Cañete la Real is one of Spain’s growing number of tiny towns with huge debts. With no more than 2,000 inhabitants the town hall owes more than 580,000 euros in unpaid social security contributions on behalf of employees. An astronomical amount bearing in mind that only 24 people work for the local corporation.
Cañete is one of the ten municipalities in the province of Malaga that are behind with their payments according to statistics for the month of June provided by the Tesorería General de la Seguridad Social. In total the town halls have negotiated, or are due to negotiate, the payment of more than 240 million euros. The figure rises to more than 300 million if the social security debts of municipal companies are included in the total.
Top of the list of debtors are Marbella and Torremolinos, who owe so much that they are dealing directly with Madrid. In the case of the former, money owed to the Seguridad Social was as much as 190 million last year. In Torremolinos neither the local government nor the opposition have revealed the current extent of the debt, which in 2009 was 41 million euros, according to the local authority.
The list continues with Estepona, Arenas, Guaro, Manilva, Sayalonga and La Viñuela as well as Cañete la Real. In Vélez-Málaga it is only municipal firms that owe money.
Town halls can apply to pay off the debt in instalments without having to put up a guarantee. However they can only negotiate the part payable by the employer and not the workers’ contribution deducted directly from their wages. Municipal firms on the other hand do have to provide a guarantee and if they fail to meet the payment plan negotiated they have to surrender assets.
If the town halls fail to comply with the negotiated plan, three opportunities to rectify are given, after which the town’s share of state income (income tax and VAT) is seized. Social security sources explain that this threat is the reason why there are relatively few local authorities with this type of debt, as many survive exclusively on this allowance from the state.
The 190 million euro debt run up by Marbella council is inherited from the ‘GIL era’. This, along with another 77 million euros owed to the tax office, obliges the Town Hall to pay a million euros a month just to cover interest. The debt was run up between 1991 and 2006.
Town Hall sources point out that Estepona’s social security debt, at more than 50 million euros altogether, is also an inheritance from previous local governments. The council is currently paying back 500,000 euros a month.
Meanwhile the mayor of Cañete la Real, Josefa Jurado (PSOE), admits to feeling “overwhelmed by problems” pointing out that she too discovered the situation when she came into office. However the 580,000 euro social security debt is not her only headache. The 24 council workers have not been paid for five months.