CEPYME examines industrial fabric and the social protection of self-employed workers

Albarracín, Daniel

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CEPYME examines industrial fabric and the social protection of self-employed workers

Published: 30 April 2003

The Spanish Confederation of Small and Medium-Sized Enterprises (CEPYME) is the central employers' organisation for Spain's many companies employing fewer than 250 workers. This feature examines CEPYME's views on two issues of particular importance to it in 2003 - the structure of Spain's industrial fabric and the social protection scheme for self-employed workers (who make up part of CEPYME's membership)..

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The Spanish Confederation of Small and Medium-Sized Enterprises (CEPYME) is the central employers' organisation for Spain's many companies employing fewer than 250 workers. This feature examines CEPYME's views on two issues of particular importance to it in 2003 - the structure of Spain's industrial fabric and the social protection scheme for self-employed workers (who make up part of CEPYME's membership)..

The Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME) is the main national employers' organisation for small and medium-sized enterprises (SMEs) employing fewer than 250 workers. Though it has close ties with the Spanish Confederation of Employers’ Associations, (Confederación Española de Organizaciones Empresariales, CEOE) (ES9910257F), CEPYME has its own structure, to which sectoral and territorial associations are affiliated. Below we examine several of the issues which are currently among the priorities of CEPYME.

The business structure

The Spanish business structure is composed mostly of small companies, many of which are represented by CEPYME. Indeed, the average size of Spanish companies is lower than the European average. CEPYME believes that this could be a cause for concern because size is an important factor for firms in facing the challenge of internationalisation and innovation in globalised markets.

According to the latest central company directory (Directorio Central de Empresas, DIRCE) produced by the National Institute of Statistics (Instituto Nacional de Estadística, INE), in 2001 the number of companies in Spain increased by 49,925 to 2,645,000 - see table 1 below. This compared with an increase of 76,591 in previous year. This is explained by the decrease in the number and proportion of companies without employee and companies without a shareholding structure.

**Table 1. Number of companies by workforce size, January 2001**
.	Without employees	1 to 2	3 to 9	10 to 49	50 to 199	More than 200	Total
Total	1,408,792	692,964	385,814	134,513	18,820	4,414	2,645,317
Percentage	53.26	26.2	14.58	5.08	0.71	0.17	100

Source: Drawn up by author from CEPYME, based on DIRCE figures.

According to CEPYME, the figures indicate that economic activity is being concentrated in more qualified and larger companies, compared with the tendency of previous years in which self-employed and less established companies played a greater role. Some progress, though insufficient, has therefore been made in Spanish company structure.

According to CEPYME, 62.4% of business did not take the form of companies in 2001, down 1.6 percentage points on the previous year. The proportion of limited companies (sociedades de responsabilidad limitada) rose to 25.2% of the total, whereas the proportion of public limited companies (sociedades anónimas) fell to 4.9% of the total.

Considered by economic activity, from 1996 to 2001 companies in the 'other services' sector rose from 46.1 to 48.8% of the total and those in construction from 9.9% to 11.9%, whereas the proportion of all firms operating in industry fell from 10.4% to 9.2% and in retail from 33.6% to 30.1%, according to the DIRCE figures, which exclude the agricultural sector.

Special social security scheme for the self-employed

CEPYME's membership includes self-employed workers, and CEPYME considers this group to be an important part of the economic and social structure of Spain. Companies without employees make up about 53% of all firms (see table 1 above) and, when those with one or two employees are added, some four out of five companies are self-employed workers or firms with fewer than three wage-earners.

An area of particular importance for CEPYME with regard to the self-employed is their special social security scheme. Self-employed workers represent 18.35% of all social security contributors and have a special position between that of employers and wage-earners.

Self-employed workers are defined as those who work on their own account, carrying out tasks of management, or providing other services or goods on a profit-making basis, or workers who are partners of workers' limited companies with a shareholding of at least 50%. The Special System for Self-Employed Workers (Régimen Especial de los Trabajadores Autónomos, RETA) is the Spanish social security scheme with the best balance of assets and liabilities. It was created in 1970 and has been brought into line with other social security schemes under the principle 'for equal contributions, equal benefits', though there are still differences in social protection, because the benefits in RETA are in general lower. Table 2 below sets out the main differences between the general social security scheme and the special scheme for the self-employed,

**Table 2. Differences between the general social security scheme and the special scheme for self-employed workers**
Area of cover	General scheme	Self-employed system
Differences due to the nature of the schemes
Financial benefit for temporary incapacity (from common contingencies)	60% of the 'regulatory base' from the fourth to the 15th day off work, paid exclusively by the employer.	None. If an 'adhesion document' has been signed, the same benefit as in the general scheme as of the 16th day.
Partial permanent disability	Compensation equivalent to 24 monthly payments of the contributory base.	Not applicable.
Permanent, non-disabling complaints.	Compensation according to the complaint caused by industrial accident or occupational illness.	None.
Partial retirement.	Shorter working hours and payment of part of the benefit.	Not applicable (no partial retirement for the self-employed).
Maternity benefit.	Includes possibility of shorter working time combined with part of the financial benefit.	This benefit is available for the self-employed under the same conditions as the general scheme, except for the possibility of shorter working time.
Differences not due to the nature of the schemes
Calculation of 'life pension' Date when the contingency arises and accrual of the pension.	Any gaps in contributions, due to contributions not being compulsory, are integrated with the minimum base at any time. Day from which the contributors are in the relevant situation; the accrual of economic benefit starts on the following day.	These periods are taken into account for the calculation but with a zero amount. Understood to occur on the last day of the month in question and the first day of the following month respectively.
Replacement of the total disability pension with a compensation payment.	The amount depends on age and may be up to 84 monthly payments of the regulatory base. Period of option: three years.	The amount is equivalent to 40 monthly payments of the regulatory base. Period of option: one month.
Retirement pension	When workers demonstrate that they contributed to the now defunct old age and disability insurance and mutual benefit systems prior to 1 January 1967, depending on their age on that date, a period of contribution is assumed, to be added to the real period of contribution.	Persons who contributed to defunct old age and disability insurance and mutual benefit systems and were later switched to the RETA do not have this possibility.
Early retirement	For those over the age of 60, who contributed to the defunct mutual benefit systems prior to 1 January 1967, at least 15 years of contributions are required. For those over the age of 60, who started contributing after 1 January 1967, the requirements are six months' unemployment, following termination of contract not attributable to the worker, and 30 years of contributions.	Not applicable. However, early retirement could apply if the workers have also contributed to other schemes that do recognise this right, with the following requirements: workers must have contributed to the mutual benefit systems prior to 1 January 1967 or in a foreign country previous to this date; and at least a quarter of the contributions must have been made to schemes that recognise this right (if the workers have contributed for 30 or more years in in total, only five years of contributions to the recognised schemes is necessary).
Multiple employment	For the period in which the worker contributed to two schemes, only the most beneficial one will be taken into account for calculating the basis for the pension, whereas the second set of contributions are not accounted for or compensated.

Source: CEPYME

CEPYME considers that the progressive harmonisation of the different social protection systems in recent years is satisfactory.

In 2001, the number of workers contributing to the RETA self-employed scheme rose by 1.21%, whereas the number of contributors to the general scheme rose by 4.28%. The proportion of workers in self-employment has fallen slightly in recent years. A comparison with other statistical sources shows that the approximately 2.6 million contributors to RETA in 2001 coincided with the number of small companies without employees in Spain.

Commentary

The business structure in Spain is highly atomised. Nevertheless, there is a great concentration of business capital, due to new forms of association in networks of companies, in which many SMEs are dependent on the strong nuclei of large corporations. In our opinion, the differences in social protection between the general social security scheme and the special scheme for self-employed workers are still very great, particularly because a significant (but difficult to specify) percentage of self-employed workers are in fact disguised employees, with a fragile employment relationship and reduced rights (Daniel Albarracín, Fundació CIREM)

Eurofound recommends citing this publication in the following way.

Eurofound (2003), CEPYME examines industrial fabric and the social protection of self-employed workers, article.