Thursday, September 29

The reform of the self-employed is approved in Congress with Ciudadanos and Vox against

The reform of the self-employed so that they contribute according to their real income has been validated this Thursday in Congress by a majority. It will be processed as a bill, by urgent procedure, so any change may be agreed upon in its journey through the Cortes. The parliamentary groups have thus endorsed this far-reaching reform for the group, by which they will start paying contributions based on what they earn from 2023, which was the result of a unanimous agreement in the social dialogue with the most representative self-employed groups ( ATA, UATAE and UPTA), the unions and the majority employers. Vox and Ciudadanos have distanced themselves from the new system, which is also born from a recommendation of the Toledo Pact so that these workers – like salaried employees – contribute based on their earnings. In detail, 260 deputies have voted in favor of the reform, another 64 have rejected it and 25 have abstained.

The Minister of Social Security, José Luis Escrivá, has been in charge of defending the decree in Parliament, which not only contains the reform of the contribution system but also a reinforcement of unemployment benefits for the self-employed (the cessation of activity ). Four new modalities are created, some that provide protection to the self-employed in situations of new ERTE, called Red Mechanism.

“It is a doubly legitimized reform”, assured the minister in his speech. It is, he indicated, because it responds to a mandate of the Toledo Pact and because it has the support of social dialogue. A reform that has “a broad consensus, which gives it credibility with the public.”

“It is a very complex reform, very worked, discussed with the representatives of the employers, unions, representatives of the self-employed, a very diverse group. It is a collective success that we have found a way to correct a situation that affects one in six workers, who until now have received a different treatment that has resulted in underquotation”, Escrivá stressed.

Starting next year, the self-employed will progressively contribute based on their earnings. For now, the Government has agreed on the quotas for the next three years, which are illustrated in the following table.

At the end of a period of, at most, nine years, the self-employed will pay a percentage of their earnings (net income) to Social Security, as wage earners already do. The latter with more contribution than the self-employed – even with the reform approved this Thursday – to the accounts that support public pensions and other Social Security benefits.

José Luis Escrivá has recalled that, after many months of complex negotiation, the Government managed to unite in an agreement in July the positions of all the negotiating parties: employers’ associations, majority unions and the three self-employed groups.

“84% of the affiliates contribute for the minimum base, regardless of the evolution of their income”, summed up the Minister. “It is difficult to understand and generates a degree of lack of protection for this group,” he deepened. The result, the minister pointed out, is a system with which two-thirds of the group will pay the same or less amount to Social Security. Another third, the one with the highest earnings, will contribute more, which will give them rights to greater social protection (pensions, sick leave, childbirth permits, etc.).

A recommendation of the Toledo Pact

The reform to contribute based on “real income” was a recommendation of the Toledo Pact, supported by all political groups, except Vox, which abstained, within the package of measures to strengthen Social Security and public pensions. This Thursday, Ciudadanos and Vox have finally rejected the agreed reform. Ciudadanos has raised a forceful opposition to the legislation in recent days, and has even justified through Inés Arrimadas its ‘no’ to the decree with erroneous quota data and has begun a sudden questioning of the self-employed groups.

The ‘no’ of Cs was defended in the Lower House by its deputy María Muñoz, who assured that the reform “attacks the freedom of the self-employed from all sides. It will be the State that decides the contribution base and not the self-employed freely, ”she justified. “They see the self-employed and salivate, they see them as ATMs”, she concluded in her intervention.

That the self-employed contributed whatever they wanted in the current elective system was an anomaly, the result of a past in which this group had little social protection, but which has been reinforced for years without the system changing. The result: that the vast majority of the group, almost 90% contribute for the minimum possible, which also leaves their social protection at a minimum.

Contributing as little as possible translates into minimum pensions, sick leave or maternity leave, among other examples. The pandemic showed a clear example of this with the cessation of activity (the unemployment of the self-employed) due to COVID. Some freelancers denounced its low amount, much lower than the returns from their businesses, but they contributed the minimum and the benefit is calculated based on this contribution.

Another consequence of this system is the great deficit in its special system. With the latest annual data available, Social Security paid double in social benefits to the group with respect to income in social contributions, with a gap of around 10,000 million euros.

Procedure in Congress

With the decree validated, the reform has been endorsed and will enter into force in January 2023. Now a new period of discussion opens, with the parliamentary procedure, in which the political groups will be able to introduce and agree on some changes.

The PP spokeswoman, Cuca Gamarra, announced on Wednesday that the party would vote in favor of the reform, despite its many criticisms so far. She did so after a meeting with the association of self-employed within the CEOE employers’ association, ATA, where its president required support for the pact reached in the social dialogue. Gamarra celebrated that long dialogue, the “rectifications” of the initial positions of the Government, but the party has linked its ‘yes’ to the request that the norm be processed as a bill.

Among the possible modifications, those of Alberto Núñez Feijóo have focused on the flat rate, which in the legislation would rise to 80 euros per month (and the second year only for self-employed people with reduced earnings), and that the PP wants it to remain as is, at 60% euros and for everyone.