Spanish government green lights new law on the social economy

Ministers also approved a five-year national strategy for the sector, which accounts for 10% of the GDP

Spain’s Council of Ministers approved a legislative proposal for a new social economy law on 10 April, along with a new national strategy for the social economy for 2023-2027.

“The advance of the social economy is not only positive for the sector, but for the whole of society”, second vice-president and minister of labor and social economy, Yolanda Díaz, told a  press conference in Madrid after the council session. “The social economy is synonymous with stability and democratic values.”

The draft Comprehensive Social Economy Law introduces changes to other legislation that affects the social economy, such as the 1999 law of co-operatives, the 2007 social enterprises law and the 2011 social economy law.

Along with the strategy, the draft law aims to revitalise, increase the visibility and consolidate the country’s social economy, which contributes 10% of the national GDP and includes the co-operative sector.

Changes include a new definition for the co-op movement, which is based on the principles defined in the International Co-operative Alliance’s Statement on the Co-operative Identity; and the introduction of new forms of participation and communication within co-ops to make best use of new tech.

A newly formed Equality Committee will develop plans to promote gender equality in co-ops. Worker co-ops will have to implement equality plans, identifying how well their general management systems have integrated the equal treatment and opportunities between women and men.

Other requirements will include occupational risk prevention measures, study of remuneration, working conditions, training opportunities and gender representation at executive level, and measures to prevent sexual and gender-based harassment. Co-ops will have to report to the Equality Commission on their progress, providing access to their records as evidence.

The draft law also contains a new definition of vulnerable groups and excluded people, which broadens the focus on the factors that determine vulnerability and social exclusion. It is hoped this will facilitate their transition to the ordinary employment market.

Furthermore, the law clarifies what entities form part of the social economy, mentioning co-operatives, social enterprises/non-profits, mutuals, special employment centres and employee-owned enterprises. To qualify as belonging to the social economy, enterprises have to reinvest 95% of their profits into the business to further its social mission.

The strategy accompanying the law was developed by the Ministry of Labor and Social Economy with inputs from representatives of 16 ministries and the autonomous communities, as well as sector bodies, trade unions and the social economy sector, including co-operatives.

The ministry says the strategy, which is aligned to the UN’s 2030 Agenda and the European Action Plan of the Social Economy, offers a range of support measures. These include technical assistance and funding for the creation of collaborative platforms, promoting collective entrepreneurship in rural areas, and using the social economy to help the integration of vulnerable women.

The strategy, which is still to be published, will not require a public hearing or parliamentary process to go through.

Luis Miguel Jurado from Coceta wants the law to pay more attention to the needs of worker co-ops (Image: Coceta)

Spanish worker co-op federation Coceta – which represents 17,600 associated worker co-ops with 305,291 workers – welcomed the draft law but wants the final text to pay more attention to the needs of worker co-ops – including problems with the Special Regime for Self-Employed Workers (RETA), the social security system for self-employed workers.

“Overall, it is a positive text for the social economy,” said Coceta president Luis Miguel Jurado. “However, as far as associated worker co-operatives are concerned, the preliminary draft falls short and does not include many of the demands of the sector, which would solve important problems suffered by our enterprises – such as those that have been occurring with the Equality Plans.

“From Coceta, we ask that the proposals made in other sections of the law be incorporated because they respond to the difficulties that are impeding our development, and the very recognition that our activity is business.”

With regard to the RETA contribution for co-op worker-owners, he said Coceta is concerned about the proposed solution – which is based on an increase in the percentage of so-called generic expenses.

Social security contributions for self-employed persons are based on their income from all economic, business or professional activities, individually or as a member of an entity, including worker co-ops. 

A deduction for generic expenses is applied to this income and under the new law this deduction will be 9% for co-operatives – up from 7% previously.

This, warned Jurado, “is not a solution as such because the problem is generated by including as work income other concepts that are not just labour advances”.

To address this issue Coceta asked ministers to modify Law 5/2011, which reforms the revised text of the General Law on Social Security.

Jurado called on the Spanish government, particularly the ministries of Labor and Social Economy, and Social Security, “to improve the text” to make it “more useful and supposes a greater positive innovation for the sector”.