The plight of the Spanish autónomos

Employment Minister Fátima Báñez - but is the Spanish government doing enough for its self-employed workers? Picture: Uly Martín

With unemployment as it is in Spain – currently around 25% (54% for under-25s) – you'd hope the government was making it easy for enterprising individuals to get off their butts and start earning some euros. But although the wheels have been oiled to some degree for self-employed workers (autónomos) over the last 18 months, there is still plenty of work to be done in order to create a system deemed fair by all.

The autónomos of Spain are faced with a barrage of problems. By far the biggest fly in the ointment is that, each month, they have to cough up an eye-watering €261.83 per month in social security payments. Ouch.

This fee, payable regardless of how little or much the autónomo earns, is obviously problematic for those whose incomes are low, insecure, or seasonal. Many self-employed teachers, for example, find themselves having to deregister in July and August in order to avoid paying the €261.83. The problem is, you can only deregister for full calendar months – so even if you work just one day in a given month you are liable for the full month's payment.

Granted, some steps have been taken to alleviate the situation. In February 2013 the government announced the monthly social security payment would be reduced for young people. Under 30s (under 35s for women) were to pay a flat rate of just €50 in social security payments per month for the first six months – leading to savings of around €1,200 - with a 30% reduction for the 24 months to follow. The changes were part of a series of meaures that, according to Employment Minister Fátima Báñez, aimed to "reduce youth unemployment and tackle the structural causes making it so high".

This measure was popular, and encouraged 170,000 people to register as autónomo in the first year. So successful it was that in March 2014, the €50 flat rate was extended to all new autónomos, regardless of age. Which sounds like good news, but it sadly does not benefit everyone in need. For example, the lower rate is not offered to anybody who has already registered as self-employed over the last five years. What's more, anybody on a part-time contract as well as being self-employed is not eligible.

Anybody Googling the word autónomo will soon discover a huge number of forum discussions between baffled would-be workers, both Spanish and non-Spanish, trying to make sense of a system that seems to be penalising them rather than supporting them. "I've really tried so hard to do things by the book and pay into the system as I think it's only fair, but when your outgoings exceed your incomings and that's just for social security, accountant and tax, I don't know how they expect anyone to continue," says contributor Jukim on a discussion entitled 'Can't afford autónomo' on the information site Andalucia.com.

Indeed, because the system is so complicated, most autónomos decide to hire an accountant to help them make head and tail of it - adding, of course, further to their costs. Sarah Farrell, an Alicante-based travel writer, pays her accountant €100 per quarter on top of her social security and tax outgoings. "The laws keep changing on tax, and it can be a minefield," she explained in an article in The Local.

In other European countries, self-employed workers are supported more by the government. In Germany the newly self-employed can apply for grants to help them with initial costs until they find their feet, and in the UK the system seems to have been created to encourage self-employed workers to flourish. "Look at the UK, Mr Politicians," writes one disgruntled PP voter, who calls Spain's €50 flat rate a "swindle". "There the self-employed can sign up on the internet, without having to queue at the social security or tax offices, and end up paying less than £100 per year." Under the British tax system, the self-employed enjoy annual tax-free earnings of around £10,000 (€12,300), and pay no National Insurance (social security) for earnings up to £5,900 (€7,200).

A similar 'exemption' for low earners is available in Spain – kind of. This article claims it is acceptable for low earners to avoid signing up as an autónomo thanks to a loophole in the wording of Spanish law. The website suggests that if you earn less than the Spanish minimum wage (currently €645 per month), and are later fined for failing to register, you can appeal, and you will probably win. "It is not legal, but it is possible," it states.

Some have found their own ways of opting out of the clunky autónomo system and still staying legal. Javi*, a lighting technician from Fuengirola in Andalusia, is operating using a system he considers much more reasonable. "Instead of being self-employed, my brother hires me and invoices the company I work for. This is cheaper for me. It's a favour from my brother," he said.

Javi, a father-of-one, explained why the autónomo system was not for him. "If you are an autónomo you have to have an accountant, which is another €50 or €60 euros per month. Then you need health insurance. When you pay into the autónomo system you are entitled to no - or very little - unemployment benefit. And if you get sick it's really hard to get sick pay. It's really hard to recover your money. It might be possible if you earn like €2,000 euros a month."

Javi can earn up to €300 per day – but his work is by no means regular. One month he might work 22 days, and the next just two – which makes the prospect of a €261.83 monthly flat fee pretty scary. "When you are self-employed you end up paying out between 40-45% of the money you earn just to be an autónomo," he explained. "With my way I pay about 25%."

As Javi explained, his brother charges the companies he works for an extra 30%. They are happy with this arrangement because it is cheaper than taking him on as a contracted worker. "It's not the normal way, but it is not illegal," he said, adding that he knew many people doing the same thing – and was also aware of many more who choose not to declare their incomes at all.

*Not his real name

Comments

[Publicado por: Edunaija]

explained, his brother charges the companies he works for an extra 30%. They are happy with this arrangement because it is cheaper than taking him on as a contracted worker. "It's not the normal

[Publicado por: Timothy]

Good and commendable article. I think entrepreneurship should be encouraged in all society especially among the under 30, and there should Government support for proper education.

[Publicado por: Jude]

Hmmm, such things dont happen quite often...whether in the USA or third world countries.

[Publicado por: Jude]

Hmmm, such things dont happen quite often...whether in the USA or third world countries.

[Publicado por: ubababs]

This is really very great indeed,very interesting while reading through ,i appreciate your effort in putting up this post.

[Publicado por: Aston Crouch]

Hello Everybody,

WHen are the Govenrments going to stop robbing the F..K out of the People,, I mean havnt you had enough of this F...ing Sh1t? Its the Accountants and everybody also, the Lawyers, the MPs in the UK they are all stealing our pensions and ou money that we pay into tax and are eating well, living well and anally fu....ing US! F... Them!! F.. the Autnomo, you are paying now more for there mistake and there thieving tactics. They dont care about you, no one does. ts about time we just stopped paying. All of US!! F..k there system it sucks and you will always end up paying more! And so will your children!!

[Publicado por: Kizi]

Your article is interesting i like it

[Publicado por: Anna]

Great article. Although it's not perfect, I think much should be done to encourage the kind of system the UK has. Poland is like Spain in that it also stifles entrepreneurship through high contributions, added to overwhelming bureaucracy.