Deserted projects SMEs freelancers threaten Europen funds as deserted projects and that SMEs and freelancers are left behind: the 2 threats that fly over the arrival of European funds to Spain.
The European funds are already here. It cost sleepless nights last summer, but agreement was finally reached in July 2020 and the European Union laid the foundations for its recovery plan. An ambitious "Marshall plan" that sought to rebuild the economy of the member states and from which Spain was especially benefited, with the receipt of 140,000 million euros of which 72,000 million would be direct aid, and not loans.
The Recovery, Transformation and Resilience Plan designed by the Spanish Government was the first approved by Brussels and will serve to articulate these funds, which will irrigate the country over the coming years. Before the end of 2021, Spain will have received 19,000 million, of which 10,500 million will be delivered to the autonomous communities, according to President Pedro Sánchez himself announced a few days ago.
The European manna has gone from being a concept to being practically tangible, but doubts are already being heard in both the public and private sectors about the capacity that Spain will have to channel and make the most of this money. Even in the government it is questioned whether the country has enough companies that drive the European funds not end up having problems of supply, but of demand.
In similar terms, a former minister of Education and now MEP, the popular Pilar del Castillo, referred to this challenge a few months ago in an interview with this medium. She raised the risk that no one would ask for such funds in the small and medium-sized enterprises area because of the cash flow problems that the pandemic has caused in so many businesses.
Deserted projects SMEs freelancers threaten Europen funds
The Government will centralise the granting of European aid in committees of experts and in a public procurement platform to ensure transparency in the allocation. But just as doubts arise with respect to the private sector, so too do doubts arise with respect to the public. An example of this certainty came at the end of May, when it was learned that the Board had been trying for weeks to incorporate the construction of a new hospital in Cadiz with these budgets.
The European Commissioner for the Economy, Paolo Gentiloni, has even spoken, who in a recent interview with La Vanguardia warned that the issue of the" absorption "of these funds"is a very important issue". "Spain and Italy are among the countries with the least absorption capacity, and this has to do in large part with the relationship between the centre and the regions. In any case, our confidence is that things are changing."
To deepen this debate, the source has consulted with various university experts, as well as specialists from both employers and unions, where they see the challenges of these funds and their injection into the Spanish economy. These are their answers.
"In some intervention plots there will be no demand." Manuel Hidalgo, director of ESADE and EI's Next Generation EU Funds Observatory and EsadeEcPol, ESADE's Economic Policy Center, is so emphatic. Although it clarifies, since" the answer is not easy": there will be no demand in certain areas"if we follow the traditional strategies applied by the ERDF funds and those included in the so-called Multiannual Financial Frameworks".
Deserted projects SMEs freelancers threaten Europen funds
"It is not uncommon for some items of funds to remain unimplemented and reprogramming is necessary, "he recognizes, although he believes that"the strategies defined in the PERTE or in others designed by the ministries can flow a large part of the funds in a more fluid way, towards industries and sectors that can be in great demand."
"There are some interventions where success depends on a critical number of companies or citizens who want to go, and about this there are some doubts", warns the expert, referring to "subsidies or investment projects" such as R & D aid or "for example, subsidies to the installation of energy saving systems".
Luis Socías, head of the European Projects Office at CEOE, does consider that the business network is prepared to propose projects with which to attract European funds. "The architecture that the Government of Spain has designed of the funds in its channeling around subsidies will be by the criterion of co-financing, that is, we must provide our own resources to that aid that comes from the State to be able to execute projects and we have a very prepared business fabric," he says.
"For every euro public will mobilize € 4 private," says Socías, noting as an example the 4,000 expressions of interest that has been received from the Ministry of Ecological Transition with a volume of funds that nearly quadruples that Spain will receive for projects of this scope, as in the case of the TRACING of the electric vehicle, where it is expected that a public investment of 4.100 million euros and a mobilization of private funds of 19,000 million.
From CCOO, its Secretary of Public Policies and Social Protection, Carlos Bravo, also puts the emphasis on public-private collaboration. "We think that Spain has the capacity to channel and deploy European funds, although this must occur with a relevant participation of the public sector, compatible in many projects with the participation of the private sector," he explains.
Deserted projects SMEs freelancers threaten Europen funds
Bravo considers that there is a driving capacity in large Spanish companies to take advantage of European funds, but he claims to give entry to other sectors of the productive fabric. "Medium and small companies with an adequate territorial distribution must be actively incorporated, in order to favor the development and transformation of our productive fabric, betting on the generation of quality and stable employment," he adds.
In this sense, Carlos Balado, professor at the OBS Business School and director of Eurocofin recalls that it is planned to allocate "17.6% to education projects, 17.1% to industry, SMEs and tourism modernization, 16.5% to science, innovation and health; another 16% to urban and rural development, 12.2% to resilient infrastructures and ecosystems, 8.9% to energy transition and 5.7% to employment and dependency policies".
"The large Spanish corporations have presented the necessary documentation for the different administrations to approve or reject their projects. If the Government had access to all of them, it would exceed 207% of the total planned as direct aid for companies, so the problem with the funds is not a lack of demand or management capacity of the companies," he summarizes. "It is the administration that sets the tone, the companies have already launched their demand."
Celia Ferrero, vice president of ATA, also points to these differences between companies. "The design of the funds is to try to find the capillarity through what are called companies, tractors, and has a disadvantage of access as a beneficiary of these projects, smes and the self are always subject to snagging a project in which there is a company of larger size, depending on the conditions of that company, which is going to split," he adds.
Deserted projects SMEs freelancers threaten Europen funds
For his part, Juan Carlos Higueras, economic analyst and professor at EAE Business School, agrees with Luis Socías in highlighting that companies will not be the problem when it comes to making European funds profitable. “I believe that the private sector is able to absorb and channel everything that is thrown on it, because, after all, if it does not have capacity, it expands it," he says, specifying that it will be the bureaucracy that slows down the execution and approval of many projects.
The Secretary of Public Policies and Social Protection of CCOO believes that the administrations will be able to channel and distribute European aid quickly. "The public sector has the capacity to do this," he stresses, while acknowledging that sharing will be a challenge. "European funds are, without a doubt, an opportunity and a challenge for the development and strengthening of cooperation mechanisms and coordinated action at the different levels of our administrative structure," he details.
On the other hand, Luis Socías highlights possible difficulties for the Administration to distribute the funds. "The brake that there may be now for the agility of the channeling is precisely in the capacity of the public sector to process the files, because the architecture of the funds is aimed at reaching the productive fabric through public contracts and subsidies, that is, the Spanish public sector is the cornerstone of the system," he explains.
Socías claims to implement Royal Decree 36/2020, which entered into force in January to expedite administrative procedures and remains paralyzed in Congress, in addition to requesting the reorganization of public resources to ensure the management of funds. In terms of control, it prioritizes guaranteeing the principle of competitive competition and "iron" control by the General State Intervention, in addition to demanding indicators that measure their degree of execution and impact.
Deserted projects SMEs freelancers threaten Europen funds
For this reason, the vice president of ATA calls for initiatives to prevent the public sector from being overwhelmed by the process of distributing European funds. "That is why we believe that there will have to be made adjustments, because we are not convinced that the General State Administration has sufficient capacity to manage the number of customers that could occur in this issue, especially tenders," he adds.
In fact, the director of Eurocofin and professor of the OBS, Carlos Balado, recalls that" in view of the data " the Administration "as a whole" has problems to execute the expenses. "On this occasion, and in a very short time, the administrations will have to manage calls that represent five times more than the volume they were used to manage".
According to the data of budgetary execution of May, the State executed until then 126 million euros of the budgeted expenditure for the Recovery Plan through transfers to the autonomies. "In this way, as long as the communities do not execute the expenditure corresponding to the transferred funds, we should talk about a distribution of funds between subsectors, but not a material execution of the Plan".
"Communities may not have effective time to fully implement planned actions."
Deserted projects SMEs freelancers threaten Europen funds
Manuel Hidalgo, from ESADE, focuses on training for civil servants. "Everything is missing but not for everyone. In the administrations there are very prepared cadres for the management of funds, but they are not the majority", regrets.
"This management is very demanding and difficult for those who are tangentially with such management. The learning curve is not easy and often all the details of its management are unknown, leading to delays and errors. For this it is necessary to devote resources to training, for example, creating specialized cadres and generating economies of scale within the administration," he says.
Hidalgo emphasizes that the funds will be distributed "in a very capillary way "in the various components, and within them"in a multitude of different investments". "This means that there is not a huge concentration of them." Having said that, he considers it "obvious" that a very important part of these funds will be managed in investments that will be carried out by large companies.
"The SME will also be a recipient, which will nevertheless require a good effort on the part of the administrations to send them the information and the funds".
Deserted projects SMEs freelancers threaten Europen funds
On this issue, Celia Ferrero emphasizes that SMEs and self-employed will be subordinated to large companies as beneficiaries of the funds, although not as end users. "We are seeing many digitalization projects of consortia, large companies and even organizations and unions that seek the digitalization of SMEs and self-employed through the sharing of different tools and standardized service folders," he explains.
"There, yes we believe that there may be a fairly important yes arrives, what happens is that you must also take into account that these companies do not always have the approval of a self-employed and smes," added the vice-president of ATA, which notes that his organization and Cepyme share the concern about the level of distrust in self-employed and smes with respect to the discourse of digitalization and sustainability that accompanies the european funds.
Ferrero therefore considers that the funds will have a carry-over effect on the self-employed and SMEs, although it does not foresee a direct impact. "If the investment always occurs in the same type of business fabric for large companies, generally in Spain many SMEs and self-employed end up falling behind forever," he says, pointing out that they could disappear because they cannot compete with companies that are large enough to access tenders.
Meanwhile, Juan Carlos Higueras shares the pessimism of ATA number 2. "We have already begun to see, most of the projects that exist, the PERTE and the initiatives that exist are led by the large Ibex companies and large corporations in general, which are the ones that have direct contact with the Government and that in the end will be the ones that channel all this," he says.
Therefore, the economic analyst and professor of EAE Business School considers that it is difficult for there to be a direct impact of European funds on SMEs and self-employed people, although he points out that an indirect impact will be achieved through subcontracts. "It will hardly reach small entrepreneurs directly and it should reach them, who are what they really are who have to rebuild the network of the economy and jobs,” he emphasizes.
Deserted projects SMEs freelancers threaten Europen funds and the Secretary of Public Policies
For his part, the Secretary of Public Policies and Social Protection of CCOO claims to include SMEs in the distribution of European aid. "The funds, in cases where there is private sector participation in their application, must have an application that is not monopolized only by large corporations," he says.
Therefore, Carlos Bravo emphasizes that the architecture of the distribution of funds already takes into account SMEs. "It is appropriate, as it seems to be applied in the few projects so far known, that the presence of large companies go and have to be accompanied by a significant participation of medium and small companies, which also multiplies the positive impact on volume and quality of employment," he details.
"The success or failure of these funds will depend on SMEs and self-employed rise to the wave of European aid", highlights Luis Socías, who asks to combine 2 types of measures:"transformative projects that, driven by large companies, have the capacity to drag in their ecosystem of SMEs and self-employed, and there the PERTE can be a good figure, and secondly ad hoc calls aimed at the characteristics and specialties of SMEs and self-employed".
To do this, the chief of the Bureau of European Projects of CEOE prioritizes the need to properly inform smes and freelancers, highlighting that management has put in place a platform, CEOE for Europe, which aims to bring that information through a system of alerts any contract and call that emerges at the national level, whether regional, local, or state to ensure that all companies, regardless of size, add to the funds.
"What is very important is information, bring any SME or self-employed how a call works, be clear that although it sounds European fund, they are funds managed by the national public sector, that you have to approach your regional, local or national window, what is a regulatory base, what is an administrative document, what is an eligible expenditure...", details Luis Socías.
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