Spain unveils more measures to aid auto sector

14th February 2009, Comments 0 comments

Spain's socialist government said Friday it would allow auto makers to put off paying their social security contributions in 2009 as part of measures to help the sector deal with plunging sales.

MADRID - "As an exception, in 2009 the rules for the payment of debts and contributions to social security will be more flexible," the industry ministry said in a statement.

The government will also extend the period an unemployed auto worker can receive jobless benefits, boost spending on training and lower social security payments to auto plants that improve their safety record.

These measures still have to be approved by unions and auto maker heads, the ministry said.

They are part of a four-billion-euro (5.1-billion-dollar) aid package aimed at helping the country's ailing auto sector that the ministry said was the second-largest such plan in Europe in terms of total funding.

The plan was ahead of a two-billion-euro program in Germany, the statement added, but was less than the nearly nine billion euros offered the sector by France.

The funds will go towards steps aimed at modernizing the sector as well as measures to boost demand for new cars which has dropped sharply in Spain as in the rest of Europe.

The plan calls for the distribution of 800 million euros this year "to help firms in the sector re-orient themselves to products with greater added value, that are more sustainable and safer," the statement said.

It also entails the creation of a 1.2-billion-euro credit line to help boost auto sales and calls for Spain to have one million hybrid and electric cars by 2014.

Car sales plunged 28 percent in Spain in 2008 over the previous year, the largest-ever yearly decline, with consumers cutting back spending as the country headed into its first recession in 15 years.

Spanish automakers have already taken steps to reduce production, including layoffs and temporary assembly line closures, in response to the fall in demand.

"There will be no public aid to companies that destroy jobs in the sector in a definitive way," Industry Minister Miguel Sebastian told a news conference.

Spain is the third-biggest car producer in Europe after Germany and France, according to the Brussels-based European Automobile Manufacturers Association.

The auto sector accounts for six percent of Spain's gross domestic product and it employs directly or indirectly more than 350,000 people, the industry ministry said in its statement.


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