Foreign firms retain business confidence in Spain

Madrid, July 16 (IANS/EFE) More than 70 percent of the foreign companies operating in Spain plan to maintain or increase their staff and investment in 2011, even though a key indicator of the business outlook declined slightly relative to 2009.

Those were the conclusions contained in the latest edition of the Barometer of the Business Climate in Spain, prepared by the government agency Invest in Spain in collaboration with the IESE business school.

The barometer, published annually, asks managers of foreign companies operating in Spain to rate the country on a scale of 1 to 5 in different areas affecting the business climate: an overview of the country, costs, infrastructure and resources and quality of life.

Overall, the companies gave Spain a rating of 2.9 out of 5, which was down from 3.1 the previous year.

Despite that slight dip, the rating means that foreign investors “continue to approve” of Spain’s business climate, Invest in Spain’s director, Javier Sanz, said Thursday.

He added that the foreign firms’ commitment to maintaining and even expanding their workforces and investment next year shows that “foreign companies believe that Spain will come out of its crisis” in the short term.

The barometer found that more than 72 percent of foreign companies plan to maintain or increase staff in Spain and more than 70 percent of those firms plan to leave unchanged or increase their investment outlays in 2011.

Compared with last year’s survey, these results represent an increase of five percentage points and seven percentage points, respectively, over last year’s investment and employment figures.

Separately, 47 percent of foreign investors expect their sales figures to climb in 2011, while 19 percent see a decline and 34 percent expect their revenues to remain stable.

Foreign investors, meanwhile, rated as “very positive” Spain’s infrastructure, quality of life, costs and market size, as well as the access it affords to other countries.

Those same investors, however, complained about a lack of flexibility in Spain’s labour market and said labour costs - especially those associated with dismissals - needed to be reduced.

A total of 304 executives participated in the survey, which was carried out in April, two months before an employer-friendly labour overhaul narrowly approved by parliament last month.

Spain pushed forward with the labour-law change under pressure from the International Monetary Fund and the European Union, which had expressed concern over the health of the Iberian nation’s deficit-ridden economy.

Foreign investors also said that the language skills of Spanish workers were in substantial need of improvement and did not meet their expectations for the second consecutive year.

According to Invest in Spain, some 10,500 foreign firms operating in Spain directly employ 1.37 million people and account for 40 percent of Spanish exports.

Of the companies surveyed, 80 percent employ fewer than 500 people, while the rest have between 1,000 and 10,000 workers on staff.

–IANS/EFE