When a company's costs rise - what it pays for raw materials, electricity or the salaries of its employees - it usually chooses to increase prices to compensate it, at least in part, and try to ensure that its profits do not suffer or do not suffer. to such an extent. This defense mechanism, however, does not exist for companies whose client is the Public Administration, which has prohibited this possibility.
This veto was included in the 2015 Law on the Deindexation of the Economy, which, among other things, prevents a company that has a contract with the public sector in force from updating it during the course of the contract if it suffers a sudden increase in costs. something that in the current environment is being the last straw for many companies.
The concern is such that even the employers, CEOE and Cepyme, and the unions, UGT and CCOO, have asked the Government to put letters in the matter, but from Moncloa nobody makes a move. A change in the law that would allow contracts to be updated would entail a high public outlay.
"The perfect storm has occurred: the law has been in force since 2015, but we did not expect a pandemic, nor a skyrocketing CPI, nor the increase in costs caused by the labor reform, nor the increase in contributions due to the pension reform, nor neither is the war in Ukraine...we are at the limit of our survival while the Administration is unjustly enriching itself," denounced Cristóbal Valderas, president of the Clece group, in an interview with EL MUNDO.
The company, owned by ACS, offers cleaning services, public hospital maintenance, home help, day centers, residences, gardening and maintenance, among others, and employs 85,000 workers, 85% women. It is present in Spain and also in the United Kingdom -where it has 6,000 employees- and Portugal -some 1,200-; and 80% of its work is for the Administration, which is why it is a victim of the Deindexation Law.
"We have had to abandon 160 public contracts because the prices are not updated. In some cases we have managed to get the specifications published again and, when we saw the conditions, we have not presented ourselves," he says. This is what has happened with the management of the Reina Sofía Foundation Alzheimer's Residence, which they have been in charge of for 17 years, since its opening.
They have not submitted to the new contest and it has been awarded to another company. "The result has been that in the end the services deteriorate and the users complain, but the deficient management is not only the fault of the company", he laments.
Faced with these complications, other large companies in the sector, such as Ferrovial or Sacyr, have chosen to sell their services unit to venture capital funds. But the impact is also perceived by smaller companies, which do not have as much muscle, such as BCL Facility Services, a Madrid company that employs 10,000 people throughout Spain and offers cleaning, maintenance, auxiliary and environmental services, among others, to the state, regional and local Administration. If you update the price of the contracts, you could facilitate higher wages for your workers.
"In some cases we are trying to open the possibility of a contract termination by mutual agreement but, even if we succeed, they are not immediate, they can last between 9 and 12 months to be executed and this leaves us in a defenseless situation and in business losses, and a company in losses cannot endure forever", complains Rosa Ferrando, the company's general director, in statements to this medium, while lamenting that "Spain and Italy are the only EU countries that do not have the possibility of reviewing prices".
For his company, the rise in the Minimum Interprofessional Wage (SMI) to 1,080 euros has been the last straw. "It affects us because we have agreements that are below the SMI and now we have to match those salaries while we continue to negotiate general salary increases. In our agreements, none have been closed in 2022 with increases of less than 3.5% and some punctual is at 16%. 86% of the costs of service companies come from direct labor, but the Administration does not let us pass anything on, we have a brutal hole, "he says.
SMEs and the self-employed also suffer from this situation. "Around 500,000 self-employed workers work directly or indirectly with the Administration and are seriously affected by the Deindexation Law. In recent years, labor costs derived from the SMI have risen, for example, by 60% and these contracts have risen by 0% ", says Lorenzo Amor, president of ATA.
Pedro (fictitious name) is one of these freelancers whose company offers services in the Canary Islands, Andalusia, Madrid and Catalonia, through some 25 public contracts. "With the rise in prices and the increase in the SMI, without the contracts being reviewed, it becomes literally unsustainable for the companies and it directly kills the small ones," he points out in conversation with this newspaper. "When the second vice president says that raising the SMI makes people happier, she does so at the expense of small businessmen like us. We signed a contract with the Administration for a value with estimated costs, now those costs are raised by the public sector and I eat them because you have to make people happy", he complains. He does not want to say his real name because as part of the adjudications are made according to subjective criteria, he fears that the Administration will penalize him for speaking publicly about this problem.
Javier Sigüenza, general secretary of five multi-service employer associations associated with the CEOE -AMI (maintenance and energy services), ASEJA (green infrastructure management), ASADE (home care), ADHAC (heat and cold networks) and APCTA (liberalized air traffic) - regrets that the Government has allowed price revisions in some works contracts, but not in services, "considered third level".
The Deindexation Law in principle seeks to prevent increases in line with inflation from generating even greater price increases, something that Sigüenza rules out: "It is not true, it will not inflate, because you are talking about services to the citizenry... because the The Ministry of Defense pays more for its cleaning, inflation will not be generated, otherwise it would not have been done with the works," he explains.
The construction sector has had the opportunity to review the prices of the specifications, although the employer regrets that very few have been able to benefit from it.
"The Royal Decree cannot be applied to 90% of the works, in practice very few have been favored. Some companies have been able to review the price of some of their works and not others, because they are seen work by work. Those that can be favored are those in which there is a time lag from the date on which the contract was formalized to the date on which the works were carried out," the National Construction Confederation (CNC) explained to this newspaper.
Given that prices have grown so rapidly in the last two years, those works in which this time difference has not been met have had to assume the increase. "Usually the review is applied to works that last a long time, which are normally carried out by large companies. Those have had the right to review, but the small ones almost none," he points out. He figures the total revisions at around 300 million euros, but they have focused on very few works
Alberto Martín is the owner of a construction SME that has 12 employees and operates in Andalusia. "For a couple of years we have been bidding for public works. Until then we had worked for the private company but we decided to explore this route. Right now we have problems with the Granada City Council because we have a work in progress that was awarded in December 2021, but until May 2022, the contract was not signed," he told this medium.
"The project has many deficiencies and cannot be executed. The work is stopped due to the modification of the project but we cannot review prices, more than a year has passed and we do not have the option of reviewing prices, which has impacted our margins up to the point that the work is no longer profitable for us. I am evaluating the possible ways and insisting that they review the prices. If I do not succeed, I will try to contemplate what options we have to terminate the contract in an agreed or unilateral manner".
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