Spanish family businesses saved the economy

Spain’s family businesses literally saved the economy from near collapse during the crisis years of 2008 to 2013, as they sacrificed profits to avoid cutting jobs in a period when unemployment was close to an unprecedented 30% of the workforce.

New research from the Institute for Family Business in Spain and a group of local universities showed that, instead of cutting jobs during the sharp economic downturn in the Spanish economy, family businesses actually continued to hire. The research found that per €1 million of revenues invoiced, Spanish family businesses increased the number of staff by 5.1 in 2013 — when unemployment was close to 30% — compared with 4.7 employees for the same amount of revenues in 2007, before the start of the crisis.

In contrast, non-family businesses survived the crisis through cutting jobs, from 3.1 workers hired before the crisis to three workers in 2013. During the crisis period, the research found that family businesses experienced a sharp fall in their profitability, which was largely due to their commitment to employment. Non-family businesses saw a less dramatic fall in profitability in the same period.

The statistics underline how family businesses were willing to sacrifice profits to guarantee employment during a time when the economy was in sharp decline. Spanish unemployment rose sharply from 2008 and peaked with nearly one in three workers unemployed in 2013. It is now around 20%. Without family businesses picking up the slack in the job market at the time, it is probably right to assume the Spanish economy would have entered an even more serious situation. The country’s GDP contracted by more than 4% in the two years of 2012 and 2013.

The robustness of the research was backed up by the fact that more than 140,000 businesses were polled by 80 researchers connected to 38 universities throughout Spain. The research provides pretty conclusive evidence of the wider role family companies play in the economy and their commitment to their stakeholders. Spanish family businesses account for 67% of private sector employment, equivalent to 6.58 million jobs, compared with 3.28 million jobs in non-family firms, according to the research.

Among other findings, the research found that Spanish family businesses are also much better at hiring women in management roles than non-family firms. According to the study, 73% of the management teams at family businesses had female representation, compared with a total for all Spanish companies of just 32%.