reasons of political patronage and make seemingly random decisions to close businesses simply to justify their existence.
Self Employment. Once upon a time nearly all of Spain was self employed. There weren’t as many social supports then as now and some structure had to be introduced but the high costs associated with registering as self employed (Autónomo) has shrunk the number of people doing this even during an economic boom. The principal gripe is that you have to pay a monthly fee of €250 irrespective of whether you have any income that month. Frans Bakker, who has lived now in Spain for 15 years, wrote a widely retweeted blog entry comparing the system for the Self Employed in Spain with his native Holland. He wants the rules for Autónomos changed so that the sector can act as a buffer against unemployment in times of crisis. Right now, the inflexibility of the rules is just driving people into the black economy.
Employment Contracts. Mark Suster, a Venture Capitalist at GRP Partners in Los Angeles, had a must read post on Techcrunch in May 2011 titled: “Startup Mantra: Hire Fast, Fire Fast” He argued that as “No startup company has any
32 entrepreneurcountry
spare capacity for dead weight” that a key element to success at a start-ups is the ability to fire at will. Most entrepreneurs would prefer to give people a chance and see how they do but as the law stands, both the cost of employing them (including Social Security) and the cost of dismissing them (redundancy) are very high. Again some creative thinking is called for. During the early stages of a startup, it would be nice to have an employment permit to allow you to hire/fire easily. Even nicer would be to have Social Security contributions waved until a certain profitability threshold was reached.
Stamp Duty. Its time to remove the 1% stamp duty payable on share capital increases. It is extremely irritating for an entrepreneur who has just incorporated a business or received financing from a Business Angel or VC to have to hand over 1% just like that. Apart from sending out the wrong message, that the state just takes and never gives, some companies use workarounds to avoid paying this toll so they are born with an absurdly leveraged balance sheet than can later deny them access to further funding.
Internet Regulation. Just leave the Internet alone. No more laws
like the “Ley Sinde” that can close down your web site in 4 days. It just makes the country an unattractive place to set up an internet business and drives away entrepreneurs already here to set up their businesses in other jurisdictions.
Encinar´s post was widely circulated and it continues to be referenced where Entrepreneurship in Spain is discussed. Jesús himself continues to be widely quoted and his message remains the same. He put it very well recently in an article in EL PAÍS: “Entrepreneurs are tired of the government offering some economic help with one hand, and strangling us with red tape with the other. We don’t need subsidies or publicly funded incubation units or municipal innovation centers. We need the government to make it easier to hire and fire people, for VAT to be repaid punctually, and for tax breaks for investors to encourage them to put money into small businesses rather than buying empty apartments. We don’t need the government getting involved, we need a legal and tax framework that will put us on a competitive footing with Silicon Valley. How are we to compete if we can’t even offer employees share options?”
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