, in Jaen, flatly refused to impose the wage cuts on herself or any of her fellow town hall employees, branding them “nothing more than empty measures”.

Another regional mayor in the spotlight has been Fuengirola’s Esperanza Ona.

Not only does she need the use of one car – paid for by town hall coffers – but also another two, which cost a cool 150,000 euros.

Luckily though, many like Mijas mayor, Antonio Sanchez, are following suit.

He has realised that these cuts need to be made as the most recent economic figures for Spain highlighted.

Eight out of Spain’s 52 provincial capitals owe, on average, more than 1,000 euros per person, while, collectively, regional authority debt is 34 billion euros or 3.3 per cent of GDP.

It is time to batten down the hatches and focus on avoiding a Greece-style economic meltdown and emerging stronger and savvier.

But this means setting an example. For, if the politicians and civil servants are loathe to implement the crucial cuts, then what chance does Zapatero and the tax office have in ever combating the black money market.

As our reader predicts in his Olive Press letter, some 750 million euros a year could potentially be raised by finally regulating black-money employment.

As he points out 500,000 people a year paying 250 euros a month in social security is 125 million a month.

But it will take the big cheeses and the officials in power to first set an example akin to that of Mijas’ Sanchez and his political town hall counterparts.

For if they aren’t willing to overcome this economic debacle, what are the chances that all the black money barmen, builders and cleaners all trying to scrape together a living will?

Jon Clarke (Publisher & Editor)

Jon Clarke is a Londoner who worked at the Daily Mail and Mail on Sunday as an investigative journalist before moving permanently to Spain in 2003 where he helped set up the Olive Press. He is the author of three books; Costa Killer, Dining Secrets of Andalucia and My Search for Madeleine.

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  1. I have made many posts on this site about this problem so maybe the article has picked up on a few of my previous post?

    Anyway recently i sent an annoymous email and fax to the office that deals with work inspections pretending to be Spanish writting a very emmotional letter. I give them info on two bars that employ illegal workers and one of the bars i mentioned employs 4 non europeans who arent even allowed to be in Spain yet work 6 days. I pointed out in the letter how they are stealing for our country with hope this would spur them into action. Well two months later both bars are still open and have both added 2 more staff who also work cash in hand so what’s the point?

    I was talking to my lawyer and said that if i had enough money i would love to put a denuncia against the Office of work inspection because it seems they dont want to their jobs very well. Everywhere i look everyone works cash in hand when i am silly enough to pay 1700euros a month in Social securtity and give my staff paid holidays.

    In Spain this is a major problem and one that can be fixed very easily but it seems it like many things here “QITs always been that way” so will never change.

  2. Mark has made an extremely valid AND TRUE point here and one that I find goes even further with the Policia Local? I assume the Police will be affected as Civil Servants so how can you expect the Policia Local motivated to work (getting them to do ANYTHING at all in the first place requires a miracle in the area of Chiclana) in an unbiased manner when a) they are employed by the Town Hall and therefore simply follow the directives of the Mayor and b)they show DISTINCT FAVOURITSM towards people they know who reside in the area in which they work and who may be relatives or people they grew-up with?

  3. The Police are more interesting in traffic fines to make the town hall money than enforcing the law. I know several policemen both local and national and they complain about there money saying they do what only is necessary when it comes to work. This comes from them being part of the contract fijo culture spain has which is a big problem here. One of the main problems of living here is not law which is there to be enforced it’s just the enforcing of it where they seem to fall down and their failure to do this is cost the goverment and country millions of euros.

  4. PIP, the thing that gets me most about things over here like i and the above piece have mentioned is every Spanard i speak to about these problems doesnt care or think that they dont excist. The other day i was talking to a lawyer who is well educated yet he thought the problem of workers without contracts was nothing. Just in the block where my buisness is there are 15 people working with out contracts and that is in a 200m streach of the coast and 75% of that part of the coast is houses.

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