EMCC European Monitoring Centre on Change

Portugal: ERM Comparative Analytical Report on ‘Public policy and support for restructuring in SMEs’

  • Observatory: EMCC
  • Topic:
  • Published on: 13 May 2013



About
Country:
Portugal
Author:
Heloísa Perista and Paula Carrilho
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Restructuring has been a matter of concern in Portugal. Several support instruments were available, before the recession, none of these though specifically targeting SMEs and/or their employees (but not excluding them).In the framework of the crisis, a greater policy focus was placed on SMEs, namely in restructuring. Social partners have been involved in this policy debate.Early 2012, a tripartite agreement was signed; restructuring is a topic, particularly in SMEs.The instruments to support SMEs and other companies in restructuring are currently under reevaluation. Two specific support instruments explicitly targeting at SMEs in restructuring were identified. The SMEs Training Programme is presented as a good practice.

QUESTIONNAIRE

Part 1: Overall policy context

1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:• If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?

Restructuring has been a matter of concern to the successive Portuguese Governments.

National Action Plans for Employment (Planos Nacionais de Emprego – PNE: 1999; 2000; 2001; 2002; 2003; 2004; 2005-2008 include a set of measures targeted specifically at restructuring processes. However, even if not excluding them, none of these are specifically targeted at SMEs. In the last National Action Plan for Employment (2005-2008), a set of instruments, at national level, aiming at the restructuring of enterprises and their employees were created, namely:

  • Integrated Intervention Office for Business Restructuring (Gabinete de Intervenção Integrada de Reestruturação Empresarial - AGiiRE). AGiiRE is an inter-ministerial programme that operates under the Ministry of Economy, Innovation and Development. AGiiRE identifies business restructuring opportunities, supports those which will help to revitalise and modernise the entrepreneurial tissue, coordinates associated national actions, and monitors business recovery processes.

AGiiRE provides:

  • information services and career guidance;
  • incentives to redundant and displaced workers to become self-employed;
  • vocational training courses to update, extend or recycle the skills of the restructuring enterprises’ workforce;
  • training opportunities for employed individuals who voluntarily decide to undertake additional education;
  • complementary social protection.

Its intervention is addressed to:

  • Sectors and enterprises in restructuring;
  • Enterprises in temporary fragile situation but with feasibility potential;
  • Workers of companies in restructuring process.
  • Nucleus of Fast and Personalised Intervention (Núcleos de Intervenção Rápida e Personalizada - NIRP): the NIRP is under AGiiRE and only operates if AGiiRE deems it necessary. These units are composed of a group of specialists from the Public Employment Services, Social Security, and other relevant bodies. Typically the NIRP will go to the restructuring enterprises, make an assessment of the situation and prepare a plan of preventive or remedial actions for the company and its workers.
  • System of Incentives for Business Modernisation and Revitalisation (Sistema de Incentivos à Revitalização e Modernização Empresarial - SIRME). The SIRME is funded by the Fund to Revitalise and Modernise the Business Fabric (Fundo para a Revitalização e Modernização do Tecido Empresarial - FRME). SIRME complements AGiiRE’s action and encourages mergers and acquisitions that involve enterprises in financial difficulties. It constitutes a capital partner for companies who want to acquire companies in difficulty, to restructure them. This support is given through loans and guarantees.
  • FACE Programme: this programme includes measures to support vocational training for workers facing restructuring and reconversion processes.

As another relevant policy measure for employees in restructuring it is to be mentioned that the Portuguese government launched the New Opportunities Initiative (Iniciativa Novas Oportunidades), in 2005, to respond to the qualification challenges in the country. The Initiative’s main aim was to reach all age groups and forms of learning in formal, non-formal and informal environments, thereby raising employability levels in all the stages of people’s working lives. The Initiative is based on two intervention pillars – youth and adults. In the former, the focus is on combating under-achievement and early drop out from school, while the second is aiming at the requalification of the active adult population.

• Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?

The Institute of Support to Small and Medium Enterprises and Innovation (Instituto de Apoio às Pequenas e Médias Empresas e à Inovação - IAPMEI), as the main public economic policy instrument targeting SMEs in industrial, commercial, service and construction sectors, includes the processes of restructuring in SMEs among its objectives.

Restructuring policy, as briefly described above, does not specifically deal with SME issues.

• Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?

Most policy measures/instruments identified are more targeted to the management of restructuring such as the AGiiRE, NIRP, SIRME and FACE programmes.

Other, such as New Opportunities Initiative, may contribute to the anticipation of change.

• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context? Was the specific case of SMEs as subcontractors a topic for discussions?

The main issues/contents that have been discussed were:

  • Growth and competitiveness;
  • Training and qualification of the work force;
  • Entrepreneurship;
  • Modernisation of the entrepreneurial tissue;
  • Maintenance of employment.

The specific characteristics of SMEs in restructuring were not specifically considered in this context.

The specific case of SMEs as subcontractors was not a topic for discussions.

• Did the discussions rather deal with the enterprise perspective or with the employee perspective or both?

Both the enterprise and the employee perspectives were dealt with.

However, the enterprise perspective had a particular focus.

1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?

In the framework the economic and financial crisis, a greater focus was placed on SMEs. The access of SMEs to funding became a major priority. Several credit lines for SMEs were created, although those were not specifically addressed to supporting SMEs or their employees in restructuring.

Other alternative measures were implemented to reinforce SMEs’ permanent capital such as the Autonomous Fund Supporting Company Concentration and Consolidation (Fundo Autónomo de Apoio à Concentração e Consolidação de Empresas - FACCE) to support restructuring, concentration, consolidation and acquisition of enterprises, particularly SMEs.

With the objective to support economic activity, exports and SMEs, the recovery plan - Initiative for Investment and Employment (Iniciativa para o Investimento e Emprego - IIE) was created, in 2008. In 2009, the Employment Initiative (Iniciativa Emprego - IE) included specific autonomous and transitional measures, among which the maintenance of employment in SMEs by reducing labour costs.

The Tripartite Agreement for a new System of Regulation of Industrial Relations and Employment and Social Protection Policies in Portugal (Acordo Tripartido para um novo Sistema de Regulação das Relações Laborais, das Políticas de Emprego e da Protecção Social em Portugal), signed in 2008 by the Government and the social partners, also contributed to give greater visibility to the SMEs’ problems. A series of important pledges were made on the adaptation of active employment measures with a view to modernising the Portuguese labour market, with a particular focus on SMEs.

The Memorandum of Understanding on specific economic policy conditionality signed by the Portuguese Government and the European Commission, the IMF and the ECB on 11 May 2011, includes a range of measures on the restructuring and revitalisation of the entrepreneurial tissue, particularly of SMEs. This is mirrored by the XIX Portuguese Government Programme.

In the Major Planning Options 2010-2013 (Grandes Opções do Plano 2010-2013, GOP) the support of SMEs is a priority. The main issues covered relate to: modernisation of the entrepreneurial tissue; access to funding; internationalisation, innovation and qualification of the enterprises, particularly SMEs.

1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?

The Standing Committee for Social Dialogue of the Economic and Social Council (Comissão Permanente de Concertação Social – CPCS / Conselho Económico e Social - CES), as a constitutional body for consultation and social dialogue, is particularly involved in policy debate on restructuring in SMEs.

• If so, which (types of) organisations and at which levels?

The organisations that participate in the Standing Committee for Social Dialogue are:

  • Representatives of the Portuguese Government;
  • Trade Unions: General Workers’ Union (União Geral dos Trabalhadores - UGT); General Portuguese Workers’ Confederation (Confederação Geral dos Trabalhadores Portugueses - Intersindical Nacional – CGTP-IN);
  • Employers’ Organisations: Entrepreneurial Confederation of Portugal (Confederação Empresarial de Portugal - CIP); Portuguese Trade and Services Confederation (Confederação do Comércio e Serviços de Portugal - CCP); Farmers’ Confederation of Portugal (Confederação dos Agricultores de Portugal - CAP); Confederation of Portuguese Tourism (Confederação do Turismo Português - CTP).

• What are their opinions, perspectives, recommendations?

On 20 January 2010, CES delivered an opinion on the Government’s Major Planning Options 2010-2013. According to CES, these do not respond to the complexity of the Portuguese situation. It is recommended that special attention is paid to the qualification of SMEs, particularly, to the lifelong training of their workers. The CES thus defends the maintenance and even the strengthening of the measures which support economic activity and employment, particularly in SMEs.

On 18 January 2012, the Government and the social partners signed the tripartite agreement ‘Commitment for Growth, Competitiveness and Employment’ (Compromisso para o Crescimento, Competitividade e Emprego) within the CPCS; one of the issues debated was the restructuring of the entrepreneurial tissue, particularly of SMEs. This Tripartite Agreement has the consensus of most of the organisations represented in CPCS. CGTP-IN however decided not to sign this Tripartite Agreement, considering (according to its web site) that the agreement constitutes an attack on the workers’ rights and it represents an unprecedented social regression in Portugal.

A negative opinion was delivered by CES, on 23 May 2012, on the Document of Budgetary Strategy 2012-2016. The CES regrets that the funding to the economy is not a central issue in the document. The enterprises have difficulties in accessing credit and this leads to bankruptcy or closure. It is recommended that significant efforts should be made for improving the entrepreneurial funding conditions.

The social partners were requested by us to share their individual opinions, perspectives or recommendations. Until now, the following contributions were provided:

UGT considers that one part of the agreement is targeted to the restructuring of the entrepreneurial tissue, particularly SMEs. According to UGT, although some of the measures are being implemented, the results in the fields of economic and employment growth are not visible yet and it is too early to assess their impact.

In the framework of restructuring proceedings, CIP underlines the urgency to eliminate the restrictions in place for the termination of employment contract by mutual agreement with access to the unemployment subsidy in case of restructuring or rescue of the enterprise if this is in a difficult economic situation. Those restrictions were set out in the Decree-Law 120/2006, article 10(4). It also stresses the need for more flexible contractual arrangements.

• Did they succeed in convincing governments or public authorities at various levels of their viewpoints?

In spite of the signature of the January 2012 tripartite agreement (without CGTP’s participation), the dialogue between the social partners (Trade Unions, Employers´ Organisations and the Government) has been facing difficulties. The measures which stem from the Memorandum of Understanding on specific economic policy conditionality and their impact on the social and employment situation are among the main reasons for the lack of consensus.

On the other hand, social partners, the CIP in particular, are still waiting for the implementation of part of the measures included in the tripartite agreements.

Part 2: Support instruments

2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees.

• Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?

Even if part of the available instruments has not explicitly addressed SMEs or their employees in restructuring, these generally have had access to those instruments.

According to information provided by telephone by IAPMEI, following the new Insolvency and Corporate Recovery Code (Código da Insolvência e da Recuperação da Empresa - CIRE), approved on 20 April 2012 (Law16/2012), the instruments to support SMEs and other companies in restructuring are under reevaluation. Most probably, some of these will be included in the Revitalising Programme (1st round) (Programa Revitalizar). This programme aims to optimise the legal, tax and financial framework of the Portuguese entrepreneurial fabric.

In the current situation, it is not easy to assess the suitability of the available instruments to the specific needs of SMEs in restructuring.

• Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees that for larger firms? If so,why?

At present, most support instruments for restructuring are specifically targeted at SMEs. Among the SME specific, two will be presented in more detail below. Other support instruments cover issues such as access to finance, and the revision of tax and legal framework.

2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:

Two specific support instruments explicitly targeting at SMEs and/or their employees in restructuring were identified:

  • FINTRANS Programme: this programme aims to raising the competitiveness of the Portuguese SMEs in restructuring by encouraging business resizing and transfer. The programme was supposed to be finished in 2011 but, according to IAPMEI, during 2012, two types of support will be kept in place: counselling and technical support.
  • Typology of Intervention 3.1.1 and 8.3.1.1Training-Action Programme for SMEs (Tipologia de Intervenção 3.1.1 e 8.3.1.1 Programa de Formação - Acção para PME): this Programme aims at promoting training-action activities addressed to SMEs and their workers in general, including SMEs in restructuring.

• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?• Are the activities of different support service providers coordinated? If so, how and how well does this work?• Which phases of restructuring do they target?• Which types of restructuring do they target?• Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?

The table below summarises the answers to the sub-questions.
 

FINTRANS

Training-Action Programme for SMEs

By whom is offered
  • Financed by the Operational Competitiveness Programme (Programa Operacional Temático Factores de Competitividades - COMPETE), as part of the National Strategic Reference Framework 2007-2013 (Quadro de Referência Estratégico 2007-2013 - QREN).
  • Implemented by IAPMEI in partnership with AEP.
  • Financed by the Human Potential Operational Programme (Programa Operacional Potencial Humano – POPH), as part of the QREN.
  • Implemented by several the intermediate bodies: IAPMEI; AEP; Portuguese Industrial Association (Associação Industrial Portuguesa - AIP); CCP); CAP; Business Council of the Centre (Conselho Empresarial do Centro - CEC); Industrial Association of Minho (Associação Industrial do Minho – AIMinho).
At which administrative level

Regional.

Regional.

How and how well does the coordination of activities of different support services providers work

No information available.

No information available.

Phases of restructuring targeted

Management.

  • Anticipation.
  • Management.
Types of restructuring targeted
  • Merger / acquisition.
  • Business expansion.
  • Bankruptcy / closure.
  • Business expansion.
Specific characteristics of SMEs targeted
  • Sectors: manufacturing, energy, commerce, tourism, construction, transportation and services.
  • Regions: Norte, Centro and Alentejo.
  • Size classes: SMEs with up to 100 employees.
  • Regions: Norte, Centro, Alentejo and Algarve.
Targeting employees of SMEs in restructuring

No.

Yes.

Type of support provided
  • Supporting the transfer of the ownership of SMEs; and Management Buy-Out and Management Buy-In.
  • Main instruments: free consulting / tutoring and networking support.
  • Standardised training-actions: consultancy and training services defined according to the common characteristics and needs of recipients in the same sector and with similar sizes.
  • Individualised training-actions: consultancy and training services defined according to the specific needs of recipients.

• Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement?

There is little information available about this topic, except for the SMEs training programme (promoted by AEP, as an intermediate body, under the scope of the Training-Action Programme for SMEs).

For further details on the assessment of this SMEs training programme, please refer to Part 3.

Part 3: Good Practice

  • Name of the instrument in national language and English:

Programa Formação PME – SMEs Training Programme.

  • Justification for selecting this measure as Good Practice:
    • The main objective of the Programme is promoting SMEs’ competitiveness, through the sustainable development of different forms of management and organisation, and increasing the qualification of their workers.
    • The SMEs Training Programme offers a solution addressing the real needs of the companies.
    • The programme is oriented to achieving results.
    • The intervention is applied in the real job context, involving managers and employees, with the support of consultants and specialist trainers.
    • This is the 6th edition of Programme and this was subject to an operational evaluation. The findings of the assessment are in general very positive.
  • Date of launch of the instrument and end date (if applicable):

Under POPH: 2008-2013.

However this kind of training initiative for SMEs dates from 1997.

  • Initiator/administrator (organisation):

POPH/QREN

  • Other involved actors and their roles:
    • AEP, as intermediate body;
    • beneficiary entities;
    • coordinators;
    • liaison consultants;
    • specialist consultants;
    • trainers.
  • Source of funding:

European Social Fund (ESF), through POPH/QREN 2007-2013.

  • Target group/eligibility/coverage:
    • SMEs up to 100 employees (enterprises with 10 to 50 employees, in particular).
    • Regions: Norte, Centro, Alentejo and Algarve.
  • Phase of restructuring targeted:
    • Anticipating and management of restructuring.
  • Type of restructuring targeted:
    • Bankruptcy / closure and business expansion.
  • Purpose/content/characteristics/description of services provided:

The Programme targets at improving the management processes and modernisation of SMEs, aiming to the increase of qualifications and skills of entrepreneurs, managers and employees. The Programme’s training method foresees a combined intervention of consultancy and training. This intervention starts with a strategic diagnosis of the firm followed by the definition and implementation of a development plan, which includes a set of training and consultancy measures.

  • Outcome of the instrument (e.g. number of beneficiaries, effects):

During the period 2008-2010, the Programme achieved positive outcomes in the areas concerned with individuals (entrepreneurs/ managers and workers) and enterprises. Results in enterprises were more relevant in areas such as ‘organisational learning’, ’internal processes’ and ‘global management quality and new entrepreneurial management practices’. Results related to the upgrading of the workers’, entrepreneurs’ and managers’ competences are significant, particularly the competences connected to technical areas. From 2008 to 2010 a total of 1,793 SMEs were supported, involving 63,608 workers. (These and the following assessment results are based on the findings of Figueiredo, coord., 2011.)

  • Strengths/success factors of the measure:
    • The entrepreneurs/managers show highly satisfied with the Programme, regarding in particular the role of trainers and consultants, the diagnosis phase, and the capacity of the Programme to address the real needs of the company.
    • The structuring and organization of the training-action model and its methodological guidelines are generally assessed as very positive.
  • Weaknesses/bottlenecks of the measure:
    • Difficulties in the articulation with the New Opportunities Initiative and with the New Opportunities Centres, as well as with measures to support the investment in SMEs, such as the COMPETE programme.
    • The global Programme length and the length of the training and consultancy.
    • From the beneficiary entities’ perspective, the Programme’s financing conditions, namely the payment of the hour training affects negatively its activity and the way how they manage and monitor the work teams.
    • The growing national economic crisis is negatively influencing the potential for continuity of the processes of improvement experimented with the Programme.
  • Was the instrument formally monitored/evaluated? If so, please specify (by whom, how, what were the finding and how were the findings used etc.)
    • The evaluation was conducted by Quaternaire Portugal – QP (a Portuguese corporate society), under the coordination of António Figueiredo. The evaluation study is dated March 2011.
    • The Evaluation Study methodology used several sources of information: documentation, surveys, interviews and focus groups, covering all the actors involved. For a deeper analysis of the Programme’s outcomes a strategy (the Panel of Entrepreneurial Situations) was used, which was applied to a sample of companies and involved document analysis, a survey by telephone and a workshop.

Weblink:

http://www.poph.qren.pt/upload/docs/noticias/Concursos_Candidaturas/2_Programa_Candidatura_Entidades_Beneficiarias.pdf

  • Information sources used for filling this section:

Commentary

Restructuring has been a matter of concern to the successive Portuguese Governments. However, in spite of the large predominance of SMEs in the entrepreneurial tissue, most of the general instruments made available have not specifically addressed SMEs and/or their employees in restructuring.

A set of restructuring policy measures, mostly focusing on managing restructuring processes, was implemented in the period before the global economic recession.

On the other hand, several credit lines for SMEs have been created, although those are not specifically targeted at SMEs and/or their employees in restructuring.

At present, in a wider context of public budget constraints and cuts, part of the available instruments for the SMEs in restructuring is under reevaluation.

The existing support instruments explicitly targeting at SMEs and/or their employees in restructuring try to cover both anticipating and management of restructuring, mostly focusing on training and consultancy.

SMEs and/or their workers are facing increased challenges, often leading to bankruptcy/closure restructuring processes, being thus exposed to a higher vulnerability. Increased demands should also be placed on public policies responses, as it has been stressed, in different ways and perspectives, by the social partners.

Heloísa Perista and Paula Carrilho, CESIS – Centro de Estudos para a Intervenção Social

References:

Useful? Interesting? Tell us what you think. Hide comments

Add new comment