Airbus Group, NV - Alestis Aerospace - Enagas - Enresa - Hispasat - Indra - International Airlines Group - Red Eléctrica Corporación -
SEPI-Attached companies: RTVE- Corporación de Radio y Televisión Española
Reference: http://www.sepi.es/default.aspx?cmd=0001&IdContainer=234&lang=&idLanguage=_EN&idContraste =
OECD Guidelines on Corporate Governance of SOEs
Spain bases its policies on the OECD Corporate Governance Guidelines for SOEs. These cover the state ownership function and accountability, as well as issues related to performance monitoring, information disclosure, auditing mechanisms and the role of board oversight of companies.
8. Responsible Business Conduct
As a member of the Organization for Economic Cooperation and Development (OECD), the Spanish government has taken some measures to promote the OECD Guidelines for Multinational Enterprises; Spain’s National Contact Point can be contacted here:
http://www.comercio.mineco.gob.es/es-ES/inversiones-exteriores/punto-nacional-contacto-lineas-directrices/Paginas/El_PNC.aspx
Spanish companies consider corporate reputation, competitive advantage, and industry trends to be the major driving forces of responsible business conduct (RBC). Initiatives undertaken by the EU and international organizations such as the OECD have influenced companies’ decision to incorporate a due diligence approach to RBC. Associations and fora that bring together the heads of leading corporations, business schools and other academic institutions, NGOs and the media are actively contributing to the advancement of RBC in Spain. Although the visibility of RBC efforts is still moderate by international standards, in the last two decades there has been a growing interest in it. Today, almost all of Spain’s largest energy, telecommunications, infrastructure, transport, financial services and insurance companies, among many others, have indicated some recognition of the importance of RBC to their operational success.
9. Corruption
Spain has a wide variety of laws and regulations addressing corruption. The legal regime has both civil and criminal penalties for corruption, bribery, financial malfeasance, etc. Giving or accepting a bribe is a criminal act. Under Section 1255 of the Spanish civil code, corporations and individuals are prohibited from deducting bribes from domestic tax computations. There are laws against tax evasion and regulations for banks and financial institutions to fight money laundering terrorist financing. In addition, the Spanish Criminal Code provides for jail sentences and hefty fines for corporations’ (legal persons) administrators who receive illegal financing.
In 2010, Spain’s Law 10/2010 transposed the third EU money laundering Directive (Directive 2005&60/CE) of the European Parliament and the Council of Oct. 26, 2005. Law 7/2012, restricts the size of cash transactions, a measure to reduce Spain’s large underground economy. In 2013, the Parliament approved the Law of Transparency aimed at reducing corruption among public officials. The Law applies to Public Law Corporations, the House of His Majesty the King, Congress, judicial entities, as well as the Bank of Spain, State Council, Ombudsman, Court of Auditors, Economic and Social Council, and corollary regional institutions. Political parties and unions also must abide by the law, as well as private entities that receive certain amounts of public assistance or subsidies.
Two bills related to the Transparency Law were passed in 2015, the Law of Control of Political Parties’ Economic and Financial Activities, and the Law for the Regulation of Public Office of Officials in the General Administration. The former prohibits political parties from accepting donations from companies and limits donations from private citizens to a maximum of 100,000 euros per year; the latter deters the inappropriate use of official positions and strengthens public institutions.
The General State Prosecutor is authorized to investigate and prosecute corruption cases involving funds in excess of roughly $500,000. The Office of the Anti-Corruption Prosecutor, a subordinate unit of the General State Prosecutor, investigates and prosecutes domestic and international bribery allegations. There is also the Audiencia Nacional, a corps of magistrates with broad discretion to investigate and prosecute alleged instances of Spanish businesspeople bribing foreign officials.
Spain enforces anti-corruption laws on a generally uniform basis. Public officials are subjected to more scrutiny than private individuals, but several wealthy and well-connected business executives have been successfully prosecuted for corruption. From July 2015 to September 2016, 1,378 people faced trial for corruption in a total of 166 cases. Of those, 99 of the 166 were completed, and 73% of them resulted in guilty sentences. In 2017, various high-profile cases of political corruption within the major political parties in Spain will be prosecuted. Of note, even members tied to the royal family have been prosecuted for corruption charges, an attempt by the government to demonstrate that Spain is attempting to address the perception of impunity.
There is no obvious bias for or against foreign investors; U.S. firms have rarely identified corruption as an obstacle to investment in Spain. Although no formal corruption complaints have been lodged, U.S. companies have indicated that they have been disqualified at times from public tenders based on reasons that these companies’ legal counsels did not consider justifiable.
Spain’s 2016 rank in Transparency International’s annual Corruption Perceptions Index was 41. Transparency International noted a lack of legal protections for whistle-blowers and the public perception that addressing corruption is politicized. Among the Spanish public, corruption continues to be one of the main concerns, second to unemployment.
Participation in International Anti-Corruption Initiatives
Spain is a signatory of the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery and the UN Convention Against Corruption. It has also been a member of the Group of States Against Corruption (GRECO) since 1999. OECD has noted concerns about the low level of foreign bribery enforcement in Spain and the lack of implementation of the enforcement-related recommendations.
Resources to Report Corruption
Ministry of Finance and Public Administrations
Alcalá, 9
28071 Madrid, Spain
34 91 595 8000
sugerencias.portal@meh.es
informacion.administrativa@minhap.es
Transparency International
National Chapter - Spain
Fundación José Ortega y Gasset
Calle Fortuny, 53, 28010 Madrid
Spain
Telephone: +34 91 700 4105
Email: transparency.spain@transparencia.org.es
Website: http://www.transparencia.org.es/
10. Political and Security Environment
There have been periodic peaceful demonstrations against austerity measures and other social or economic policies. Public sector employees and union members have organized frequent small demonstrations in response to service cuts, privatization, and other government measures.
11. Labor Policies and Practices
Spain has exited the economic crisis and has some of the strongest growth rates in the EU, although it still suffers high unemployment. The unemployment rate made a downward march, from nearly 27 percent at the height of the economic crisis in 2013 to 18 percent at the end of 2016. This is the first time in six years that Spain’s unemployment rate has fallen below 20 percent. However, with 4.2 million Spaniards out of work, Spain continues to have the second-highest unemployment rate in the EU, behind Greece. The Government of Spain forecasts the unemployment rate will not drop below 15 percent until 2019. The unemployment rate among youth, defined in Spain as those aged 16 to 25, remains high (42.9 percent at year end), leaving a significant portion of the next generation currently without skills, a significant risk to Spain’s long term competitiveness, particularly given the shortage of workers who possess the skills for today’s tech economy.
Popular Party President Mariano Rajoy has promised to create half a million jobs per year, and he came close in 2016 with 413,000 jobs. Jobs growth could be related to the increasing numbers of tourist coming to Spain. In 2016, Spain set a new record with more than 75 million visitors, who spent more than 77 billion euros according to government figures. By regions, employment rose the most in Comunitat Valenciana (+32.6 thousand), Madrid (+27.8 thousand) and Castilla-La Mancha (+13.7 thousand). By sector, jobs were created in agriculture (+72.9 thousand) and industry (+47.8 thousand) while employment fell in services (-112.3 thousand) and construction (-27.8 thousand).
The size of Spain’s labor force is shrinking. The number of people willing and able to work fell by over 100,000 individuals to 22.7 million in the final quarter of 2016, for an economic activity rate of 58.9%. The number of employed persons decreased 0.1 percent to 18.51 million. Employment decreased in both public (-17.8 thousand) and in private sector (-1.6 thousand).
The estimated number of foreigner workers in Spain in 2016 was 1.7 million. The most representative groups of workers come from Romania (310,577), Morocco (216,040), China (95,408), Italy (84,801) and Ecuador (65,999).
In 2016, permanent job contracts rose by 60,200 while temporary contracts decreased by 79,400. The Labor market reforms in 1994 and 1997 eased impediments to hiring and firing but did not fundamentally change the labor regime. The labor market is divided into permanent workers with full benefits and temporary workers with few benefits. Labor market reform legislation enacted by the parliament in September 2010 aimed to encourage the use of indefinite labor contracts by reducing the number of days of severance pay under these contracts. In January 2011, government, business and labor agreed to a pension reform that increases the legal retirement age from 65 to 67 over a 15-year period beginning in Jan. 1, 2013, and gradually increases the number of years of contributions on which pensions are calculated.
After consultations between business and labor organizations, the government introduced a labor reform decree in 2012 that included new provisions related to collective bargaining, hiring, and job placement. The law makes dismissal quicker and less costly, and gives more power to businesses to change working conditions and wages. In 2013, the Minister of Employment announced changes to the 2012 labor reform to promote hiring consolidating the incentives that were scattered throughout Spanish legislation into a single chapter of the Law of Employment in order to facilitate hiring. In 2013, the Parliament approved a further reform of the pension system, in order to guarantee the sustainability of Social Security, introducing a sustainability factor, a new indicator for the revaluation of pensions, and the creation of an independent fiscal authority that is responsible for reporting on the effects of the law and adequacy of pensions.
In 2014, the government approved a Royal Decree on a special program for the activation of employment. According to the Minister, this was the government’s response to the Eurogroup’s demands for a second round of labor reform. In 2015, the government approved an extraordinary credit of EUR 850 million to fund during 2015 the Activation Program for Employment, which is aimed at long-term unemployed with family responsibilities. It is estimated that the program will have a total annual cost of over EUR 1 billion. The program was renewed for one more year and the latest application period will end by April 15 2017. This program will come to an end by Oct. 15, 2017 if not renewed. Over 400,000 unemployed people are expected to benefit, (about 350,000 of them in the first year). Andalusia, Valencia, Catalonia and the Canary Islands will have the highest number of beneficiaries.
Collective bargaining is widespread in both the private and public sectors. A high percentage of the working population is covered by collective bargaining agreements, although only a minority (generally estimated to be about 10 percent) of those covered are actually union members. Under the Spanish system, workers elect delegates to represent them before management every four years. If a certain proportion of those delegates are union-affiliated, those unions form part of the workers’ committees. Large employers generally have individual collective agreements. In industries characterized by smaller companies, collective agreements are often industry-wide or regional. The reforms enacted in 2012 gave business-level agreements primacy over sectoral and regional agreements and made it easier for businesses to opt out of higher-level agreements. They also required collective labor agreements to be renegotiated within one year of expiration.
The Constitution guarantees the right to strike, and this right has been interpreted to include the right to call general strikes to protest government policy.
12. OPIC and Other Investment Insurance Programs
U.S. Overseas Private Investment Corporation (OPIC) insurance is not offered in Spain. Various EU directives, as adopted into Spanish law, adequately protect the rights of foreign investors. Spain is a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which provides political risk insureance.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
*Ministry of Economy, Industry and Competitiveness, http://www.comercio.gob.es/es-ES/inversiones-exteriores/informes/Paginas/presentacion.aspx
Table 3: Sources and Destination of FDI
Table 4: Sources of Portfolio Investment
14. Contact for More Information
Ana Maria Waflar
Economic Specialist, U.S. Embassy Madrid
(34) 91 5872290
waflarax@state.gov
Tags
Bureau of Economic and Business Affairs Bureau of European and Eurasian Affairs Spain
Source: U.S Department of State, Bureau of European and Eurasian Affairs
