Questions and answers on Spain’s second payment request under NextGenerationEU

(Source: European Commission)

How did the Commission assess Spain’s second payment request?

On 30 April 2022, Spain submitted to the Commission a request for the disbursement of €12 billion in non-repayable support (net of pre-financing) under the Recovery and Resilience Facility (RRF). The request was based on the achievement of the 40 milestones and targets for the second instalment, as outlined in the Council Implementing Decision approving the plan. They cover investments and reforms in the areas of green and just transition, the labour market, pensions, regulated professions, digital connectivity and R&D. Other areas covered are healthcare, education, support to vulnerable groups, entrepreneurship and micro-enterprises, prevention of tax fraud and green taxation, as well as effective and sustainable public spending. The Commission carried out its preliminary assessment of the request within the two months period foreseen by the RRF Regulation.

With their request, the Spanish authorities provided detailed and comprehensive evidence demonstrating the fulfilment of all 40 milestones and targets. As required by the RRF Regulation, Spain has also confirmed that measures related to previously satisfactorily fulfilled milestones and targets have not been reversed. The Commission has thoroughly assessed this information before endorsing the positive preliminary assessment of this payment request.

What are the next steps?

The Commission has now sent the positive preliminary assessment of Spain’s fulfilment of the milestones and targets required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC’s opinion, to be delivered within maximum four weeks, should be taken into account in the Commission’s assessment. The Commission will adopt the decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee. Following the adoption of this decision by the Commission, the disbursement to Spain would take place. The amounts disbursed to the Member States are published in the Recovery and Resilience Scoreboard. The Commission has also shared its positive preliminary assessment with the European Parliament.

How do the milestones and targets achieved by Spain so far effectively support the green transition?

The acceleration of the green transition is supported by several reforms enacted by Spain in the context of its second payment request. These include regulatory measures to support investments in energy-efficient renovation and national plans to promote electricity self-consumption and to support the development of offshore wind and other marine energy. Spain has also adopted a strategy that sets up a comprehensive framework for the development of a more sustainable, secure and connected mobility.

Spain has also adopted a reform that introduces taxes on non-reusable plastic packaging and the deposit and incineration of waste to promote the circular economy and reduce the use of single-use plastics. Spain has adopted a plan to support a more efficient and sustainable irrigation system to help address the challenge of water scarcity in Spain.

Measures enacted also seek to ensure that the green transition leaves nobody behind. In the context of its just transition plan, Spain has adopted the regulatory framework for a training aid programme to provide people affected by the transition to a low-carbon economy with vocational qualifications and to integrate them in the labour market. Spain has also taken steps to support the economic development of municipalities and territories in their transition to a low-carbon economy.

How do the milestones and targets achieved by Spain so far effectively contribute to the digital transition?

While milestones and targets related to the digital transition are more concentrated in other payment requests, there are some important measures included in the second payment request which contribute to this goal.

For example, Spain has taken steps to support and accelerate the shift to 5G mobile communication with the implementation of measures on spectrum allocation and with the adoption of a legal act for the temporary reduction of 5G spectrum taxation to accelerate 5G deployment. Within the framework of the Spanish National Artificial Intelligence Strategy and before the January 2022 Commission proposal for a declaration of rights and principles that will guide the digital transformation in the EU, Spain adopted a Digital Rights Charter which suggests principles and policies to address the new challenges arising from Artificial Intelligence and the digital environment, including actions expected from the public authorities. Steps have also been taken to digitise schools, with the approval of the programme to equip classrooms with digital equipment, train teachers, prepare or revise the digital strategies, and provide digital devices in public and publicly subsidised schools.

Finally, some of the measures supporting the green transition related to this request will also support the digital transition. For instance, the Strategy on mobility also includes measures to enhance the connectivity of the transport system, including multimodality, through the digitalisation of networks.

How do the milestones and targets achieved by Spain so far contribute to improving Spain economic and social situation, and its resilience?

As part of its second payment request, Spain has adopted a transformative package of labour market reforms with the agreement of social partners. These include:

  • measures to simplify and reorganise the menu of employment contracts, to reinforce the use of open-ended contracts, including for the performance of discontinuous activities (‘fijo-discontinuo’), and to restrict the use and duration of temporary contracts with the aim of addressing labour market segmentation;
  • measures to strengthen the control in the use of part-time contracts and the fight against labour fraud; and
  • the establishment of a permanent scheme (the so-called ‘RED Mechanism’) to adjust to cyclical and structural shocks, by covering the suspension or reduction of working time through an employment regulation plan that includes a requirement to improve or retrain workers in the skills identified as being in demand.

Further to the approval of the Action Plan to tackle youth unemployment, which was part of its first payment request, Spain has taken additional steps to strengthen its active labour market policies through the enactment of a new Spanish Employment Activation Strategy 2021-2024.

Finally, Spain has regulated the work of home distributers by digital platforms (riders) to ensure that they get a fair and equal treatment in terms of working conditions.

The Commission expects these measures will help address structural challenges in the Spanish labour market, and their outcomes should be reinforced by other reforms and investments envisaged in later instalments of the plan, such as the reform on active labour market policies, the digitalisation of public employment services and the improvement of digital skills and educational outcomes.

Spain has also taken measures to support the twin transition of several economic sectors, such as measures to move towards more sustainable tourism. More broadly, measures have been taken to reform the university system and, in the field of research and innovation, to improve coordination across national and regional administrations thanks to agreements to implement coordinated R&D plans.

Concerning the resilience of its health system, Spain has adopted a plan to strengthen primary care in its National Health System. This should help improve responses to new health problems and prevent diseases, as well as reinforce the capacity of primary care. In order to address the obsolescence of existing equipment in its National Health System and interregional differences in its distribution, Spain has adopted a plan for the award of €796.1 million in grants to be invested in high-tech equipment.

Spain has also adopted measures that contribute to further increasing the quality and efficiency of its public expenditure and the effectiveness of its tax collection system, which will help ensure public finances sustainability. In addition, Spain has enacted a first set of pension reforms to preserve its adequacy, protect pensioners from poverty and incentivise workers to postpone retirement. As part of this package, Spain has already enacted the reform replacing the former sustainability factor by a new intergenerational equity mechanism. This latter reform will be assessed as part of the fourth RRF payment request of Spain, along with other remaining elements of the overall pension reform: in line with the Council Implementing Decision approving the plan, the overall package of reforms needs to ensure the financial sustainability of the pension system.

Does the achievement of these milestones and targets contribute to an effective implementation of the Plan?

Some of the milestones fulfilled constitute significant steps in the implementation of Spain’s recovery and resilience plan, and of its broader reform agenda. For example, Spain has made the National Evaluation Office for public procurement fully operational. This is an important step towards a governance structure that will support a consistent public procurement framework, ensuring transparency, effective control mechanisms, interconnection of public procurement databases and coordination across government levels. This framework should also ensure that investments included in Spain’s RRP that will be awarded based on public procurement are conducted in the most efficient way.

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