Spanish Sociedades laborales : activating the unemployed : a potential new EU active labour market policy instrument

This book investigates the potential of the Spanish Sociedades Laborales (SLs) as an instrument of active labour market policy for re-turning the unemployed to the labour market and also the transferability of the scheme to other EU Member States. Spanish Sociedades Laborales (SLs) – mostly small and micro enterprises – are a qualified form of conventional corporation, majority-owned by their permanent employees. Unemployed persons can capitalise their unemployment benefits as a lump sum to start a new SL or to recapitalise an existing SL by joining it. This makes SLs similar to start-up subsidies for the unemployed, an established instrument of active labour market policy across the EU. The new 2015 Law on Worker-Owned and Participatory Companies substantially modernised the concept of SLs 30 years after its inception. The book tackles two currently widely discussed policy issues at both the EU level as well as the national level, i.e., reactivating unemployed in the context of ALMP and encouraging employee co-ownership in the context of the economic reform agenda in particular with regard to corporate governance, regional economic stimuli and distributive justice. Foreword 5 Preface 8 Acknowledgements 10 Contents 11 Abbreviations 13 List of Figures 15 List of Tables 18 1 Introduction 20 Abstract 20 1.1 Definition of a Sociedad Laboral 22 1.2 Specific Context: Start-up Incentives as Active Labour Market Policy 23 1.3 Scope of Investigation 24 2 Review of the Literature on Employee-Owned Firms 27 Abstract 27 2.1 Benefits of Employee Ownership 28 2.1.1 Mitigating Agency Problems 28 2.1.2 Improved Enterprise Efficiency, Labour Productivity and Competitiveness 29 2.1.3 Recruiting and Retaining Employees 30 2.1.4 Economic Resilience and Survival 30 2.1.5 Stability of Employment 31 2.2 Problems Facing Employee-Owned Firms 31 2.2.1 Interference with Management 31 2.2.2 Potential Underinvestment 32 2.2.3 Risks for Employees 33 2.2.4 Potential for Free Riding 33 2.2.5 Obstacles Specific to Small and Micro-enterprises 34 2.3 Complementarity Between Employee Ownership in SLs and ALMP 34 3 Regulatory Framework 38 Abstract 38 3.1 Legal Framework and the 2015 Reform 39 3.2 Social Security Contribution Regime 46 3.3 Fiscal and Other Incentives 48 3.3.1 Specific Tax Incentives for SLs 48 3.3.2 Tax Incentives for SMEs and Newly Founded Businesses 49 3.3.3 Government Aids and Subsidies 50 3.4 Subsidies for Sociedades Laborales in the Basque Country 2015 52 3.4.1 Aid for Technical Assistance 52 3.4.2 Aids for Integration of Persons as Partners in Sociedades Laborales 53 3.4.3 Aid for Social Entrepreneurship 54 3.5 Organisations Representing Sociedades Laborales 55 4 Empirical Data on Sociedades Laborales, 1999–2013 58 Abstract 58 4.1 Population of Sociedades Laborales in Spain1 59 4.2 Development of Sociedades Laborales in Spain, 1999–2013 59 4.3 The Crisis Years 2007–2013 in Spain 66 4.4 Focus: Sociedades Limitadas Laborales in Spain 68 4.5 The Capitalisation of Unemployment Benefits in SLs in Spain 70 4.6 A Closer Look: Sociedades Limitadas Laborales in the Basque Country 2003–2013 73 4.6.1 ‘Victims of Their Own Success’—The Problem of Disqualification 73 4.6.2 Promoting the Capitalisation of Unemployment Benefits in the Basque Country5 75 4.6.3 Capitalisation of SLLs in the Basque Country7 77 4.7 Disqualification and Deliberate Transformation in Andalusia—2012 Survey Data 85 5 Evaluation of the Programme 89 Abstract 89 5.1 Cost–Benefit Analysis of the Programme in the Basque Country 91 5.2 Access to Finance 96 5.3 Secondary Employment Effects 98 5.4 Survival Rates, Comparison with Conventional Firms 100 5.5 Assessment of the Concept with Regard to EU Policy 101 5.5.1 Transferability of the Concept 102 5.5.2 Compatibility of National Start-up Incentives with the Scheme of Sociedades Laborales 104 5.5.3 Integrating the Concept of Sociedades Laborales into the Microfinance Programme 105 6 Conclusions 109 Abstract 109 6.1 Summary of the Findings 110 6.1.1 General Characteristics and Business Environment 110 6.1.2 Capitalisation of Unemployment Benefits and Access to Capital 111 6.1.3 Survival Rates and Experience During the Financial Crisis 112 6.2 Integrating the Concept of Sociedades Laborales into ALMP 113 6.3 Policy Recommendations 115 Annex I: Description of Data Sources 118 Annex II: Overview of Low-Threshold Limited Liability Companies in the EU-28 120 Annex III: Overview of ALMP Start-up Incentives in the EU-28 129 Bibliography 131 Bibliography 131 Index 139 This book investigates the potential of the Spanish Sociedades Laborales (SLs) as an instrument of active labour market policy for re-turning the unemployed to the labour market. SLs are mostly small and micro enterprises and a qualified form of the conventional corporation, majority-owned by their permanent employees. Unemployed persons can capitalise their unemployment benefits as a lump sum to start a new SL or to recapitalise an existing SL by joining it. This makes SLs similar to start-up subsidies for the unemployed, an established instrument of active labour market policy across the EU. This book examines the function and success of existing SLs and explores the transferability of the scheme to other EU Member States. It tackles two widely discussed policy issues at both the EU level as well as the national level: firstly, the reactivation of the unemployed into work, and secondly the encouragement of employee co-ownership in the context of the economic reform agenda, in particular with regard to corporate governance, regional economic stimuli and distributive justice. Front Matter ....Pages i-xxii Introduction (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 1-7 Review of the Literature on Employee-Owned Firms (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 9-19 Regulatory Framework (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 21-40 Empirical Data on Sociedades Laborales, 1999–2013 (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 41-71 Evaluation of the Programme (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 73-92 Conclusions (Jens Lowitzsch, Sophie Dunsch, Iraj Hashi)....Pages 93-101 Back Matter ....Pages 103-129 Annotation Investigates the potential of the Spanish Sociedades Laborales (SLs) as an instrument of active labour market policy for re-turning the unemployed to the labour market and also the transferability of the scheme to other EU Member States. Spanish Sociedades Laborales (SLs) - mostly small and micro enterprises - are a qualified form of conventional corporation, majority-owned by their permanent employees. Unemployed persons can capitalise their unemployment benefits as a lump sum to start a new SL or to recapitalise an existing SL by joining it Jens Lowitzsch, Sophie Dunsch, Iraj Hashi. Includes Bibliographical References (pages 119-124) And Index.