This contractual figure, “as conceived”, does not correspond to the intended purpose and “introduces precariousness”. With these words, Valdeolivas announced at a press conference the possible cancellation of the subsidy contract for entrepreneurs that came into force with the 2012 labor reform.
Remember that the treaty aimed to promote stable recruitment of entrepreneurs and SMEs, which is 95% of the corporate structure in our country. According to this, companies with fewer than 50 employees could receive a series of bonuses and tax breaks for the permanent hiring of unemployed people aged between 16 and 30, over 45 and women, who are hardest hit by the crisis, for a period of three years. It also authorized a one-year probationary period, allowing the worker to be fired without compensation if it has not expired.
However, according to the Foreign Minister, “this modality has neither achieved the desired results nor curbed timing, despite the favorable contractual conditions and economic incentives.
What does the CES say?
The data collected by the Economic and Social Council (CES) does not appear to be so unfavorable. like that in Report on the socio-economic and labor situation in Spain in 2017 the following assessment of this contract modality is compiled verbatim: “In 2017 246,827 subsidy contracts for entrepreneurs, which is 39% more than last year, following the trend of continuous increase in the number of executed contracts of this type since its inception. The increasing use of this contract is also reflected in the total number of full-time permanent contracts initially concluded, as in 2017 support contracts for formalized entrepreneurs accounted for 35.7% of these, compared with 28% in 2016 and 20% there they were in the past years represented on average”.
By age groupsIt states that “these contracts are mainly concluded with young people (37%) and workers aged between 30 and 44 (36%) who, with 26.8% of contracts concluded, represent almost three quarters of all contracts concluded with workers over 45 years of age .
Also noteworthy is a paragraph that separates the interest of employers from tax rebates and deductions in this type of contract. “Of the contracts concluded, only 3% involved the tax deductions provided for in certain cases for this type of contract. As has been pointed out in previous editions of this report, the use of the contract for entrepreneurs seems to be usually not associated with tax benefits these include (apart from the eventual incentive of premiums for the long-term unemployed under 30 and over 45) and Yes to other functions such contracts as the compatibility of the salary with part of the recognized unemployment benefit or the extension of the probationary period to one year.
What Entrepreneurs Say
Luis Tramonteacher at UDIMA and at the forefront of the technology company Aratech lifestyle technology , is one of those who, according to their own statements, have made use of the entrepreneur promotion agreement more than once. In his opinion, the introduction of this contract was a success “in a time of crisis, in which we all looked very closely at fixed costs and the time to integrate staff into our structures. It was an incentive to expedite recruitment of the most affected groups. Many of those over 45 who remained unemployed would not have recovered for the labor market without such measures. With this in mind, he admits that he was more than pleasantly surprised when he hired executives.
Tramón also highlights the convenience of the contract to test and attract talent, but also to keep them, since there is an obligation to maintain the employment relationship for at least 3 years to benefit from the incentives.
As for whether these types of measures encourage more or less job insecurity, Tramón believes that the use of technology has led to new business models, such as collaborative platforms, that need to be regulated by specific laws. “The problem is that legislation is always lagging behind, but you can’t go against the natural trend of the market as needed, we should look for hybrid models that favor coexistence but eliminate initiatives that don’t work.”
On the other hand the reflection that Miguel Angel Romerofounding partner of HRCS reads as follows: “You have to remember that a permanent contract is not given to us by the company, but to us. If an employee puts on their batteries, creates value and aligns with the values of the company, they will have no problem achieving this.”
Miguel Ángel Romero also defended the possibility of testing employees before establishing a permanent contract, as allowed by the Entrepreneur Support Agreement, and greater flexibility in the event of redundancies. “You have to assume that entrepreneurs would much rather hire than fire someone, but staying with someone who doesn’t work is very stressful.”
Finally, it also separates the rise in abuse from initiatives like the contract, arguing that “no entrepreneur will hire someone who doesn’t fit into a job, no matter the incentive. In fact, most of them were not even aware of the existence of the Entrepreneur Support Contract because very little was publicized.”
And the startups?
And if it is difficult for an SME to guarantee a 3-year contract, it seems almost impossible for startups. “How are we supposed to think about 3-year permanent contracts when most startups disappear after 2 years from birth?” is the rationale offered Alexander GonzalesCEO of Talentfy a job platform they prefer to call “Talent” because they don’t filter candidate profiles by age, education, or gender.
Alejandro González regrets the distancing of initiatives like the Entrepreneur Support Contract from the reality that exists in a startup, “where you are constantly rotating and you have profiles that can be useful to the organization today but maybe not in 6 months. All of this in an environment of uncertainty and at a brutal pace.” What entrepreneurs value in this case is the greatest possible flexibility to be able to hire and fire in an agile manner, “not only thinking about what will be cheaper, but also because startups in usually have few resources, but are also looking for the survival of the company”. He also alludes to the change of course on the labor market, in which “a contract for life is gradually becoming unthinkable. It almost comes to me to continue to talk about permanent contracts as a joke. What has to be said is that shortly employability will depend on the productive capacity of each professional and the value he contributes”.
In his specific case, he says he has 7 permanent employees in the workforce, to which he later adds 20+ freelancers working on projects. Despite this, he admits that he has entered into a contract that is suitable for taking advantage of the bonuses, but which he finds difficult to fulfill. “It’s natural selection and when we talk about startups we have to think of companies that can change 20 times in 3 years. I would propose more than austerity measures, others that encourage the creation of new businesses and labor market mobility”.