Corporate mortality in Spain is at the forefront of Europe: disappearing almost 10% every year and the average lifespan of companies does not reach eleven years
The mortality of Spanish companies leads Europe. Each year, more than 22,500 companies disappear, representing 9.3% of companies in the national territory that have employees, a rate that is almost one and a half points higher than the community average of 7.9%, according to a report released this Monday. published by Cepyme, who denounces that labor costs and taxes are the major ballasts for the growth of companies.
What’s more, looking at the longer term, barely half of Spanish companies with employees (52.7%) survive three years after their creation, again a share significantly lower than the European average (56.3% ) and much lower than that of most partners, far from neighboring countries such as Portugal (64%), Belgium (61.8%), Germany (58.6%) or France (58.5%). And this level drops to 40.4% after five years.
In reality, the average lifespan of Spanish companies is less than eleven years, which is about six and a half years shorter than the European average. In Italy, Portugal and Germany, business life expectancy exceeds 12 years and in the case of Denmark even exceeds 55 years.
This is related to the size of Spanish companies, which are 24% smaller than the European average (it should be taken into account that more than 99% of the Spanish fabric consists of SMEs). In fact, the German company triples its size and the British doubles. This smaller size hampers Spanish productivity, according to Cepyme, highlighting that large firms’ productivity is 2.5 times higher, a gap wider than the community average.
Cepyme’s report suggests that the benefits of increasing the average size of Spanish companies would be numerous: it would make it possible to permanently reduce unemployment, increase the potential growth of the Spanish economy, reduce the budget deficit and reduce debt. Reduce. Promoting business growth so that the substance has the same composition as the European average would make it possible to create 1.3 million jobs, increase gross domestic product (GDP) by 5.5%, increase sales by €268,500 million. increase would help increase the wage bill by €32,000 million and, according to the study’s estimates, raise collections by €22,000 million.
However, the employers’ association of small and medium-sized companies blames the government for this smaller size, as it causes the Spanish tax system to block the growth of SMEs, which have to pay the third highest social security contributions in Europe and corporate taxes. and the income tax is also one of the highest on the continent. In addition, the smaller company is less effective in deductions and is more affected by high direct taxes. They, in turn, complain that the minimum wage, which stands at EUR 1,000 a month after an increase of more than 40% in just five years, is proportionally the most expensive in Europe (more than 54% of the average wage), making it directly more expensive the minimum labor cost to hire and prevents the creation of more jobs.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
