Are sheltered employment centres in Spain economically sustainable?: Empirical analysis

Abstract

Economic sustainability is one of the most analysed topics in recent years, although studies on social enterprises are rarely found. In Spain, social enterprises encompass different types of enterprises, among which we find sheltered employment centres. The aim of this article is to analyse empirically whether sheltered employment centres are economically sustainable, generating added value for the Spanish economy. For this purpose, the Economic Value Added (EVA) is used as a measure of performance and compared with another traditional measure of performance, the net income. Based on the total sample of sheltered employment centres existing in Spain in 2022, and analysing their economic-financial information for the last four years available, the results obtained suggest that they were able to generate value and be economically sustainable, although the profits generated were not sufficient to cover the impact of the pandemic -COVID-19. In this sense, sheltered employment centres' indebtedness had a negative impact on economic profit and was a significant variable in explaining their economic sustainability. These results justify that these entities pay attention to the management of their financing, avoiding the use of financial resources at cost in projects with low profitability. Consequently, practical and theoretical implications are raised for all third parties interested in this particular type of enterprises, and future lines of research in this field are proposed.