EMCC European Monitoring Centre on Change

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

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



About
Country:
Spain
Author:
Pablo Sanz
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.

In Spain there is no comprehensive set of instruments aiming to support restructuring in SMEs. Before the crisis, policies concerning SMEs sought to facilitate business start ups and remove administrative obstacles. In addition, some measures aiming to improve the competitiveness of SMEs were launched. During the first phase of the crisis, policies affecting SMEs were designed to encourage economic activity by reducing corporation taxes and supporting financing by means of a number of lines of credit. Since 2010, different labour law reforms have been enacted aiming to improve enterprises’ capacity of adaptability. Moreover, new measures which make the management of restructuring easier and cheaper have been enacted, as well as new labour contracts and employment incentives specifically addressed at SMEs.

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:

Before the global recession, Spain lived one of its greatest periods of economic and employment growth. From 1994 to 2007, more than 8 million jobs were created. In this thriving economic context, specific challenges for SMEs in restructuring was not a prominent issue in public and policy debates, especially regarding the management of restructuring. Rather, main debates concerning SMEs focussed on how to support and encourage business growth and business start up and how to improve the competitiveness of SMEs. Moreover, debates on how to improve vocational training and lifelong learning arose, resulting in different legislative projects in 2002 and 2007. Nevertheless, SMEs’ access to training was not the focus of these debates and legislative projects.

• 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)?

From 1999 to 2008, it is possible to find real policy debate regarding SME issues mirrored in policy documents at national and regional level.

• 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 policy areas involved were SME policy and entrepreneurship policy implemented at national and regional level.

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

Restructuring policies focussed exclusively on the anticipation of change phase.

• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context?

Policy debates about SMEs mirrored in policy documents contemplated four main topics:

Removing administrative obstacles and encouraging business start ups

This topic was handled within the policy area of entrepreneurship or SME policy.

One of the main actions was the socalled ’Regulatory Simplification and Streamlining Plan for the Competitiveness of SMEs‘ (Plan de Agilización y Simplificación Normativa para la Competitividad de la PYME) (1999). Under this plan, a single front office for enterprises was created. This front office encompassed advisory and counselling services as well as processing services needed to start up a business. It was an initiative jointly launched by the general administration, the regional administration and the Chamber of Commerce. The main goal was to support entrepreneurs in the process of business start up.

Moreover, in 2003, a special regulation in company law was enacted with a view to encourage SME start up and lower administrative burdens. ’Law 7/2003 of new enterprise limited company of the 1st of April‘ introduced a new juridical frame specifically adapted to the needs of SMEs aiming to facilitate start ups. Furthermore, it reduced the accountability reporting required for SMEs. In addition, the law created an information centre and business creation network aiming to provide services and information to entrepreneurs and SMEs (Centro de Información y Red de Creación de Empresas, CIRCE).

Facilitating access to finance for SMEs

One of the main priorities of the national and regional SME policies was to offer easier access to finance. At national level, the line of credit specifically addressed to SMEs, ICO-PYMES, was the main public financing source for SMEs. At regional level, the most common tools used to facilitate access to financing for SMEs were: 1) lines of credits extended by banks, generally with subsidies in the interest rates; 2) bank guarantees or direct credits provided by the regional financing institutes (Ministry of Public Administration, 2011).

Improving competitiveness of SMEs

The Plan for the Consolidation and Competitiveness of SMEs 2000-2006 provided public subsidies to SMEs or intermediate associations that developed actions addressed to improve SME competitiveness. The plan encompassed the whole Spanish territory, except Navarra, and the industrial, construction, commerce and general services sectors, except the commerce sector in the Basque Country. Two financial lines were created: 1) Informational society and 2) Innovation in management techniques.

This measure is directly related to restructuring, understood as the anticipation of change.

In addition, it is worth highlighting the contribution of local development agencies to competitiveness by offering training adapted to the local needs.

Encouraging the recruitment of some categories of employees by self-employed workers

Although since 1997 measures aiming to encourage the recruitment of employees have focussed mainly on fostering open-ended contracts in all enterprises, it is possible to find some measures specifically addressed to micro-enterprises. Hence, in 2000, the Plan to Encourage Employment (Plan de Fomento del Empleo) gave discounts in the Social Security contributions to self-employed workers without employees who recruited unemployed workers with special insertion problems.

• Was the specific case of SMEs as subcontractors a topic for discussions?

In the case of subcontractors, a change in the legislation was introduced in 2006 (ES0610039I). Although it was not directly addressed to SMEs, it affected them because in Spain SMEs play a very important role in the subcontracting process. The main goal of the law was to improve the public control of subcontracting processing, thus reinforcing the rights of subcontracted workers transferred by a different enterprise like a temporary work agency (Empresa de trabajo temporal).

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

Discussions have mainly dealt with the enterprise perspective. With regard to subcontractors, the discussion dealt with the employee perspective.

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)?

The global and financial crisis of 2008/2009 has changed the focus of all the policies. The main priority has been to promote employment and reduce unemployment. Attending to the rationality and goals of the policies, three phases can be identified.

In the first phase (2008-2009), the most distinctive confirmation of the employment policies was the Government’s commitment to promote employment by means of different neo-Keynesian measures included in the Spanish plan for stimulating the economy and employment, otherwise known as Plan E. The measures set forth in this plan, which were specifically aimed at SMEs, involved a reduction in corporation taxes and different lines of credit. In addition, employment incentives aiming to encourage hiring by self-employment were introduced in a later Royal Decree.

The second phase began in 2010. That year, Spain started to face severe obstacles in order to gain access to international financial markets at sustainable yield rates. Under these circumstances, measures approved by Ecofin on the 8th of May 2010 aiming to mitigate the sovereign national debt crisis forced the Spanish Government to enact a drastic plan to cut the public deficit. The Spanish commitment with the deficit reduction limited the scope for demand-side measures aiming to boost the economy. Accordingly, the policies addressed to reduce unemployment were focussed on structural reforms aiming to provide more flexibility to the Spanish labour market. In addition, new tax discounts and employment incentives with better conditions for SMEs were enacted aiming to foster employment.

General elections were held on the 20th of November 2011. The Popular Party emerged as winner achieving absolute majority. The new Government states that its priorities during this phase will be deficit reduction and employment promotion. The combination of both goals implies, once again, that demand-side policies are not the main focus of their employment policies. Accordingly, the first package of measures addressed to combat unemployment has been a new labour legislation reform which provides more flexibility to the labour market. Some changes in the legislation have been specifically addressed to SMEs while others, such as the new collective bargaining regulation or the modification of the Collective Redundancy regulation, are expected to increase the adaptability of SMEs and to facilitate their restructuring management. In addition, a new important measure aiming to allow enterprises to collect outstanding invoices from the public administration, by means of the banks, has been enacted. This last measure can positively contribute to alleviate the financial needs of SMEs.

All these measures are described in question 2.

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

Since the global recession started to affect the Spanish economy, but already before, social partners have been involved in public and policy debate. Nevertheless, the focus of the debates has not been restructuring in SMEs.

Tripartite social dialogue was directed towards discussing a number of aspects, such as the employment policies, the pension reforms or the labour legislation. Indeed, the last two reforms of the labour legislation, specially the first one, were subjected to tripartite discussion, despite the failure of social partners to reach an agreement.

Bipartite social dialogue has only partially focussed on restructuring. The last bipartite ‘agreement on employment and collective bargaining’ (2012-2014), signed on the 6th of February 2012, acknowledged the need to ensure, in the short term, that the rise in prices remained below the European average in order to improve the competitiveness of the Spanish economy. Social partners concur that in the long term, productivity must be increased in order to achieve competitiveness based on quality. Attending to these goals, the agreement determines criteria and guidelines for collective bargaining which are grouped into four chapters. The first deals with the structure of collective bargaining and internal flexibility, stating that sectoral multi-employer collective agreements should give greater priority to company agreements in issues such as working time, functions and wages. This guideline has become practically irrelevant since the new collective bargaining regulation has been enacted, because it gives priority to company agreements (which are not widespread among SMEs) over multi-employer collective agreements vis-à-vis those aspects. Regarding internal flexibility, the agreement points out that collective agreement should facilitate an irregular distribution of working time throughout the year of 10% of the annual working time. The second chapter centres on employment, training, flexi-security, information and consultation, mostly including general recommendations such as the promotion of stable employment. The third chapter concerns wage criteria, stating that wages stipulated in collective bargaining should not rise by more than 0.5% in 2012 and 0.6% in 2013. Finally, the fourth chapter encourages social partners to introduce opting-out clauses in collective bargaining, allowing enterprises to withdraw temporarily from collective agreements the following issues: working time, remuneration system, shift work and working system. Opting out clauses should only be applied in the case of a persistent drop in revenue.

As it can be appreciated, the agreement does not deal directly with restructuring. Some aspects of the agreement, such as the guidelines aiming to increase productivity and competitiveness may be linked to restructuring, understood as anticipation of change.

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

The social partners involved in tripartite and bipartite social dialogue were the Spanish Confederation of Employers’ Organisations (Confederación Española de Organizaciones Empresariales, CEOE), the Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME), the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CCOO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT).

• What are their opinions, perspectives, recommendations?

In the case of trade unions, their concern regarding SMEs is focussed on the poorer working conditions that characterise SMEs. In this sense, the trade unions argue that the low union membership rate and the lower number of workers’ delegates and workers’ committees present in these enterprises makes it difficult to monitor whether collective agreements are fulfilled in different aspects such as working time, safety, training, and so on. For this reason, they reject the decentralisation of collective bargaining enacted with the new regulation. The tables below show the existence of employee’s representatives in undertakings according to two surveys: the European Company Survey and the Spanish Working and Living Conditions Survey. The latter allows us to compare the evolution over the past years.

Table 1. Companies with employee representation

2009

Size of undertaking Yes (%)

.

No (%)

.

Not applicable (%)

Fewer than 50

51.3%

47.6%

0.5%

Between 51 and 250

73.4%

25.8%

0.4%

More than 250

84.7%

13.8%

0.8%

Total

54.9%

44.6%

0.5%

Source: European Company Survey 2009 (Eurofound)

Table 2a. Employees working for an organisation with a structure that enables collective bargaining, that is a workers’ delegate, a workers’ committee or the like

2010

Size of undertaking 

Yes (n)

No (n)

Total (n)

Yes (%)

1

159,617

505,464

665,081

24.0%

Between 2 and 9

1,259,805

2,717,101

3,976,906

31.7%

Between 10 and 49

2,307,241

1,681,654

3,988,895

57.8%

Between 50 and 249

1,839,624

494,412

2,334,036

78.8%

250 or more

1,538,383

179,942

1,718,325

89.5%

Total

7,104,670

5,578,573

12,683,243

56.0%

Table 2b

.

2006

Size of undertaking 

Yes (n)

No (n)

Total (n)

Yes (%)

Between 1 and 10

1,942,722

3,627,498

5,570,220

34.9%

Between 11 and 50

2,549,591

1,633,695

4,183,286

60.9%

Between 51 and 250

1,943,570

419,041

2,362,611

82.3%

More than 250

1,565,164

165,490

1,730,654

90.4%

Total

8,059,163

5,957,163

14,016,326

57.5%

Source: Working and living conditions survey 2006 and 2010 (ECVT)

As far as business is concerned, CEOE-CEPYME argue that small enterprises, strangled as a result of credit stagnation, must be given greater freedom to make wage and working time adjustments. They claim that it will be easier to maintain employment and also prevent the closure of these enterprises if employers and employees negotiate working conditions at the enterprise level. Attending to this idea, they agree to the new collective bargaining regulation, although not all the sectoral employers’ organisations share the same opinion. Moreover, CEOE-CEPYME claim that labour costs and taxes should be lower for SMEs.

Both unions and employer’s organisations agree that one of the main problems SMEs are facing is credit stagnation.

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

The viewpoints of the employers’ organisations have prevailed over the viewpoints of the unions.

Part 2: Support instruments

This question sets out a brief overview of the main support instruments for restructuring SMEs enacted since the global recession started to affect Spain in 2008. Although the focus of the exposition is on instruments aiming to support SMEs, some general and transversal measures which intend to support restructuring are included.

- Support instruments in the first phase (2008-2009)

Measures within the plan E specifically aimed at SMEs were, first, a reduction of five percentage points of corporation tax over a period of three years for enterprises with fewer than 25 employees and a sales volume of less than € 5 million which until 31st December 2009 had kept or increased their staff. The measure was also extended to enterprises with similar characteristics which maintained or increased employment during 2010 and 2011.

Second, a line of credit within the Spanish State Credit Institute (ICO) known as ICO-PYMAR was created, the aim of which was to finance the needs of small and medium private shipyards stemming from ship-building contracts. The aim was to help these enterprises to meet their orders at a time in which they were in danger due to the credit restrictions that existed in the private shipyard sector.

Third, ICO established a line (ICO-LIQUIDEZ) in order to finance working capital for SMEs. This was an exceptional measure given that until then, ICO had only financed investment capital. This measure was extended to medium-sized enterprises, creating a line of credit with identical characteristics.

Fourth, a line of credit (that is, guarantees) of € 3,000 million was established in order to encourage credit institutions to finance the investment of medium enterprises in new productive assets or the acquisition of shares in enterprises abroad.

On the other hand, Royal Decree 1300/2009 introduced new incentives in Social Security contributions for the self-employed who took on a first employee. The measure sought to create employment and was linked to the provision of an open-ended contract.

- Support instruments in the second phase (2010-2011)

During this phase, two legislative reforms were enacted reforming different aspects of the labour legislation.

The first reform came with the law on urgent measures for the labour market reform (law 35/2010 of the 17th of September) (ES1007011I). Under this reform, measures expected to favour adaptability and management of change were those allowing the use of internal flexibility. Hence, the law allowed the modification, by means of collective bargaining at company level, of the conditions established in multi-employer agreements. The conditions liable to be modified were salary levels, working hours and working time distribution. This measure also stipulated that changes had to be negotiated within a non-extendable period of 15 days. To minimise the possibility that this change might weaken collective bargaining, especially in the case of companies with no workers’ committee, it was decided that, in the absence of workers’ legal representatives, employees would be able to confer representation on a commission made up of a maximum of three members belonging to the most representative trade unions of the sector.

Another important aspect relates to the promotion of the reduction of working hours. The decision was taken to increase discounts in the contributions to the Social Security for companies that allowed workers to receive training during working hour reduction schemes, provided that the companies concerned were subject to Collective Redundancy Procedures concluded in an agreement with the employees’ representatives. In these cases, the discount in Social Security contributions rose from 50% to 80%.

The second reform came with the reform of collective bargaining rules (ES1107011I). This reform attempted to facilitate the anticipation of change by bringing collective bargaining closer to the company level. Accordingly, the reform gave priority to company-level agreements over multi-employer and provincial level agreements in matters such as basic pay and pay supplements, overtime, working time and shift work distribution, occupational categories, type of contracts and work-life balance measures. However, the law allowed social partners to establish –whether at inter-professional level or sectoral level (regional and national) – another structure of collective bargaining. The idea behind this reform was that by bringing collective bargaining closer to the company level, working conditions should be more adapted to the specific needs of the companies.

On the other hand, Royal Decree 1796/2010 (ES1012021I) reduced corporation taxes by extending the concept of the ‘reduced-sized enterprise’ (businesses with sales figures of up to € 8 million) to those with sales figures of up to € 10 million. This meant that more enterprises would be subject to a tax rate of 25% rather than 30%. In addition, the payment of the Chamber of Commerce fee was eliminated during 2011 for ‘reduced-sized’ companies. Since 2012, companies are no longer obliged to pay the Chamber of Commerce fees.

Finally, it is possible to find in these phases some employment incentives targeted at SMEs. Hence, Royal Decree 1/2011 offered enterprises with more than 250 employees a 75% discount in their Social Security contributions when they hired workers on part-time contracts of between 50% and 75% of the working day. This discount rose to 100% in the case of businesses with fewer than 250 employees. This programme was in force during 2011.

- Support instruments in the third phase (2011-2012)

Within this phase, the most important package of measures came with a new and deeper legislative reform of the labour legislation. The law addressed both phases of restructuring.

With regard to the management of restructuring phase, the following measures can be highlighted.

First, the reform makes dismissal easier and cheaper by reducing the dismissal costs of open-ended contracts. Compensation for wrongful dismissal is reduced from 45 days per year worked (up to a maximum of 42 months) to 33 days per year worked (up to a maximum of two years). Moreover, it modifies the reasons that justify objective dismissal (with a cost of 20 days per year worked). It establishes that economic reasons are considered valid ‘when a negative economic situation arises from the results of the enterprise, in cases such as the existence of current or foreseeable losses, or the persistent drop in its revenue or sales. In this case, a drop in revenue or sales is considered persistent when occurring during nine consecutive months’.

Second, it had a direct impact on the management of restructuring by reforming the Collective Redundancy rules. In Spain, collective dismissal was regulated by the Collective Redundancy Procedure (ERE), an administrative procedure which includes redundancy procedures, temporary dismissal and working time reduction. It can be applied for economic, technical, organisational or production reasons to a minimum of: 10 workers in companies employing fewer than 100 workers; 10% of the payroll in companies employing between 100 and 200 workers; 30 workers in companies employing 300 or more workers.

When an enterprise applied for ERE under the previous regulation, a consultation process was opened with employee representatives. This process could not exceed 30 days, or 15 days for enterprises employing fewer than 50 employees. If the consultation process ended with an agreement, the measure was authorised. However, if it ended without agreement, collective redundancies needed to be authorised by the labour authority. Until now, the majority of the EREs authorised by the labour authority had been agreed by the enterprise and employee representatives. This usually implied that enterprises agreed to pay more compensation than the amount applied in the case of dismissal for objective reasons (20 days per year worked).

Under the new regulations ERE will not need to be authorised by the labour authority. If the consultation process ends without agreement, the company will be able to pay what they decide – although it is anticipated that companies will be inclined to pay the same rate as for objective dismissals. Moreover, working time reduction and temporary dismissals will be easily implemented.

As far as the anticipation of change phase is concerned, the most important measure comes with a new and deeper modification in collective bargaining rules. The law reforms collective bargaining regulation by giving priority to company agreements over multi-employer agreements even if social partners decide to establish an alternative structure of collective bargaining in a sector. Moreover, the law allows opting out from collective bargaining if the enterprise records a drop in its revenue or sales during six consecutive months. In addition, the reform finishes with the socalled ’ultra-activity of collective agreements’, establishing that a collective agreement will cease to be in force two years after its completion. On the other hand, the law allows enterprises to modify wages on the grounds of technical or organisational reasons which justify the measure, and it allows employers to move employees from one professional group to another which requires lower educational qualifications if this can be justified for technical or organisational reasons.

On the other hand, a new open-ended contract has been created for enterprises with fewer than 50 employees, the socalled ’open-ended contract of support to entrepreneurs’. Under this contract, the trial period will last one year. Thus, during the first year, the employer will be able to freely dismiss the employee hired under this contract. The contract is subject to discounts in contributions to the Social Security aiming to encourage the recruitment of unemployed between 16 and 30 years of age, unemployed older than 45 years old, and women in male-dominated sectors. Furthermore, newly-employed workers will be able to supplement their wages with 20% of unemployment benefits. Thus, with this contract, the Government eliminates dismissal costs during the first year and, at the same time, it reduces direct and indirect wage costs. The amendments included during the discussion of the project law in Parliament have limited the use of this contract to periods where unemployment reaches rates exceeding 15%.

Finally, it is worth noting an important measure aiming to alleviate financing problems of enterprises. On the 24th of February 2012, the Government enacted, by means of a Royal Decree (4/2012), a new line of credit aiming to help town councils to pay outstanding invoices incurred prior to the 1st of January 2012. The plan establishes a credit of € 35,000 million available in all the banks. Accordingly, enterprises will be able to collect outstanding invoices from town councils in the banks. Town councils will have ten years to return the debt. The interest rate is 5% and the State will act as guarantor of the town council debt.

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?

As exposed above, the most important measures enacted during the crisis have been directed towards facilitating restructuring by extending flexibility in the labour market or reducing the control capacity of the labour authority over the collective redundancy procedures. In principle, all SMEs should have access to the new restructuring opportunities offered by the current regulatory frame.

It is too early to assess if the new regulatory frame is suitable for SMEs’ restructuring needs. Accordingly, the only assessment which can be made at this time is that the measures enacted have increased the power of all the employers to unilaterally adjust employment and working conditions. Whether this new regulatory frame will improve SMEs’ performance in restructuring cases remains to be seen. As Toharia argues (2011), the most important consequences arising from the labour law reforms in Spain tend to be unexpected, and even unwanted.

• 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?

According to the Government, the new collective bargaining regulation should be more suited to SMEs. They argue that small enterprises experience more difficulties in observing the working conditions agreed in multi-employer sectoral collective agreements. Accordingly, the new regulation allows companies to conclude agreements adapted to their specific needs, thus improving their capacity to anticipate change.

The most problematic aspect of the new regulation lies in the absence of employees’ representatives in small enterprises. According to the European Company Survey, employees’ legal representation is only present in 51.3% of undertakings with up to 50 employees.

The low concurrence of employees’ representation in small companies is considered an obstacle to the decentralisation of collective bargaining.

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:

Yes, lines of credit specifically addressed to SMEs and open-ended contracts of support to entrepreneurs. In addition, some employment incentives are targeted at SMEs.

• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?

Lines of credit are offered by ICO and by regional administrations. The open-ended contract of support to entrepreneurs is valid throughout the national territory. Employment incentives result in discounts in the contributions paid by the enterprises to the Social Security.

• Are the activities of different support service providers coordinated? If so, how and how well does this work?

The instruments mentioned in this study belong to different institutional spheres and, therefore, are not coordinated. By and large, it can be said that there is no coordinated SME policy.

• Which phases of restructuring do they target

The open-ended contract of support to entrepreneurs can make the management of restructuring easier and cheaper for these enterprises, because they can freely dismiss the employee during the first year.

Lines of credit and employment incentives do not specifically relate to any restructuring phase.

• Which types of restructuring do they target?

With regard to the open-ended contract of support to entrepreneurs, the main type of restructuring targeted is business expansion, because it is formally oriented to encourage the recruitment of new workers by SMEs. However, it also facilitates internal restructuring because during one year, the company can freely dismiss the worker. Employment incentives relate to business expansion. Lines of credit do not relate to any specific type.

• 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?

The open-ended contract of support to entrepreneurs is targeted to enterprises with fewer than 50 employees. Some employment benefits are targeted to self-employed, and others to SMEs in general (fewer than 250 employees). Some lines of credit, such as ICO-PYMAR, are targeted to specific sectors (shipyard manufacturing sector), and others to SMEs in general.

• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?

Lines of credit help overcome the problem of credit stagnation for SMEs. The open-ended contract of support to entrepreneurs and employment incentives aims to encourage business expansion among SMEs.

• 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?

With regard to the measures aiming to provide financial support to SMEs, a recent evaluation report prepared by the Ministry of Public Administrations (2011) states that the impact of the ICO in the financing of SMEs can be considered not very relevant. According to this report, 6.8% of SMEs received financing from ICO in 2010. The report states that the main obstacle for enterprises in order to benefit from ICO lines is the increase in the interest rates, linked to the difficulties which Spain faces to gain access to external financing.

The open-ended contract of support to entrepreneurs cannot yet be evaluated.

The effect of employment incentives in the labour market is an extensively discussed issue. These measures have been implemented in Spain since 1997, becoming the most important active labour market policy. Despite initially being intended mainly to promote full open-ended contracts, they now aim to encourage any kind of contract (temporary, part-time, etc.). During some periods, employment incentives positively contributed to reduce temporary rates. The current adverse economic circumstances do not allow for a reliable assessment of their effectiveness.

Part 3: Good Practice

  • Name of the instrument in national language and English:

Cheque Innova/ Innovation Cheque

  • Justification for selecting this measure as Good Practice:

We have selected this practice because it is one of the few measures currently available in the Spanish territory which aims to encourage the anticipation of change by improving the competitiveness of SMEs. Its proactive rather that defensive character makes it of interest.

  • Date of launch of the instrument and end date (if applicable):

It was enacted on the 29th of March 2012

  • Initiator/administrator (organisation):

The main administrator or initiator is the regional government of the Basque Country, specifically the Society for Competitive Transformation (Sociedad para la Transformación Competitiva SPRI).

  • Other involved actors and their roles:

Consulting enterprises, vocational training centres, technological centres and local development agencies.

  • Source of funding:

Department of Industry, Innovation and Commerce of the Basque Country Government

  • Target group/eligibility/coverage:

Enterprises with fewer than 250 employees

  • Phase of restructuring targeted:

Anticipation of change

  • Type of restructuring targeted:

Innovation can be related to internal restructuring because it can lead to diversification, change of organisation structure, etc.

  • of services provided:

The programme allows SMEs to gain access to low-cost specialised services adapted to their real needs. Services provided are approved by SPRI, being included in a services catalogue. Services are provided by different intermediary entities such as consulting enterprises, vocational training centres and technological centres. The services which are subsidised by an ‘Innovation Cheque’ are grouped into three headings.

  • Advanced solutions. This includes services such as advance management, branding, new business models or innovation.
  • Practical solutions and reflexions targeted towards the improvement of enterprise performance. This includes services relating to the improvement of process innovation, financing training and risk analysis.
  • Solutions focussed on the client-supplier relationship. This includes the identification and definition of innovation projects concerning the client-supplier relationship.
  • Outcome of the instrument (e.g. number of beneficiaries, effects):

It was enacted on the 29th of March 2012. No assessment can yet be provided.

  • Strengths/success factors of the measure:

It allows enterprises to gain access to different services adapted to their specific needs.

  • Weaknesses/bottlenecks of the measure:

No weakness can yet be identified. The programme has only just begun.

  • Was the instrument formally monitored/evaluated? If so, please specify (by whom, how, what were the finding and how were the findings used etc.)

It has not been monitored yet.

  • Weblink:

https://app3.spri.net/ayudaspri//paginas/ficha.aspx?idprograma=469

  • Information sources used for filling this section:

Weblink of SPRI, Official Bulletin of the Basque Country.

Commentary

The main priorities of public policies since 2010 have been deficit reduction and the promotion of employment. The combination of both goals implies that instruments aiming to support restructuring have mainly relied on structural reforms which do not involve public expenditure. Labour law reforms have been directed towards increasing the power and freedom of employers to adjust employment and working conditions. With the new legislation, employers can freely implement individual and collective redundancies. At the same time, it is easier for them to implement functional, internal or wage flexibility measures. However, different measures can be identified in some regions. The government of the Basque Country has launched, in a healthier economic environment, a proactive measure aiming to encourage positive management of change by improving the competitiveness of SMEs.

References

  • Ministry of Public Administration (2011). Informe de Evaluación de las Líneas ICO-PYME. Consulted on the 17th of May of 2012: http://www.aeval.es/comun/pdf/evaluaciones/E25-ICO-PYME.pdf
  • Toharia, L. (2011). El debate sbore las reformas necesarias para la economía española: el mercado de trabajo. In Gaceta Sindical, nº17, pp. 201-237

Pablo Sanz. CIREM Foundation

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