Spain: Self-employment in the Spanish labour market

A recent report on self-employment describes some of the main characteristics of the self-employed in Spain, as well as their views and perspectives. Almost two-thirds work in the services sector. Just over half consider that their biggest problem is the high social and administrative charges they have to pay, followed by high tax rates.

Introduction

Data from the Register of self-employed workers (RETA) suggest that self-employment is gaining in importance in Spain. In June 2016, the number of workers registered as self-employed increased by 11,000 to more than 3.2 million, the highest level since 2011. However, data from the EPA Survey – the Spanish Labour Force Survey, conducted by the National Institute of Statistics (INE) – show that the proportion of the self-employed fell slightly in relation to the total workforce. The number of self-employed increased from 3,060,700 in 2013 (17.9% of the total workforce of 17.14 million workers) to 3,087,400 in 2015 (17.3% of the total workforce of 17.87 million workers).

In July 2016, human resources firms Adecco and Infoempleo published the results of a survey on self-employment in the Spanish labour market (PDF). The survey is part of a report, Employment supply and demand in Spain 2015 (PDF), based on several information sources such as surveys of companies and professionals, job offers advertised on Infoempleo and Adecco websites, and data from INE and the Ministry of Employment. It draws particularly on 613 surveys conducted with enterprises and professionals, and a sample of 8,478 candidate employees who were asked about issues such as labour intermediation and labour market perception. There is no specific information about the methodology used for the section on self-employment.

The survey’s findings include some interesting details about self-employment in Spain and some of the perceptions shared by the self-employed.

Characteristics of the self-employed in Spain

Level of educational attainment

Most of the self-employed surveyed (64.3%) had a university education. This can be broken down as follows:

  • 39.7% had a primary degree;
  • 23.8% had completed a master's or other postgraduate level of studies;
  • 0.8% had a doctorate.

Only 0.5% of the self-employed surveyed had not even completed basic education and 7.3% had only passed basic education.

Sectoral distribution and turnover

The majority of the self-employed surveyed worked in the services sector (63.7%). The next largest categories were those who worked in information and communication technologies sector (16.7%), followed by the construction sector (14.1%).

Most (82%) did not have employees; 16.2% had fewer than 5 employees, 1.3% had 5–10 employees and only 0.5% more than 10.

Annual turnover was under €100,000 for 91.9%, while 6.3% had a turnover of between €100,000 and €300,000.

Location and working time

Around half of the self-employed surveyed (51.2%) worked from home. Just under a quarter (23.8%) worked in a rented space, 9.9% worked at a co-working site and 6.3% owned the place of business where they worked.

Nearly one in four worked seven days a week but most worked five days (34.7%) or six days (31.9%) each week (see table below). Only 9.7% of those surveyed worked less than five days per week. However, more than a third (36.3%) worked between eight and 10 hours a day, and 15.1% worked more than 10 hours per day.

Given these long working days, around 80% those surveyed said they did not combine self-employment with other salaried work. 

Working time of Spanish self-employed
Days per week Proportion of respondents Hours per day Proportion of respondents
<5 9.7% <5 8.0%
5 34.7% 5–6 15.7%
6 31.9% 6–8 25.1%
7 23.8% 8–10 36.3%
    >10 15.1%

 

 

 

 

 

 

 

 

 

Source: Employment supply and demand in Spain 2015 (PDF)

Financial sources

Most (68.9%) had used their own savings to set up their business. A quarter reported (25.1%) asking their family and friends for financial help. Other options reported were bank loans (15.1%), capitalising unemployment benefits (14.1%), applying for financial aids or subventions (7.3%) or resorting to crowdfunding (1.8%).

Assessment of current situation

One of the most interesting conclusions of the report on self-employment is that, while 57.7% of the self-employed surveyed said they had been happier since they started working independently, 41.8% admitted that they had become self-employed out of necessity. A combination of necessity and finding a good opportunity had led 25.3% into self-employment.

About two thirds (65.5%) said they would rather be full-time employees than self-employed. The main reason they gave was that being an employee provided more calm and security than being self-employed. This implies that only just over 3 in 10 were really comfortable with self-employment.

When asked about the personal resources required for successful self-employment, having suitable working experience was a priority for 31.9%, followed by having a good business idea (29.5%), having enough economic support (25.1%) or having the required training (13.6%).

Advantages and disadvantages

In terms of the benefits of being self-employed, the main advantages mentioned were being ‘their own boss’ (56.1%), deciding working time and schedules (51.4%), having more freedom (41.3%) and working on what respondents really enjoyed (40.2%). Some also mentioned higher personal satisfaction (37.1%), having more decision-making power (36%) or being paid more (8.6%).

Asked about the main problems they faced, 54.3% considered that high social and administrative charges were the biggest obstacle. The next biggest challenges were high tax rates (47%), finding new clients (39.9%) and unfair competition (that is, unequal conditions among competitors) and the black economy (36.6%). Other important challenges mentioned by respondents included finding financial help (27.7%), Spain’s economic context (25.6%), clients who did not pay their bills (20.4%) and decrease in demand (20.4%).

Economic crisis and perspectives

The economic crisis has severely affected the Spanish labour market as a whole, including the self-employed. When the survey was conducted, 65.8% of the self-employed said they were still feeling the impact of the economic crisis while 34.2% said that they were managing well.

Looking to the future, 21.7% of respondents said they would not be able to hire employees because their sector or area of business was stagnant or in recession, and 1.6% were planning to reduce employee numbers because of poor economic results. Because of the high cost of labour, 10.4% of respondents said they would not be able to hire new workers even if business improved. However, 9.1% said they were planning to employ new personnel in the coming year and 52.2% said they did not need employees to carry out their professional activity.

Among the small proportion of self-employed who were willing to hire new employees (9.1%), fewer than half (46.5% of this group) said they would consider taking advantage of government subsidies or support measures offered by public authorities. Almost a third (31.9%) said they did not even know how such support worked. Only 8.6% said they would apply for these measures.

The Spanish government has in general terms tried to incentivise self-employment, but 70.8% of this survey’s respondents said they did not think such measures would help to reduce unemployment levels. Only 14.9% believed that they would have a positive effect on the Spanish labour market.

Conclusions

The results of the survey show the contradictory reality of the self-employed in Spain. While 41.8% reported that they became self-employed out of necessity and 65.5% would rather be full-time employees, 57.7% stated that they have been happier since they started to work independently. While many reported that they valued being their own boss and establishing their own working tim, in practice many have to work very long hours and some even work seven days a week.

It is frequently said, particularly by trade unions, that the economic crisis has created a labour market dominated by uncertainty and short-term work. It seems that in fact the lack of stable employment opportunities may have encouraged many workers to become self-employed. There also seems to be an incipient trend, especially among young people, to dismiss traditional and stable salaried employment in favour of project-by-project self-employment.

The survey reveals that some of the main problems faced by Spain’s self-employed include:

  • high social and administrative charges;
  • high tax rates;
  • difficulties finding new clients;
  • unfair competition;
  • Spain’s poorly performing economy;
  • clients who fail to pay.

It is therefore not surprising that the Federation of Self-Employed Workers of Spain (ATA) has requested a cut in administrative charges and taxes for the self-employed and zero tolerance for those who fail to pay self-employed contractors for their work. 

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