Economic crisis forcing company closures, government is warned it must pay its debts

Based on reports from the Social Security department, a Balearic employment watchdog claimed yesterday that the number of people employed and contributing to the Social Security system has fallen by 5.44 percent within the year. There were 47'985 companies operational in October 2010 with workers contributing to the system whilst just 45'370 were doing so this year.

The figures confirm a trend of company closures, job losses and subsequent elimination of Social Security contributions which has been ongoing since 2007 and intensifying over the past two years.

Cycle of debt
The trend has become so worrying that the Balearic Business Confederation (CAEB) has warned that if the regional government and its local authorities don't start paying off the debts they owe to suppliers of goods and services, further companies are going to “go under” due to financial hardship.

The warning was given by CAEB's president, Josep Oliver, at the presentation of the Confederation's annual report for 2011 yesterday in Palma, detailing social and economic developments over the last twelve months.

Oliver said that between 2007 and 2010, the Balearics had lost 1.85 percent of its business activity, whilst cooperatives were faring better having increased by 4.5 percent during the same period.

Meanwhile, Social Foundation “Gadeso” said that the company closures should not just be looked at in economic isolation. The workforce of the Balearic Islands is also being subsequently “pushed into the wilderness” and that the government needs to establish retraining programmes for the unemployed.

Another important factor emerging from CAEB's report yesterday is that in 2010 there were 46.9 percent less people belonging to professional trade groups than in 2007. Cooperatives gave 8'235 people work in 2009 but just 2'612 last year.