News, August '09

Government in crisis launches Plan E

PlanE work under way in Mallorca

May 22nd. In March the government announced that it would support immediate borrowing by town councils for minor works to employ recently laid off building workers: Plan E. Now a new scheme to subsidise car sales gets the same name: Plan 2000 E. What happened to plans b to d? Could it be that this is the very last hope before 'F'?

Desperate measures are being undertaken by the government to keep Spain at work. In March the government announced a scheme to underwrite small loans taken out by town councils to do jobs which need doing, but are not covered by local budgets, such as minor repairs or small street paving jobs. all to keep the unemployment figures under control. Over 2 million have lost their jobs in a year, doubling the figure at January 2008. Sadly, the scheme will not last long enough to keep these workers indefinitely out of the statistics, but it is a great help to the many, particularly those of the more than 800,000 families with all their members out of work.

Likewise there is fear that the auto industry, which built 2.8 million cars in 2007, will collapse altogether if no incentives are available to buy cars. The old VIVE plan, subsidising loans was as good as dead, so something new needed to be put in place to revive sales, such as the German scheme. Now manufacturers, national and regional governments have put together to offer a 2000 € discount on new car sales where an old one is retired: Plan 2000E.

Nevertheless, many voices, notably the governor of the Banco de España, are calling for radical overhaul of employment law, to encourage firms to hire workers on long-term contracts. This would require a reduction in lay-off pay. The Economist reports.