Guide to Business in Spain logo

2. State incentives for training and employment

2.3. Local employment initiatives (no time limit)

In addition to the incentives to foster employment referred to above, aid and subsidies may also be granted for investment projects aimed at generating economic activity and stable employment which are executed in local and regional areas of Spain, where these are subject to classification by the State Employment Public Service as investment and employment (I+E) projects or entities.

The specifications for the grant of this aid are set out in the Order of July 15, 1999 of what was, at the time, the Ministry of Employment and Social Security, which have remained in force in the context of the new Spanish Employment Strategy 2017-2020 approved by Royal Decree 1032/2017, of December 25, 2017.

In this Employment Strategy 2017-2020, special importance is given to the planning, assessment and monitoring of activation policies for employment based on results. Thus, it comprises a battery of projects and measures aimed at rationalizing the unemployment protection system and providing the National Employment System with key tools, infrastructures and data systems, with a view to modernizing it and enhancing its efficiency and effectiveness. These measures include most notably the following:

  • Improvement of protection systems: Reinforcement for orientation, training, requalification, intermediation and protection programs for long-term unemployed persons over 50 years of age; and for the integral orientation, training and direct support program for young people without professional qualifications.
  • Reinforcement of support systems and instruments, with a new frame of reference for public/private and public/public cooperation.

Specifically, under the 2017-2020 Strategy, the then Ministry of Employment and Social Security approved a Strategic Plan of subsidies for the period 2017-2019, as a planning instrument for public policy in this area. Nonetheless, at present, a Strategic Plan has not yet been approved for 2020. In this connection, pursuant to the Strategic Plan of subsidies for the 2017-2019 period, prior to April 30, 2020 a report is to be prepared on the degree of progress of the Plan’s application and on its effects and the budgetary and financial repercussions of its application in 2019, as well as a report assessing the Plan, to be borne in mind for the preparation and approval of the following Strategic Plan.

The 2017-2019 Strategic Plan included two subsidy lines which basically conform to the specifications of the aforementioned Ministerial Order of July 15, 1999. We refer to (i) subsidy line 1.7: "Employment Agents and Local Development (EALD)" and (ii) subsidy line 1.27: "Enterprise (Axle 5 Autonomous Community Management of funds made available by the State Public Employment Service)".

Having established this, for a project to be classed as “I+E” and, accordingly, to be eligible for financing as a “local employment initiative”, it must meet the following requirements:

  • A local Corporation must support the business project by contributing economic and/or material resources, such as infrastructures or services assisting it in the start-up and management of the business.
  • Projects must provide for the hiring of workers or the recruitment of new partners in the case of projects involving cooperatives or labor companies.
  • Projects must provide for the incorporation of a new company with a maximum number of 25 employees at the time of incorporation.
  • Projects must relate to a newly formed enterprise.
  • Projects must be aimed at the production of goods and/or services which relate to emerging economic activities or, in the case of traditional activities in the area, goods and/or services which will cover needs not covered by the existing structure.
  • Projects must meet technical, economic and financial viability requirements.

The Incentives which may be granted for projects deemed eligible may take any of the following forms:

  • A financial subsidy aimed at the reduction by up to three percentage points of interest rates on loans granted to the company in connection with its incorporation and establishment. The maximum amount of a subsidy of this type will be €5,108 per indefinite-term job created.
  • A subsidy for the support of management activities, to help the developer or trader make the decisions needed for the functioning of the enterprise (e.g. subsidies for the external contracting of market or technical research, reports, and/or training programs). This subsidy will only be available during the first year after the incorporation of the company and will cover 75% of the cost of the qualifying services up to a maximum of €12,020.
  • A subsidy for technical assistance for the hiring of highly-qualified technical experts, covering 50% of total labor costs (including employer social security contributions for a maximum period of one year). This is a one-time subsidy with a ceiling of €18,030.
  • A subsidy for each indefinite-term employment contract, amounting to €4,808 for each new worker hired under an indefinite-term full-time contract (or the related proportion of such overall amount in the case of indefinite-term part-time contracts).
  • A subsidy for cooperatives and labor companies amounting to a maximum of €4,808 per unemployed working partner recruited on an indefinite-term basis. This subsidy is not compatible with those described in the two preceding points.

All the aforementioned subsidies may be increased by 10% where the main activity is related to certain areas, such as the protection and maintenance of natural areas, new information and communication technologies, waste management, mass transportation, the development of local culture, and the care of children, the handicapped and the aged.

Applications for these incentives must be submitted to the respective Provincial Directorate of the Employment Public Service or the appropriate Autonomous Community body, which are the bodies in charge of their management and which therefore have the task of selecting the projects and granting the related aid.

This aid and these subsidies are compatible with others granted by other government agencies or public or private entities, although the total amount of the subsidy awarded, whether taken alone or together with aid or subsidies granted by other public authorities, private or public entities, may not exceed 80% of the cost of the subsidized activity.