What if Amancio Ortega paid tax in Spain and hired only Spaniards?

Editor’s note: This article was first published in August 2012; it was written when Amancio Ortega had just reached third place in the rich lists, in the middle of Spain’s recession.

Ever since it was announced that Amancio Ortega, thanks to the Inditex empire, had reached number 3 in the ranking of the world’s richest people, there has been a steady stream of criticism of the way this man has achieved success.

Hundreds of comments have appeared from people who probably shop at Inditex Group stores (if not them, then their girlfriends, sisters, cousins and friends), yet who don’t think it right that online sales are taxed in Ireland instead of Spain, or that production is subcontracted or outsourced to countries where labour is much cheaper than in Spain.

Mr Amancio Ortega has taken the criticism on board and will change the way he runs the company. Instead of paying tax on his online sales in Ireland, at just 12.5%, he will pay it in Spain, at around 24%. Likewise, he will abruptly end his collaboration with outside factories in countries where workers earn around €200 a month, thereby avoiding labour exploitation. Bearing in mind that this is the normal wage in those countries, where the working day is sometimes abusive, he has finally concluded that he should bring his factories to Spain and hire only Spaniards, creating jobs in Spain and paying Spaniards decent wages.

One year later

On the very day this new way of working was announced, Inditex plunged on the stock market, as the market consensus said the new system would hit its profits. The Inditex Group would struggle to compete in the sector, because it would have to raise its prices to soften the impact on costs and profits.

See also: How many rich people and millionaires are there in Spain?

Six months later, Inditex’s sales had fallen by more than 60% worldwide, to the point that the company has been forced to close 30% of its stores, most of them in Spain, where Spaniards’ pockets remain in a critical state as the recession goes on.

Inditex now has to deal with a new textile company that is taking over the market in Spain. This new company, called ECI (Explotadores de Chinitos e Indios), roughly “Exploiters of Chinese and Indians”, keeps opening stores in our country thanks to strong demand from Spaniards. There is talk that ECI could launch a takeover bid for Inditex.

Interview with Inditex’s unhappy customers

We interviewed the thousands of people who used to criticise Mr Amancio Ortega for looking for ways to cut costs (even though they shopped at ZARA) and asked them why they no longer shop at the Inditex Group chains.

They told us that ZARA is now very expensive and that they prefer to shop at ECI, since the quality is similar and the price is much lower.

PS: I’m sure that as you read the first paragraphs you were finding this news hard to believe. Only a businessman who doesn’t value his company would pay 24% when he could pay 12.5%, and would not make use of much cheaper labour (as long as it is within the law). So relax: Amancio Ortega is still in his right mind.

As for child exploitation, we should know that neither Inditex nor Apple approves of their products being made in factories that exploit minors. As for the wages paid in those countries, we are not going to change working conditions there, since we can’t even change our own. Those factories are there for every company, and if Amancio Ortega doesn’t use them, someone else will.

You should never forget that the Inditex Group creates thousands of direct and indirect jobs in Spain.

Before making any kind of hypocritical criticism, I’d recommend you look around you: the components of your plasma TV are made in those countries, as are the shoes you’re wearing, the parts in your car and your latest smartphone (whatever the brand), along with whatever device you’re reading this article on.

And finally, we may forget that a 12- or 14-hour working day for a wage of €200 a month is the only way out that millions of people in developing countries have to feed their families without resorting to prostitution or far worse.

Featured image: Zarateman, CC0 1.0, via Wikimedia Commons.