Roadmap for reviving the Spanish economy after the pandemic

IESE and the Institute of Family Business analyze how to maintain employment, preserve the productive fabric and promote viable companies

The authors argue that there will be no economic recovery if business cannot be conducted safely.

June 2, 2020

A rigorous diagnosis of the situation and a plan to relaunch the economy and revive business activity in Spain, designed to address the unique needs of each sector. This is the basic premise from which IESE and the Institute of Family Business prepared their report, “Boosting Employment and Relaunching Business: Reflections on Action,” laying out the best strategies for putting Spain on the road to recovery from the economic damage caused by the COVID-19 pandemic.

The document, which has already been sent to the prime minister and the economic vice president, states three benchmark objectives: maintaining employment, preserving the productive framework and supporting viable companies.

Five Core Policies

The report argues that given the current circumstances, it’s essential that the government, as soon as possible, conveys five fundamental policies:

1. Adaptation of jobs to the new reality. ERTEs need a more functional framework in order to meet the needs of each sector and company with agile and flexible solutions.

2. Promotion of job training geared toward improving productivity and digitalization. Such training programs have been an essential instrument in developing future employability in EU nations with more experience regulating temporary employment.

3. Liquidity and financial structuring of companies. A lack of liquidity can lead to solvency issues and threaten the survival of many companies. New government aid measures must be enacted for companies that are committed to maintaining long-term employment.

4. Encourage entrepreneurship. Guarantee temporary capital infusions, bound by certain requirements,  for entrepreneurial projects so that Spain does not lose its entrepreneurial momentum.

5. Fiscal policy. Adjust the tax burden on businesses and families and make it more flexible over time. Fight fraud and improve public spending management. Greater efficiency, transparency and accountability are needed.

A shared responsibility

The study also emphasizes that the work being done to eradicate the virus must continue without rest. The authors make clear that there will be no economic recovery if companies and their employees cannot work safely. In this respect, a fluid public-private collaboration is necessary, since companies have accumulated a great deal of experience during this crisis and are now better prepared for a second wave of the virus, should one occur.

The researchers also highlight three key concepts on which to support economic recovery strategies:

Trust. A clear, reliable plan supported by all social actors will allow citizens to regain lost trust.

Collaboration. In order for diverse social interest issues and needs to be met in such a complex situation, the creation of an agency composed of government representatives, leading business executives, economists and social agents is proposed. This group must prepare a rigorous diagnosis and design a plan to relaunch the economy and business activity within 5 or 6 weeks of its creation.

International perspective. To align Spanish economic interests with those of the EU’s recovery plans, it is necessary to enter European negotiations with a solid and mutually agreed-upon framework. 

The study is the result of an analysis performed by IESE Professors Antonio Argandoña, Jordi Canals, Javier Díaz Giménez, Franz Heukamp, Núria Mas, Pedro Nueno, Alfredo Pastor, Juan José Toribio, Pedro Videla and Xavier Vives in collaboration with the IEF’s Simón Pedro BarcelóJuan CoronaMarc Puig and Francisco Riberas.

The conclusions are based on data gathered from a survey completed by more than 550 companies across Spain, in virtual meetings with 56 senior managers and a panoramic view of the specific problems facing 16 sectors relevant to the Spanish economy.