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Vote Elections
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Spain is about to hold its most contested general elections in history. The Spanish President Pedro Sánchez called general elections last February after the Government’s defeat to approve the General State Budgets in the Congress. This Sunday 28, Spanish citizens will vote in a political scenario more fragmented than ever, although in the last few months two blocks have been formed reproducing the old left-right division that existed before. The manifesto proposals vary greatly from one block to another so, depending on the winning side, Spanish economic policy can take completely opposite courses.
According to the polls, no party will obtain enough majority to govern alone, so candidates have already talked about possible coalitions. One the one hand, the Socialist Party (PSOE) and the anti-austerity party Unidas Podemos (renamed after the alliance between Podemos, the traditional left party Izquierda Unida, and the green party EQUO) represent the Spanish left wing. Both have left most of their differences behind in order to focus on a common enemy, Vox. However, despite their intention to establish a progressive Government together, the polls have indicated that they would need the support of more parties to reach the majority, and this is where nationalists may play an important role.
On the other hand, the conservative Popular Party (PP) and the liberal party Ciudadanos (Cs) have already declared their intention to form a coalition, but they would also need another ally according to polls. Who may that be? Most likely, that would be the recently emerged far-right party Vox, which has already given its support to PP and Ciudadanos to form Government in Andalucía last December. However, aware of the bad publicity of this ally, PP and Ciudadanos have avoided making references to the populist party during the campaign, although none of them rule out a future coalition with Vox.
In this context, it is not surprising that most of the economic proposals of the five parties reproduce to a large extent the block division. The clearest example is the fiscal policy proposals. PP, Ciudadanos, and Vox have promised a considerable reduction of taxes, especially regarding the Income Tax and its maximum rate. The three parties of the right have defended that, to increase the consumption and to grow the economy, it is necessary that individuals dedicate less part of their income to the State.
Another important part of their fiscal manifesto is the reduction of the Inheritance and Donations Tax, as well as the Corporate Tax, which they consider to be too demanding with entrepreneurs. PP and Vox go even further promising the complete elimination of the Wealth Tax too.
In opposition, the progressive block stands up for the progressivity of the tax system as a wealth distribution mechanism. Both Podemos and PSOE aim to increase the contribution of large companies and taxpayers with higher incomes to the’ State coffers’. In addition, the two parties have proposed the creation of new taxes as the Digital tax or the Tax on Financial Transactions to compensate the social spending estimated in their manifestos.
On its part, Podemos wants to create a specific Tax as well to the banking sector and to the great fortunes while reducing VAT to basic products and supplies such as heating, gas, and electricity. The objective is to protect and expand the Spanish welfare state by increasing revenues, in contrast to the liberal block, that intends to boost the economy by reducing the fiscal pressure to individuals and companies.
The other main pillar of the economic manifestos is employment, the pending subject of Spain. Despite the economic recovery, the unemployment rate is still at 14% and job insecurity has increased due to the labor reforms to make the employment market more flexible after the economic crisis. The main concern is associated with temporary work, which represents 26% of total contracts, twelve percentage points above the EU average. Conscious, all political parties have made the fight against precariousness their own.
Regarding temporary contracts, proposals go from one extreme to the other. Unidas Podemos proposes to prohibit temporary contracts of less than one month and set a maximum of six months, after which the contract must become permanent. For its part, PSOE has promised to simplify the types of contracts to three (indefinite, temporary and training), while the manifesto of Vox talks about reductions of 10% in social contributions to companies that create new permanent contracts to unemployed people. But Vox will only apply these incentives when companies hire workers of Spanish nationality, excluding migrants despite being in a regular situation.
PP and Ciudadanos have focused on self-employed workers in their manifestos, proposing tax reductions and incentives to encourage entrepreneurship while Unidas Podemos emphasis on the need to address the growing phenomenon of ‘false self-employed’ people.
There is also a big contrast when it comes to the minimum wage, which already experienced an increase of 22% in January after the agreement between PSOE and Unidas Podemos. Nowadays is situated at €900 ($1,030) per month but both parties pretend to continue with this trend and Unidas Podemos proposes to reach €1,200 ($1,340) per month during the next mandate. PP has considered on numerous occasions this measure to be irresponsible as it may discourage hiring, while Ciudadanos prefers to introduce ‘salary supplements’ to the workers with less income instead of raising the minimum wage.
Paternity leave has more consensus among the blocks, at least between Ciudadanos, PSOE, and Unidas Podemos, they all agree on the progressive equalization of paternity leave to maternity leave up to 16 weeks in order to address women’s underrepresentation in the labor market by encouraging a better sharing of caring responsibilities. However, differences predominate most of the time, especially when it comes to regulating the labor market. Podemos wants to repeal the labor reforms introduced by PP and PSOE during the economic crisis. PSOE wants to derogate just some parts of them to strengthen the role of the collective agreement as a guarantor of the rights of workers. And PP wants to deepen the flexibility of the labor market in order to create more jobs.
When Spaniards vote today they will not only be choosing the future Government but also the future economic model, more liberalism versus more government intervention.