“In Spain, we shouldn’t have bailed out the bankers who sank their entities”

By Cruz Sierra, in Valencia | valenciaplaza.com | Bad timing. It must feel at least challenging to become chairman of the employers' association Cierval in the region of Valencia. The autonomous government recently asked Madrid for help to face its debts, while Madrid itself negotiates in Brussels softer deficit targets and the conditions of a banking bailout for the country's financial industry. José Vicente González said in an interview with VP that he agrees Spain needs to change its ways, but criticises that the central government seems unable to cut the waste and excess of the public administration.

One year has gone by since taking the Cierval job. Has it been as tough as you thought it would be?

It has been a tough year for everyone. All employers' organisations have suffered from financial suffocation because the regions' government (Generalitat Valenciana) cannot pay its debts with us. The situation is dire, and most of us have just had to cancel many of our programmes. Our task, that is, to advise companies, has now been very much limited to basics because we struggle even to pay our staff's wages.

Do you support the central government's austerity measures, the VAT rise, the pay cuts for civil servants, the reductions in public services?

A VAT increase is a severe measure that will worsen our domestic demand. Many companies will need to offset this using their profits if they want to keep alive. Yet, I think it is necessary. Half of the latest changes imposed by the central government are linked to mor

e taxes, which isn't good for the economy because it means companies and individuals have less money to spare, but helps to achieve the deficit targets.

What I don't see is the same effort in reducing public spending. Raising taxes has an immediate impact, but trimming waste in the public administration is a must and cannot be delayed any longer. We should be more radical. Public spending can be cut down while preserving areas that promote job creation, infrastructures, technology investment, or our universities. Madrid should explain clearly its plans, so citizens know why they sacrifice today for a better tomorrow.

Wouldn't you agree that big corporations can contribute more to the collective effort and pay higher taxes?

We need a fair fiscal system. I think small and medium size companies need help, they are the roots of our economy. But small or big, the entire industry needs a stable framework.

Is it worth injecting so much capital in banks despite the continued credit crunch? Could we let fail no-viable entities?

No one is happy with the way our banking sector is being rescued, that is true, and companies with no access to credit are the unhappiest. We have been witnesses of deplorable management practices. Employers' associations believe credit needs to be made available again, because profitable companies are on the brink of closing, which means higher jobless rates. Rescuing banks and savings banks to transform them is the right thing to do, but we should not have bailed out the bankers who sank their entities.

Do you agree that Spain's regional government model needs restructuring? As it is, it drops a huge burden on taxpayers every year and scares foreign investment.

We need rigour and fiscal discipline, but Spain needs more federalism, not less. But all administrations must be accountable for their spending, so they do not spend the money they cannot generate.

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