Andorra la Vella, April 12, 2020
Easter Sunday, 2020, Andorra’s Cap de Govern, Xavier Espot Zamora, took to the podium to explain the new economic and social measures to be taken to alleviate the consequences of the health crisis:
Soon it will be a month since we decreed the first measures to suspend activities and to introduce confinement to deal with the health crisis of the COVID-19 pandemic. As I told you in one of my first appearances, this crisis turns what we find unthinkable one day, into the reality of the next. Over the course of these weeks, we have all become accustomed to living with this new reality, and we have adapted – with effort and resignation – to the new situation.
The measures of confinement and suspension of activities that we decreed may, at one point, have seemed excessive. But now no one doubts that they were completely justified. I have always told you that our priority was to tackle the health crisis triggered by the pandemic and that we would not save any efforts in this fight. That is why we decreed home confinement when we had the first signs of community-acquired coronavirus infection in our country.
It was not easy for me or any policy maker to make such a decision, which implied limiting people’s freedom of movement and to place in serious difficulty the economic fabric of the country. But the Government has always been guided by scientific criteria and the decisions of the health authorities. And it is with this same rigor and this honesty that today we can say that we were not in a rush, that confinement actions were what were needed at that time, and that, thanks to those difficult decisions, Andorra has been able to cope with the pandemic without suffering the collapse of the health service, ensuring that all people have received the necessary medical care and that every effort has been made – and is being made – to save human lives.
Over the past few days we have seen the contagion curve flatten and above all, the number of active cases of coronavirus begin to decline. This has only been possible thanks to the involvement of everyone, each one from his own position of responsibility. To the extent that today, several international institutions and media outlets speak of the “Andorra Model” as one of the examples to be followed in dealing with the health crisis.
Precisely because this crisis has come to attest to the death of almost all certainties and to shatter a good part of our plans, it would be hasty to draw conclusions now from each country’s management of this health crisis; but, if the trend we have begun to see, consolidates and we can speak of Andorra as a model, the merit will always be a shared one.
First of all, by the health authorities and all the people who work in the public health system and in the rest of the health, socio-sanitary and emergency services. Because, thanks to them, who are on the front line of the crisis, we are facing this situation with guarantees.
Secondly, Andorra is, and must continue to be, a model of citizen responsibility. Addressing the COVID-19 pandemic would have been impossible without the responsible actions of the great majority of the citizens of this country. By staying at home, respecting the measures of physical distance and following the instructions of the authorities, you have helped to reverse the contagion curve and prevent the healthcare collapse. Thank you very much.
And third, but not least, Andorra has, during these days, also been a model of political consensus. The loneliness of those who have taken responsibility for governing this country is often mentioned. Throughout these weeks, however, my team and I have been joined by the counsellors (MPs) and the “Consell General” (Parliament) – both from the majority and the opposition – by the Comuns’ cònsuls and “consellers” (councillors), as well as all the people who hold public responsibility: from anonymous public servants to the co-princes and their services.
The exercise of responsibility that we have all shown, from first to last, will allow us, in the coming days, to take measures to relax the rules of confinement and – little by little – resume activity. Any day now the Government will be allowing orderly outings for physical activity and, from next week, we will look at whether the number of commercial establishments which may be open to the public, can be expanded, while at the same time we will open online commerce of non-essential products within Andorra.
To make a gradual return to normal, discipline and civility will be required, and we are convinced that, once again, the vast majority of citizens will respond appropriately, and that the legal tools of enforcement available to us, will not be needed. The State of Emergency and Alert Law, passed unanimously by the General Council a few weeks ago, ensure that the levels of freedom which, little by little the majority of citizens will be regaining, are not affected by the abuses and malpractices of a minority.
From the beginning of this crisis, I have been very clear in explaining to you that the Government’s priority was to tackle the pandemic, to save human lives and to prevent the collapse of healthcare. In addition, we have been taking steps to alleviate the impact of the health crisis on the fabric of the country’s productivity.
We have to be aware that we are dealing with an unprecedented economic crisis. The suspension of pandemic activities has affected all economic sectors, but especially service economies and tourism-related activities, which account for more than half of our gross domestic product.
Also the good management of Andorra’s health crisis, and the gradual return to normality, do not guarantee a recovery of tourist and commercial activity on which many companies and many jobs in our country depend.
The recovery will be slow, the return to normality will not be the same in all economic sectors and the future remains uncertain.
A crisis of this magnitude requires – as I said a few weeks ago – an exercise of co-responsibility. This may not be the same for everyone, but it must be equitable: each must contribute according to their ability; and each must receive according to their need.
To date, everyone has made efforts and sacrifices: salaried people have had to agree to forgo vacations and to accept changes in schedules and functions within the company. The Government has taken part in contributions to the Social Security and is guaranteeing soft loans and deferral of financial operations amounting to €130 million. And the companies have made a great effort: for they will have to pay the full salaries of their employees in March and April, with most activities already suspended or reduced to a minimum; business premises owners have stopped collecting rents and receive almost nothing in return; and financial institutions are making an effort to fund the Government’s spending and investment at interest rates well below what the market would have set.
In the same spirit of co-responsibility, in that sense, we are asking each and every one of us, based on our ability, to confront what we will have to face in the days to come.
The second package of economic measures the Government has been working on – in constant dialogue with all the political forces present in the General Council and with Economic and social agents – is also governed by the principle of co-responsibility,
Tomorrow we will send a bill to the General Council on new exceptional and urgent measures to address the economic consequences of the pandemic that will be applicable – if the councillors give their approval – starting from 1st May.
The main purpose of this bill is to guarantee the survival of the country’s business fabric and, with it, the jobs that depend on it. To achieve this, what we have done is to adapt to the current situation and the idiosyncrasies of our country, mechanisms already provided for in many labour laws in the countries around us.
The formula of the temporary suspension of work contracts and the reduction of working hours, is the one that allows us to achieve, in the most optimal way, the two goals that we have set ourselves: the survival, with co-responsibility, of our production and of jobs. Because it allows on the one hand, for companies, for a few months, to relieve themselves of the burden of having to pay full salaries, whilst guaranteeing that salaried people keep a large part of their income,
Obviously the temporary suspension of work contracts and the other complementary measures provided for in this second law of exceptional measures, are mechanisms that require concessions and efforts from all the parties involved.
Salaried people who have their work contracts suspended will have to accept a reduction in salary, which we want to have make the least impact possible, especially in the case of lower wages. Thus, while those who receive the average salary, at the rate of 2100 euros, will have to temporarily give up 20% of their salary, those who receive 1200 euros will only have to give up 3% of their salary, and those who receive the minimum wage, will have their wage fully guaranteed.
Companies that choose to temporarily suspend work contracts will have to assume part of the wages, which will never exceed 25%, and will also be reduced depending on the salaries involved.
The rest of the costs will be assumed directly by the Government, until reaching, depending on the case, 75% of the salaries.
This formula guarantees that people who normally pay wages between the minimum and the average salary – located at 2,129 euros – will never pay more than 20%. In addition, all those persons affected by a suspension of their work contracts or who have been fired, will be entitled to a reduction of 20% of the amount they pay in rent and to the interest-free deferral of mortgage payments. This means that real estate owners and banks will also continue to bear a part of the burden of this economic crisis.
As I said, the main purpose of this package of measures is to guarantee the survival of the country’s productive fabric and jobs. However, we are aware that some business projects will no longer be viable and some people will permanently lose their jobs. But these people need to be reassured that there will also be supportive measures from the public authorities. For this reason, next week we will approve a modification of the rules that regulate the benefits of involuntary unemployment and the subsidies for housing rents to facilitate access to government help by the people who have been fired in the wake of the crisis.
Also, self-employed workers will have more direct support and support measures in cases where the pandemic has dramatically reduced their income and activity. The law that we will enter into parliamentary procedure tomorrow, provides for a benefit equivalent to the minimum wage for most self-employed workers while their activity is suspended.
We have opted for formulas that apply the principle of co-responsibility equally and, at the same time, are possible for the public sector to manage, though it will take a great financial effort to cope with them.
I would like to share with you this evening a reflection: Andorrans have, since time immemorial, chosen to have a undemanding state structure. Andorra has, for decades, been a country that has given opportunities to many people and where the state is neither an ubiquitous entity nor an unsustainable burden. We have always preferred to leave ample freedom for our citizens, with moderate taxes that did not impinge excessively on the income of individuals and companies. This is our economic and social model: a dynamic society and a State proportional to our needs.
My commitment as head of government is to improve everything that is needed, to correct the defects of this model, to ensure that no one is left behind and for opportunities to reach everyone. But it is also very important that this model, which gives ample space for people, continues to be so in the future. We need to be well aware that every euro the government spends comes from the taxes each and every one of us pays. And that indebting the Government beyond its capacity would mean losing sovereignty and mortgaging our future.
A country that has chosen to have a moderate, not ubiquitous, State is a country that in times of need must be very clear that each and every person has to contribute, to the best of their ability.
Yet you must know that the Government will spare no effort to deal with the difficult economic and social situation we are experiencing. Coping with a very important part of the salaries of people affected by a temporary suspension of contracts, means an expenditure by the Government of between 90 and 120 million euros from now until December, to which must be added another 250 million as guarantees and payment of interest on soft loans, and direct subsidies to companies.
We have just issued a public debt of 125 million euros. And we managed to place it smoothly. But we need to be clear that if these debt issues are possible today, it is because Andorra, despite their fragility, generates confidence. And we build confidence because for years we have implemented fiscal consolidation policies and budgetary rigor. Because we have, as a country, shown that we always keep in mind that public money is taxpayers’ money; and that it is necessary to save in times of boom to have the resources to deal with situations of need, such as the present. This is what everyone does at home. That’s what the vast majority of good entrepreneurs do. This is what our forefathers did, which made Andorra great, and that is what the Manual Digest recommends.
The Government, in constant dialogue with the majority and opposition parliamentary groups, has been working for a few weeks to open international funding channels with the European Central Bank, the French and Spanish banking authorities and the Council of Europe Development Bank. Likewise, we continue to work on the accession of Andorra to the International Monetary Fund, which will help to increase confidence in our country. In this regard, the proposals and contributions of the opposition – “Partit Socialdemòcrata” and the “Tercera Via” – have been very timely and necessary.
As I said, the Government’s contribution to overcoming the economic crisis will be – proportionately – very important. The direct aid that we have set up and will launch is equivalent to 6% of the country’s gross domestic product, significantly above the proportions reached by other European countries with a financial capacity much higher than ours.
This will require new measures to contain the spending in the public sector. We have been working on budget restructuring for weeks now, rethinking or deferring some investments. Obviously, temporary suspensions of employment contracts could also be applied to the civil service, if needed,
But in any case, the budget adjustment must begin and begin with a reduction in salaries for public officials and some charges. at present designated as free. In the coming weeks, I will meet with all institutions to agree on a joint measure to reduce the salaries of political officials, in line with the efforts we are demanding of citizens as a whole.
All these measures are contained in the bill which tomorrow we will send to the General Council for discussion and approval, requiring effort and sacrifice by everyone. Neither I, nor anyone, has a magic formula to guarantee the absolute fairness of all political decisions; especially in an unprecedented situation like the present. What I can tell you is that my team and I have the full intention to adapt our measures to the evolution of this crisis situation.
Exercising government responsibilities is always complex; because it involves finding a balance between diverse, often opposite, interests. This is what people in public office already knew and considered when they took up that office. Now, moreover, this responsibility – which is itself complex – is especially difficult; because the task is to distribute the burdens of one of the greatest economic crises in our history;
in this situation, none of us has anything to gain. What we have to try to do is for us all to contribute our part, so that we are all able to move forward.
We will not get out of this situation by pulling each other onto “our side”. It will be useless to try to get the others to bear a heavier burden, or to think that, by sacrificing one sector of society we can save the rest. These lowdown calculations are part of the past.
Because, if we can learn one thing from the current situation, then, the general interest is more than just the sum of individual interests, because this sum – now and always – offers zero as a result. And this result, at the moment, is the only thing we cannot afford. These difficult times that we are living through requires that we be able to think beyond our particular situation, beyond our own immediate circumstances.
Beyond that, this capacity to think about the other, this general interest that is more than the sum of particular interests … this added value, this is the country, this is the society, this is our homeland.
Andorra was a country long before it had a flag, or anthem, or a seat at the United Nations. Andorra is a country with an ancient national identity without ever having an army, or currency, or other attributes that seem essential to being a nation. Andorra was a country long before – centuries before – being a State. That is why we have a modest state and we want it to remain so. But we also want to have a strong society; and a dynamics one; with solidarity when needed,
Because it is with the exercise of co-responsibility and maturity, that we have shown in recent days that we demonstrate our patriotism. It is with equity and solidarity that we will make our identity stronger. It is with a management of the day to day, of the daily life, from the human measure of things, bearing in mind that people are more than a figure or a statistic, that we will be able to pass this difficult test.
And we shall overcome. Of course. And we will show once again that, in our own way, following our own path and our own recipes, the citizens of Andorra are able to face the challenges of the time we are living through.
And we the Government will continue to devote our full capacity to the job. Do not have any doubt.
Thank you very much,
And long live Andorra!”
Translated by Clare Allcard