'Integration companies' examined

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'Integration companies' in Spain are organisations which seek to integrate people faced by social exclusion into employment by providing training and work experience. In 2001, the government took the first steps towards regulating these companies, which have been regarded with some misgiving by trade unions and, to a lesser extent, employers' organisations. We review the situation in early 2002.

'Integration companies' (Empresas de Inserción, EIs) in Spain are special organisations aimed at helping with the integration into the labour market and society of people who are experiencing, or threatened by, social exclusion. EIs are linked to other initiatives, mainly in the areas of social assistance and training, and their activities are based on an 'integration itineraries' approach - ie a phased process of integration into employment and society.

EIs are located at the final stage of the process of integration, in that their aim is to prepare workers to enter the normal labour market. This preparation involves providing the people concerned with the necessary occupational and social skills and suitable working habits. Their 'added value' in comparison with other types of social integration scheme is that they involve a real job in which the training is based on tutored practical work rather than simply on the acquisition of theoretical knowledge.

EIs in practice

At the end of 2001, there were approximately 200 EIs in Spain, not including specific organisations for certain groups of people - such as the 'special employment centres' (Centros Especiales de Empleo) for people with disabilities - or 'labour workshops' (talleres laborales) that are not run independently - such as the 'occupational workshops' (Talleres Ocupacionales) devoted to occupational therapy and/or occupational training.

In all cases, EIs are promoted or managed by not-for-profit organisation, so there is a clear link between the EIs and 'social intervention' by such bodies. A minority of EIs have acquired a different legal entity to their original one, and have become companies (mostly limited companies, and a few public limited companies), though most have continued as not-for-profit organisations.

Most EIs are 'temporary' integration structures - in the sense that people suffering from or threatened by exclusion pass through them and do not remain on their workforce, or they remain on the workforce but occupy an 'ordinary' job, leaving vacant their 'integration' position for other people from the target groups. However, a minority of EIs are 'final' integration structures, in that they employ people on an open-ended basis.

EIs are mainly micro- and small enterprises, though in a few cases are they medium-sized. They focus their activities on labour-intensive rather than capital-intensive areas, given their aim of integrating people into employment and also as a result of the socially-oriented and not-for-profit nature of their backgrounds. EIs' main activities include collecting and recycling urban waste, industrial and domestic cleaning, and gardening (though recently there has been an increase in the number of EIs working in construction, which is a more capital-intensive sector).

The employment conditions in EIs are in general regarded as being better than those for similar jobs in 'normal' firms. This is because: their recruitment and dismissal policy is less strict; labour legislation is observed to a greater extent in terms of working time and pay (due to the EIs' integration aims, and the control to which they are subject); and less emphasis is placed on competitiveness and productivity.

In general, EIs receive specific financial support from public institutions, though this is limited and temporary in nature. Perhaps because this makes them dependent to some extent, one of the EIs' main problems is that their commercial and financial policies are still undeveloped, as to a lesser degree are their management and work organisation. This leads to problems with competitiveness and productivity - though the subsidies that EIs receive allow them a certain margin in their productivity to permit them to employ people who initially lack the necessary training and ability to perform.

The legal situation

There is no specific legislation on EIs in Spain, so their definition, description and in particular their operations are rather diffuse and ambiguous. There are major gaps in the fiscal legislation as it applies to EIs and a lack of definition of their position in industrial relations terms. In recent years, there have been several attempts to introduce national regulations on EIs in parliament. The last such initiative was processed and rejected in spring 2001.

At the Lisbon European Council meeting in March 2000 (EU0004241F), the EU Member States decided to launch an initiative to fight poverty and social exclusion, involving common objectives and National Action Plans (EU0111101N). The first two-yearly National Action Plans on social inclusion were drawn up by the Member States in the first half of 2001. The Spanish Plan included as an action planned for 2001-3 under Objective 1.1 ('Fostering access to employment for persons suffering from or threatened by social exclusion') a commitment 'to support integration companies and to promote their legal regulation, improving their functioning'.

Given this commitment to introduce regulation, the government specifically referred to EIs in the 'Law on urgent measures for the reform of the labour market' (Ley de Medidas Urgentes de reforma del Mercado de Trabajo) passed by parliament in June 2001 and published in the Official Journal on 5 July 2001 (thus approving Royal Decree-Law 5/2001 of 2 March 2001 - ES0103237F). The ninth additional provision of the law refers to 'companies for the promotion and integration into employment of persons suffering from social exclusion' as those that may recruit persons threatened with social exclusion (though not exclusively). It states that such firms may have any type of legal form and carry out any business activity, but must 'habitually reserve no less than 30% of their jobs for the employment of [those people that the law considers to be excluded]... to train them and teach them skills related to the standard exercise of a working activity'. Article 4.1.3 of the law lists as the people who are considered to be 'at risk of social exclusion': those who receive minimum incomes or who meet the requirements for the same but are unable to receive them for administrative reasons; persons between 18 and 30 years of age who have been in institutions for the protection of minors; persons undergoing rehabilitation due to drug or alcohol addiction; inmates of penal centres who are able to work, and people who are on probation or are ex-prisoners.

The additional provision also states that the articles of association of these firms must state that their aim is 'the full labour market integration and access to ordinary employment of such persons'. It adds that such companies may benefit from the allowances laid down in the law on urgent measures and that 'they may carry out programmes that are determined in collaboration with the administrations and public bodies with competencies for the integration into employment of socially-excluded persons', and may conclude agreements with the public employment services . The law thus indicates that the regions (autonomous communities) will have the main responsibility for developing the regulation of EIs, and for establishing aid policies for them. There are already several regional regulations on the issue, but none of them give legal status to EIs (except in a few cases).

The position of the social partners

The main trade union confederations - the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) and the General Workers' Confederation (Unión General de Trabajadores, UGT) - have participated in debates and meetings on EIs, and have expressed their positions in various documents and declarations.

The unions' position is basically one of mistrust and questioning of EIs. They are suspicious of the appearance of new forms of employment contract (such as those included in various parliamentary and government initiatives) and feel that it is necessary to monitor the employment conditions in the organisations that have so far been called EIs. They also question the link between employment policy and social policy implied by EIs, and insist that social policy should be limited to people suffering from or threatened by social exclusion, and not apply to all unemployed people.

The employers' organisations have not been so active in the debates on the regulation and operation of EIs, and their position has been less clear. However, they too have been mistrustful of the appearance of this new type of business, which they have occasionally called a possible instrument of 'social dumping' because of the special conditions and subsidies which apply.

There are several associations representing EIs. They have been created to defend the position of these firms and particularly to promote the introduction and improvement of legal regulation and to obtain support from the public administration. These bodies are mainly organised at regional level, but the largest is the Spanish Federation of Integration Company Entities (Federación Española de Entidades Empresa de Inserción, FEDEI), which has lobbied and negotiated at a national level. It has been very critical of government action on EIs, though it collaborated closely with the Ministry of Labour and Social Affairs in one of the attempts to introduce regulation. It believes that the 2001 law on urgent measures is 'insufficient' and lacks definition with regard to future regulation. FEDEI has stated that it fails to understand this law, feels impotent and exhausted at the process of bargaining and the complexity of company law, and considers that the social work of EIs has received little recognition and support.

Commentary

The government has now provided the minimum legal support for the regions to develop independently their own regulations on EIs through the regional employment services and social services. This regional approach involves the possibility of increasing the existing inequality between some regions due to their different traditions and attitudes concerning EIs and other social initiatives. It also implies a 'competence ceiling' (at regional level) which means that EIs cannot obtain national status and will be unable to receive special treatment in terms of taxation or labour law.

From the viewpoint of employment and social policy in Europe, EIs in Spain are closer to the concept of 'new entrepreneurship' that to that of 'corporate social responsibility'. 'New entrepreneurship' is a concept introduced by the European Commission's Directorate-General for Employment and Social Affairs in its 1996 first report on local development and employment initiatives (LDEIs). This report raised the idea of understanding the company not only as an organisation of production and direct wealth creation but also as an organisation that structures society through the social integration created by employment and the satisfaction of certain social needs. 'Corporate social responsibility', on the other hand, was described by the Commission in its 2001 Green Paper on promoting a European framework for corporate social responsibility(COM (2001) 366 final) as a concept 'whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis'.

EIs fall more under the 'new entrepreneurship' heading because they are devoted to economic activities linked to certain social needs and have a social commitment to integration in employment and society. They form part of the specific fabric of social organisations belonging to the so-called 'third sector', and do not stem from the inclusion and integration of the principle of solidarity in ordinary companies.

The 'traditional' social economy has not had a significant effect on the appearance of EIs, so one might wonder whether EIs can emerge from a traditional capitalist approach and whether this function of integration into employment and society can be performed through ordinary companies. At least in Spain the answer seems to be no. (Miguel Angel Gil, researcher, and Cristina García Comas, CIREM Foundation)