Low-interest loans for companies that create employment

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The Spanish Ministry of Labour reached a preliminary agreement in May 1998 with the State Confederation of Savings Banks for these institutions to grant low-interest loans to companies that create employment.

Spanish savings banks (cajas de ahorros) are credit institutions with a special status. They operate freely according to market criteria and can offer the same services as banks. However, they have the legal status of private foundations with charitable aims because they return a percentage of their profits to society through charitable work. They specialise in small savings and finance for families and small and medium-sized companies. They also have strong local roots, a dense network of branches and a mainly regional base.

This special status is what made it possible in May 1998 for the Ministry of Labour and the State Confederation of Savings Banks (Confederación Estatal de Cajas de Ahorro) to reach a preliminary agreement for these institutions to grant low-interest loans to companies that create employment. The savings banks have initially expressed their support for the agreement, provided that each savings bank will be free to adopt the plan voluntarily and that the loans are profitable - an aspect on which the Bank of Spain has placed special emphasis. The agreed formula is to create a joint commission between the Ministry and the Confederation to study the projects that are submitted and to transfer them subsequently to the savings banks interested in financing them. The Ministry will reward the institutions that join the agreement symbolically with the title "Collaborators in the National Employment Plan".

The objective is to generate cheap finance for small and medium-sized companies and professionals which generate employment. Priority is also given to plans that involve jobs for women and groups that find it more difficult to enter the labour market, such as those aged over 45. At present, the lowest interest rates are available only to large companies that have a greater capacity to negotiate their loans. Small and medium-sized companies find loans far more expensive, especially if they have been set up recently.

The preliminary agreement has been reached at almost the same time as the signing in Catalonia of the first pact for employment (ES9805154F) after the November 1997 Luxembourg Employment Summit (EU9711168F). It is significant that all the signatories of the pact - government, employers and particularly trade unions - have called for the participation of the savings banks in the agreement. Up to now, the charitable work of the savings banks has not been directly linked to employment: if the agreement ends up by being ratified, it will be an important step in the fight against unemployment.