Self-Employed Left Hanging after Spanish Government Promised to Protect Them from Worst of Covid-19 Fallout

During the last crisis, Madrid ramped up the tax burden on the self-employed to historic highs while wasting vast sums on corporations and banks. Same thing on an even bigger scale is now in the offing.

By Nick Corbishley, for WOLF STREET:

Since Spain was put on lockdown, ten days ago, its government has repeatedly said it will do everything within its powers to insulate the self-employed from the worst of the economic fallout. It was a lie. All Madrid has really offered them (or should I say, us) is the opportunity to get into (more) debt. That debt will be provided by the banks, who will get to enjoy all of the interest paid on it, but it will be underwritten by the government to the tune of 80%.

In other words, if you’re self-employed or a small business owner and most or all of your business activity has come to a grinding halt and your earnings have plunged while your fixed costs remain pretty much the same, the only way you can try to solve that problem is by taking on (more) debt. This might make sense if you have a reasonable prospect of generating a healthy income in the near future.

But that is pretty unlikely, all things considered. Once the coronavirus has been brought under some semblance of control, the economy, both of Spain and most of the rest of the world, will probably remain very challenged for a while. On the bright side, so to speak, if things don’t work out and you end up defaulting on the debt, it will be taxpayers, including your relatives and friends — not the banks — that will pick up most of the bill.

The same deal, with certain subtle differences, has been offered up by the governments of most advanced economies. In Spain, the government has also launched tax-relief measures that will allow self employed workers and small-business owners to delay paying up to €30,000 worth of taxes by up to six months, although the interest starts kicking in straight after the third month.

But that’s where the assistance more or less ends. Madrid has prioritized helping out businesses, particularly large ones with overbearing debt burdens, and full-time contracted workers, more than a million of whom have already been temporarily laid off in the last 10 days. Once those workers’ paperwork is done, which could be a while given the sheer numbers, they can claim unemployment benefits equivalent to 70% of their former earnings (up to a certain limit). This is preferable to losing their jobs for good, though there’s no guarantee they’ll still have jobs when their workplaces reopen.

By contrast, what Spain’s self-employed workers need, at the barest minimum, is a break from having to pay their monthly social security contribution (minimum amount: €290, one of the highest levels in the EU). It would ease the burden a little, at least for the duration of the lockdown. And it would not only be easy for the government to do, it would also be pretty cheap. The total fiscal impact of suspending the payment for two months would be a tiny fraction — less than 1% — of the total amount of money (€200 billion) the government has pledged to mobilize to try to combat the economic effects of the coronavirus.

Yet in spite of all that and despite coming under concerted pressure from myriad directions, including Spain’s Chamber of Commerce, the government refuses to cancel, suspend or reduce the payment. If, by next Tuesday, that doesn’t change, all of Spain’s self-employed, including many gig economy workers, many of whom are generating next to no revenues, have next to no cashflow and next to no savings, will have to dish out €290.

The only way to avoid this fate is to qualify for the government’s “extraordinary” support program, which entitles you to no more than €660 of monthly assistance — the equivalent of roughly two-thirds of Spain’s minimum wage. There’s just one catch: in order to qualify for the program, all of your activities must have been terminated as a result of the lockdown. Either that or you must have lost at least 75% of your earnings (compared to your median monthly income over the last half year).

Even if you do qualify for the program, the red tape probably won’t be complete before the end of this month, meaning you will still have to pay the €290 in social security, which will be reimbursed at some point in the future. The problem with this is that it presupposes that you will have enough money in your account at the end of the month to cover the payment; if you don’t you will be liable for non-payment charges, which the government will not reimburse. More sinister still, if the payment doesn’t go through, you will effectively be in debt to the government, which automatically disqualifies you from the program.

Untold hundreds of thousands of self-employed workers won’t qualify for the program at all since they, like me, have kept up at least some of their professional activities, as a basic act of financial survival. In my own case, I’m fortunate in that I can still write for this esteemed publication [Wolf here: To avoid confusion, and for people who didn’t see the /sarc tag, by “esteemed publication,” Nick means WOLF STREET. And Nick, keep the articles coming!). Nonetheless, I, like many of my friends, will probably suffer a 40-60% hit to my income over the course of the lockdown.

Over the next two months, Spain’s legions of self-employed workers stand to lose an estimated €18 billion in income, according to Lorenzo Amor, the president of the Association of Self-Employed Workers (ATA). By the time the lockdown is over, as many as a million of them could have hit the wall, most of them needlessly.

Sadly, none of this comes as much of a surprise. Spain’s government institutions have never much cared for the self-employed. During the last crisis, when Mariano Rajoy’s graft-ridden administration was holding the reins, Madrid ramped up the tax burden of self-employed workers to historic highs, even as they were dropping like flies, while wasting vast sums of public money on propping up floundering debt-burdened corporations and banks. Sadly, the same thing, on an even bigger scale, is now in the offing. By Nick Corbishley, for WOLF STREET.

Bailouts, please! ReadAustralia’s Construction Industry “On Brink of Collapse”: Started Going to Heck Last Year, Now Comes COVID-19

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  79 comments for “Self-Employed Left Hanging after Spanish Government Promised to Protect Them from Worst of Covid-19 Fallout

  1. 2banana says:

    Corporations love big government. The bigger, the better.

    As big government crushes any and all competition. No need to be cost efficient or competitive or even profitable. And those lovely bailouts.

    Corporations return the favor with graft, political donations and nepotism.

    Big government hates the self employed. They threaten big government and big companies.

    Self reliant small companies being uppity with the carefully crafted market place? With no kickbacks? And no need for a big government iron fist? Undercutting the graft and inefficiencies?


    • joe saba says:

      seems like new barter system will be in works – and no worthlesscoin isn’t answer
      I mean REAL WORLD PRODUCTS in exchange for work/product on local scale

  2. Nick says:

    I am from the government, and I’m here to help you.

  3. Anthony says:

    Wow…€290 a month….just to let you know in the UK, if you are self employed and have no income or make very little, the social security payable is zero, in fact the government pays it for you so you don’t miss out on pension rights… Tough times at the moment in Spain, especially if the Brits don’t come on holiday this year, hopefully they will but at the moment, nobody is planning trips into the sun……

  4. Iamafan says:

    I’ve learned the hard way not to rely on government handouts. The last straw is zero or negative interest rates. I am sorry, if you have not saved for a rainy day, too bad.

    • joe says:

      Yields on short-term debt of the United States government turned negative on Wednesday.

      Three-month Treasury yields fell to negative 0.035. One month Treasury yields were negative as well.

    • Social Nationalist says:

      Government handouts and financial bailouts is the only thing you got. The West as the East Germans used to say, have gone lazy. Nobody wants to pay for the debt binge since 1983.

      If you would “liquidate”, the bread/supply lines would shoot up by 6 months. Company after company would collapse globally squeezing supply further. It would make the 1976 era Soviet Union look like a paradise. The age of abundance was created by dollars to end as my great grandfather said, the long running scarcity that was a off and on normal function of capitalist societies until WWII. There is no way out. What do spoiled people do when they become poor. They lash out in rage and hatred. Government’s begin losing power and then they collapse.

      So you have a choice, manage the gluttony the best you can, pushing it to a productive end that rebalances the system like in 1933 or lose 50% of real GDP in a liquidation that will threaten the rule of law.

      Capitalism was never that great. It was heavily driven by the scientific revolution and then the debt expansion into building concrete slabs and consumer products that came with the same science. That growth ended in 1924 naturally(outside the rest of the decade which was a bubble) and you never really have come up with a “free market” replacement for that investment to keep the people fed and clothed enough to feel they were getting stronger. Maybe there will never be another one.

    • Wolf Richter says:


      Nick isn’t retirement-age yet. He’s a relatively young guy by my standards. As are many contractors. Some of them in their 20s. When you’re not earning a lot, and live in an expensive part of the world, it takes a while to save up enough money to live off.

      They all are going to tell you the same about your worries about 0% interest rates. It doesn’t bother them. They don’t feel sorry for you at all. They’ll say, “that’s your problem, too bad.”

      • Iamafan says:


        I have lived in a third world country so I am used to disruptions. I was lucky enough to visit the USSR and Eastern Europe so I do have my opinions on socialism.

        I said a long time ago here that I was going to spend my principal. I have no choice but I planned to survive by saving for a rainy day. I’m not relying on unearned income as a retiree. I consider myself extremely lucky. It does not really bother me, too but of course who doesn’t want their money to earn interest.

        I am more worried about the future of my young kids, all in their 20s.


      • Lisa_Hooker says:

        They all are going to tell you the same about your worries about 0% interest rates. It doesn’t bother them. They don’t feel sorry for you at all. They’ll say, “that’s your problem, too bad.”

        I do not want 20 or 30 freelance somethings to feel sorry for me. I did freelance at that age, for two decades, and understand.

        What terrifies me is Congress and the Fed saying, “that’s your problem, too bad.”

        Anyone else notice that Congressfolks and Senators are not answering their office phones – because caronavirus. Sick days holiday at home.

        I was planning on not spending down principal for at least another 5-10 years.

    • Petunia says:

      I saved for a rainy day, unfortunately, it rained for two years.

    • Saltcreep says:

      Iamafan, even though I agree that government should not be bailing out private enterprises ever, for any reason, then they obviously are in that business in a big way, and they bail out zombie enterprise after zombie enterprise, so long as they’re large enough and politically connected enough.

      The ECB has been buying corporate debt for yonks now, and the big boys in the big club will get handed out money in some way or another, whatever.

      If you’re going to leave the small fry to become toast (the ones that have generally contributed to society over time at high tax levels), then you’d better damned well let the big fish become toast too! Sadly that sort of concept is just the workings of some innocent imagination of fairness.

  5. joe says:

    Not a unique situation any where now. Forced small business shutdowns all over the US – by Governor Exec Orders. But at least with $0 income you pay $0 tax and SS. Of course rent, utilities, license fees, and state required insurance still continue.

    In the US SS system, apparently unlike the UK, if you pay $0 you get $0.

    • Unamused says:

      I have good news for you joe. You can collect SS benefits in the US even though you’ve never paid a dime into it.

      I’m surprised you didn’t know that.

      • Wolf Richter says:


        “You can collect SS benefits in the US even though you’ve never paid a dime into it.”

        NO. To get the minimum SS retirement benefits or SSDI benefits you must have paid into the SS system a certain amount for a certain number of years. If you don’t get over that hurdle you get nothing under those programs.

        The only thing that you can get without having paid into the SS system is SSI (Supplemental Security Income). But there are still limits as to who can get it.

        • Unamused says:

          Spousal benefits and survivor benefits are SS benefits, and those do not require such a beneficiary to have paid into it. Still, the only people who can legally collect benefits without paying into Social Security are family members of workers who have done so.

        • Unamused says:

          FYI, your Senate bailout bill contains a provision to let corporations stop paying into Social Security for the rest of the year, at least. The idea is to bleed the program and discredit it so it can eventually be discontinued.

        • 2banana says:

          “In certain cases, some individuals who immigrate to the United States when they’re 65 or older may be entitled to draw Social Security benefits…”

          Without ever putting in a dime.

        • Wolf Richter says:


          “Without ever putting in a dime.” ==> Effing BS

          READ THE FRIGGIN ARTICLE BEFORE YOU POST THE LINK. You quoted out of context and left off how much these people have to WORK and contribute to SS before they can draw SS, and you left out the “totalization agreement” that the US has with other countries such as Japan (I know about this personally because my wife is Japanese). From the article you linked:

          “A totalization agreement is an arrangement between two countries with similar social security programs, that ensures workers and their employers don’t pay Social Security taxes on the same earnings, in two different countries, while preventing individuals from double-dipping when they claim benefits.”

          You’re trashing this comments section with you manipulative BS.

      • Iamafan says:

        These things are so small, and depending on where you live, are taxable income to fed and/or state.

        My mother in law’s sole income is her dead husband’s benefit.
        I plan to pay for her assisted living and more, and have already budgeted it.
        To me, that’s life.

      • Lisa_Hooker says:

        The there’s the requirement for 40 quarters of paid taxes before eligibility for US socialized healthcare – Medicare.

  6. Joe says:

    Canada hates the small business and self-employed. The massive regulations and laws incorporated by government has made it impossible to make a living.
    They actually put expired dates on personal safety equipment now with the many safety courses you must have in construction. You must also have many different insurances and licenses for equipment.

    • Joe says:

      They too are on expired dates to need to keep retaking the same courses.

    • Social Nationalist says:

      lol, please. Small business and self-employed basically make their living off the corporations and startups that become corporations. Regulations my backside.

      That is why Corporations, especially mid-sized Corps not heard on the news get so much arm rubbing.

      • joe says:

        Ever run a small business? Meet a payroll? A friend’s business has 10 licenses to maintain and is subject to 3 taxing authorities.
        And now closed by order of the governor. But still expected to pay licensing fees, worker insurance and taxes.
        Small businesses make their money from customers.
        You need to learn something before commenting.

    • Unamused says:

      They actually put expired dates on personal safety equipment now with the many safety courses you must have in construction. You must also have many different insurances and licenses for equipment.

      They don’t want you to hurt yourself, joe, because then you’d become one of those disabled freeloaders you despise who cost the taxpayers so much money.

      I must know ten guys this has happened to. Don’t let it happen to you.

    • Bill from Australia says:

      Same in Australia

      • As good as it is, this article is anti-surprising. Wouldn’t your mind be blown if anything else happened?

        There’s an unspoken “Arms Race” inherant in capitalism. Because corporations can consume everything, they must, or fall to those who do. Governments, then, must cater to their biggest corporations, or end up nothing but corporate vassal states.

  7. Phaedrus says:

    I wonder if the support of big business and salaried contract workers (which I imagine is a shrinking portion of the economy in this age of economic dislocation) has to do with the political donations or influence of this block?

    I’m assuming that freelancers, given their smaller organizational footprint, don’t get political representation through some sort of ‘freelancers’ union’ or political party?

    • Social Nationalist says:

      Well duh. Freelancers are a step up from the ordinary worker. Don’t produce that much demand in terms of investment and take money from the government in terms of health care at a higher rate than they produce.

      A pyramid scheme like capitalism has to follow the top or it dies.

    • Arizona Slim says:

      In the United States, there actually is an organization called the Freelancers Union. But, from where I sit, it seems more like a buyers club than an actual union. I have yet to hear about the Freelancers Union calling strikes or setting up picket lines at the companies that are so slow to pay. Or don’t pay at all.

  8. Michael Jones says:

    The system is collapsing and small businesses are decimated. The very businesses that politicians backhandedly claim to support are the ones that will not survive. The ones that do and are incredibly lucky to get any assistance, will be straddled with additional debt. All the while major corporations are allotted low interest loans, grants, and forgiveable loans.

  9. WES says:

    Socialists always prefer dependent over independent people.

    Being a socialist allows you to discriminate against independent people.

    That is what socialism means.

    • Unamused says:

      Socialists always prefer dependent over independent people.

      That describes every socialist corporation I’ve ever heard of, and they all seem to be socialists these days. They like nothing better than for their employees to be dependent on them because it reduces the turnover rate and they can be made to do things their conscience would otherwise never allow. If they have children who can similarly be held hostage, so much the better.

      • Paul says:

        Agreed. Socialism for the rich, rugged individualism for the poor but would question if there’s anything much like a conscience these days. Decades of bread and circus’s have eroded what used to be, and it ain’t coming back. The word ‘nihilism’ will be trending up at Google Trends, I dare say.

    • 2banana says:

      I had relatives who lived in the USSR and Warsaw Pact back in the day.

      The called socialism the government system for the lazy.

      I could tell you about their first hand experiences of FREE “Medicare for all” nationalized health care…but they, obviously, didn’t have the right socialists in charge of that monster.

  10. stan6565 says:

    The Spanish government is pragmatic. It is mainly the self employed, through their SMEs, that actually generate wealth.

    The massive state controlled and state subsidised corporations, less so, I suspect.

    So the easiest thing to do in this election cycle is to fleece the working bees some more. They won’t notice, they are just dumb working bees.

    Keeps the parasitic state apparatus happy and bloated.

    • Social Nationalist says:

      No they don’t. They receive the wealth that the corporations who do the bulk of investment, create. This is the problem with this post. I can’t believe you don’t get that.

      • Unamused says:

        They receive the wealth that the corporations who do the bulk of investment, create.

        Wealth is created by the employees of corporations, including the wealth corporations get through bailouts.

        Corporations are legal fictions. By themselves they create nothing. I worked alone for years for my own corporation and the damn thing never lifed a finger to help me, probably because it lacked fingers and had no work ethic.

        • 2banana says:

          Ok. Our first lesson for today is how wealth is created. It doesn’t happen by shuffling papers or moving digits.

          “wealth corporations get through bailouts…”

        • Prairies says:

          2B: Does “Wealth through access to 0% interest loans” sound better to you, large corporations get access to luxuries in lending from the Fed that the working class and the small business owners can’t get.

        • Lisa_Hooker says:

          After the Citizens United decision I hoped my corporation would pitch in and do it’s fair share. Nope. But it continued to demand payment of annual filing fees and licenses.

  11. Counterpointer says:

    No one expects the Spanish Liquidation!

    /sorry, couldn’t help it.

  12. Udo says:

    Can’t think of a worse place to live, all things considered, than Spain.

    • Ensign_Nemo says:

      I’d rather live in Spain than in North Korea, Cuba, most Islamic nations, most African nations, or any active war zone such as Syria or Libya.

      Yes, things are bad economically, and coronavirus is revealing the chinks in the armor of Western governments. However, there are still many places that are even worse, and it is wise to keep things in their proper perspective.

  13. Michael Engel says:

    1) US 3M = (-)0.038, first ever NR.
    2) SPX entered Feb 2018 support line. It became a thud, an upthrust.

  14. Konstantinos Spingos says:

    In Greece, many professions were qualified to be eligible for a lump sum of 800 Euros and the suspension of insurance and tax payments until September 2020 without interest. Their employees may be temporarily suspended from work and also receive a lump sum of 800 Euros or be offered half-time and salary reductions. Of course no one can predict what the decicions will be in the second month into COVID crisis.

  15. bruce says:


    I asked this on another thread but does anyone know how a private investor can create a hedge similar to the one Bill Ackman used this week to make approx. 100x’s profit. Forbes does not provide much details on what this hedge really is???

    • sunny129 says:

      Contact SEC and Hedge Fund association, if there is one! Just like private Equity business there are regulations for the creator and those who invest in it!

      Bill Ackman is a veteran in creating & closing and reopen another, if the first one fails! This is the usual modus operandi in Hedge fund business.

      just like any one open a MFund, there are regulations/standards at SEC!

    • Counterpointer says:

      If he did it for 100x profit then you can bet it looked insane, required very deep pockets, and steel balls. My guess would be aggressive index shorts, paired with something like levered TVIX puts all the way up to 70, depending on where in the term structure he was nailing the strike price. It has to be incredibly cheap to place and maintain, and give the appearance of less than roulette odds or asteroids striking the earth to pay off. I haven’t seen anything move that far or that fast in fx or the credit universe. Fx crosses have been pretty tame, in relative terms. Credit’s just getting going. and there are bailout cross-currents to navigate.

      So it’s not technically a hedge. It’s a massive speculative bet.

    • 2banana says:

      There are plenty of 3x and 5x “shorting the market funds” you can buy.

      Mortgage your house. Take out every cash advance on your credit cards. Empty your bank accounts. Borrow everything you can. Buy the ETFs on margin.

      So now you have 5x with leverage. With enough leverage you too can get 100x

      • Counterpointer says:

        Give me a fulcrum and a long enough lever and I shall lift the world.

        – Archimedes LLC, domiciled in Delaware

        • Lisa_Hooker says:

          I built this fantastic lever but they keep moving the fulcrum closer and closer to me.

    • Optimist_Tim says:

      It sounded like he bought index put options or a spread involving them in early March when prices were low, before volatility jumped. He talked about limited downside from the positions. Buying them far out of the money with fairly short terms until expiry could get those kinds of returns when prices collapse and volatility explodes from a low level.

  16. Unamused says:

    The pain in Spain is mainly bankers’ gain.

  17. Jeff Relf says:

    Gig workers are getting slaughtered.

    1979: Apocalypse Now
    2020: (Zombie) Apocalypse Now

    • Social Nationalist says:

      Not if your a American in the troubled Senate bailout package. A year full of salary(though it may die due to the excessive nature of the transfers, which were used to bribe Senators to support the Russians gangs slush fund) for gig workers.

  18. Bill says:

    You should consider moving to Portugal.

  19. Paulo says:

    This is a terrible story and situation. It is why people go into crime, if you want my opinion.

    • Wolf Richter says:

      Nick’s gonna work his butt off for WOLF STREET and that will help him a little to get through this. But other self-employed workers don’t have three legs to stand on, and when two fail, still have one that they can concentrate on.

    • Lisa_Hooker says:

      It explains why smuggling and black markets are honorable businesses.

  20. Michael Engel says:

    1) Bill Gates will not get a dime, but he doesn’t care.
    2) Demand for high quality collateral, especially for the most desire
    3M, sent 3M to NR for the first time.
    3) To fight the sudden shutdown the market need liquidity.
    4) When Congress will approve new $2T debt , US treasury will issue plenty 3M to finance this debt. That’s even more important than we will be getting $1.2K from the US gov.
    5) The more 3M notes circulate in the market, the more collateral there is for the shadow banks, foreign banks….which borrow in the repo market.
    6) It might solve the current bottleneck created because the prime dealers are hording, starving their clients, who need them the most.
    7) $1.2K will not lift Bill Gates net worth, but the troubled global
    market will be flooded 3M notes. It will relieve the system quench
    for a top quality collateral, at least for a while.
    8) While the 3M was underwater, the long duration are rising.
    9) The German 2Y and 10Y are rising as well.
    10) Tomorrow, with millions in the unemployment line might send
    the market down.

  21. backwardsevolution says:

    Nick – I am sorry for your situation. Your wife out of work, your mother-in-law losing money on the Mexican peso, you losing your employment. Hopefully this will all be over very soon. The Spanish government are being very short-sighted on this.

    Visca el Barca! Look after yourselves, and look after Messi!!!

    • Nick Corbishley says:

      Thanks, backwardsevolution, for your words of concern and encouragement.

      For the moment, we’re doing quite well all things considered. I can still write, read and do my ta ichi, my wife can still do her yoga, paint and tend the plants on our balcony and my mother in law can still read her books and was just given access to our HBO account (something we may regret further down the road). In sum, we’re staying active, physically and mentally.

      I reckon Messi will be alright, too. Given his huge value to the club, I imagine Barca will have him behind a fortress that is impenetrable to any virus, no matter how contagious.

  22. Xabier says:

    Aupa, Don Q!

    ‘No evil lasts a hundred years’.

    I never quite saw the consolation in that saying, though. Supreme Iberian irony, I suppose…… :)

    • Nick Corbishley says:

      Thanks, Xabier, for the “aupa”, it’s most appreciated.

      I’ve always loved the “100 years” expression. It’s one of the more extreme examples I’ve ever encountered of managing expectations downward. And I suppose that if you were living in Spain in the 1940s or ’50s, just to pick one period, the dark times probably did indeed feel like an eternity.

      • Xabier says:

        Spanish proverbs are a course in philosophy in themselves, and of course so many come from Persia and Arabia.

        In hard times I recommend the Basque saying:

        ”Be a man, be a stone’.

        Granite, I suppose! There are centuries of experience in that one.

  23. Paddy Isle Of Man says:

    thanks Nick, very good article.
    I like most small businesses have lost big so far around 90% of my turnover, and we are only just starting here on the Isle Of Man.
    no funding if you are behind on your Taxes so, no boat, no life jacket and no paddle.
    for me what would make more sense is for all Governments to tell the banks, finance houses, utilities, home rental and or office warehouse rentals to be suspended for say 4 months, and on the finance side just add the 4 months to the other side and give maybe £500/£1000 per month to cover for expenses. in other words suspend normal banking for 4 months.

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