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Economic crisis stifles cleaning sector in Spain17th of May 2013
Juan Díez de los Ríos, president of the Professional Association of Cleaning Companies (ASPEL), writes exclusively for ECJ about the professional cleaning sector in Spain as part of our series focusing on the major countries of Europe.
The economic crisis which is still gripping Spain, together with the complex Spanish employment framework, are significantly compromising the viability of many of the country’s cleaning companies.
At the start of the recession in 2008 there were 18,279 cleaning companies in Spain, with a total turnover of 8,300 million euros. Just two years later more than 56,000 employees had been forced to leave the sector, 2,169 companies had closed down and turnover had fallen by
14 per cent.
High outsourcing rate
The country has one of the highest percentages of cleaning services outsourcing in the EU, approximately 80 per cent, although it is highly fragmented. In 2010, 75 per cent of the 16,110 companies had less than 50 workers and only 0.45 per cent employed more than 500 people. It is this latter group which ASPEL represents.
ASPEL is the employers’ organisation in the buildings and premises cleaning sector. It represents 17 company groups, comprising 51 per cent of the sector’s turnover and 37 per cent of its workers (over 134,000), and it has a presence throughout the country. Its member companies’ business is concentrated in the cleaning of buildings - particularly offices (45 per cent), education (14 per cent), health (12 per cent) and transport (nine per cent).
The companies dominating the Spanish market are ISS, Clece, Eulen, Eurolimp, FCC, Pilsa, Acciona, Valoriza Limpisa and Samsic. They account for around 40 per cent of market turnover. Seventy-nine per cent of cleaning workers are female, 55 per cent are part-time and foreign employees account for 20 per cent of the workforce.
As is happening in other EU countries which have entered recession due to the economic and financial crisis, the Spanish cleaning sector is being very badly affected by budgetary adjustments in public and private tendering procedures. Another damaging factor is non-compliance with the law on late payment by public authorities, and the lack of liquidity to make salary and social security payments.
ASPEL has gathered data related to overdue payments by public administrations as a group to its member companies. In 2010 the total outstanding debt was 552 million euros, with late payment standing at 78 days for central government, 245 days late for local communities and 300 days late for city councils.
In March 2010 the serious problem of payment to suppliers to the public sector actually led to the Spanish government creating a special supplier payment-financing fund, providing liquidity for local and regional administrations. This had a briefly positive effect by virtue of the fact that the total debt to ASPEL companies fell by 69 per cent.
Despite this however, the arrears have not disappeared, given the fact that as of today overdue debt has grown to 378 million euros, with late payment ranging from 92 to 139 days. So ASPEL has publicly requested the reissue of the plan to strengthen assistance from the government in respect of payment to suppliers of services by the public authorities.
This situation is exacerbated by the fact competition in the cleaning sector is based solely on price. In some cases electronic auctions are now being employed, a controversial method among cleaning companies. From ASPEL’s point of view the processes of electronic auctions completely disregard the sustainability of employment, the quality of the service which will be provided, or respect for environmental and social responsibility - among other aspects. This puts pressure on price reform and the elimination of disproportionate tenders in public contracting.
Until very recently the decentralised structure of the Spanish State meant that a company wishing to work throughout the country had to adapt its personnel policy to the directives of 61 collective agreements in different spheres (provincial, autonomous community, sectoral, and even by type of work). In December 2012, however, a national collective agreement was signed for the first time - a real milestone for the market.
Major employment reform
Cleaning companies have also been greatly affected by the four major employment reforms which have been imposed during the last six years. This has constantly altered the economic picture for companies in sectors such as ours, which employ such large numbers of people.
As far as the future is concerned for the companies represented by ASPEL, the emphasis will be on improving their company strategies, diversification, growing in size and adapting as best as possible to the legal framework and the budgetary limitations of their clients. Progress very much depends on Spain’s economic situation but there is undoubtedly still potential for growth in the market. Not only that - new international markets are also opening up and bring additional opportunities.