Raúl Contreras

Ashoka Fellow
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Spain
Fellow since 2006
This description of Raúl Contreras's work was prepared when Raúl Contreras was elected to the Ashoka Fellowship in 2006 .

Introduction

Raúl is creating employment for marginal groups normally excluded from the labor market through an integrated model in which social and economic interests converge. He has converted corporations into agents of social transformation to bring about a more inclusive economic system.

The New Idea

Raúl is reshaping traditional economic tools to demonstrate that marginalized groups can be profitably and sustainably employed. Current Spanish “insertion firms” benefit from a government subsidy for employing vulnerable populations but fail to improve the long-term outlook for their beneficiaries. Through the social holding company IUNA, Raúl is applying standard, competitive business practices to insertion firms that effectively prepare employees for main-stream employment. Central services, such as sales, training, financing and marketing that independent firms could not afford are provided as central services by the holding company. Raúl is developing other profitable business models by focusing on the sectors in which insertion makes more business sense; that is, those that are manual labor intensive and do not require highly qualified employees (e.g. messenger services, gardening and construction). His goal is to create models that allow the mainstream economy to become the agent for the insertion of these groups into the labor market.

The Problem

The current economic system with its profit orientation often excludes members of vulnerable populations: single mothers, former prisoners or addicts, homeless, disabled individuals, etc. Social exclusion in Spain is difficult to quantify, but growing poverty levels indicate that nearly 20 percent of the population now lives below the poverty line. They also reveal that the percentage of the population living in the “fourth world” is growing due in part to immigration which exacerbates this problem. The Spanish government currently addresses unemployment and economic exclusion by funding “insertion firms”, which receive subsidies for employing certain vulnerable groups. However, the traditional “insertion” model has failed to meet its goal of inserting beneficiaries into society or the labor market. Although the funds were intended for use by mainstream businesses, work integration today is carried out largely by social welfare institutions which create social enterprises. These quasi-companies aim to train and prepare marginalized individuals for the mainstream workforce, giving them the tools to find employment and stay employed, but their stopgap charitable attitude satisfies only short term needs. They consistently fall short because they are not equipped to meet the needs of a normal business and cannot provide marginal people with the adequate training to find a job in the labor market. Instead, these individuals remain in a cycle of exclusion. To prevent this, insertion firms give employees permanent contracts, but this reduces incentive for acquiring job skills and re-integrating into the mainstream economy. Consequently veritable ghettos are created rather than real social integration. Thus, the current model of insertion firms artificially perpetuates inefficient business structures that survive due to subsidies from public funds, and most will eventually disappear. The paradigm perpetuated by these programs—one which assumes that vulnerable groups can not be profitably integrated into the mainstream market—is not sustainable over the long term. Even worse, this paradigm prevents effective integration of vulnerable populations into the labor market.

The Strategy

Raúl’s strategy is to prove to businesses and society that employing marginal people or people in danger of becoming marginalized is both economically viable and socially responsible. He believes that in order for the current economic system to stop being the main cause of exclusion, it is necessary to involve free enterprise and change it from within. Raúl began his work by demonstrating alternative models for employment of marginalized populations; non-charitable models that directly transfer to the corporate sector. His efforts borrow every-day strategies from the business world not ordinarily used in socially oriented work. He created a series of companies to employ high numbers of low-skilled workers and focused on fields where marginalized groups have a competitive advantage—gardening, moving services, construction, etc. Unlike Spain’s traditional insertion firms, his companies are supervised by executives with management experience in the private sector. While corporate decision making may be sensitive to the special needs and situations of employees, overall, the culture is an efficient, competitive, private-sector vision. Raúl’s focus is to build these companies, each with its own profitable model of employee insertion. He has designed IUNA, a holding company for these businesses, in order to take advantage of economies of scale and synergies between the companies. IUNA is “owned” by CSO Novaterra and works to procure financing for member companies, provide consulting services, assists firms to detect new marketing opportunities, and facilitates marketing and sales among other functions. IUNA provides training and is a key part of the management team while company personnel acquire the necessary skills for their positions. With seed funding, IUNA can attract private sector capital to fund its expansion. By setting up IUNA as a corporation, Raúl has imbued the enterprise with the ability to mobilize capital which citizen organizations of small-individual enterprises can not match. IUNA is an independent financial entity which sells its stocks to shareholders. The resulting capital provides financial support to the firms of which IUNA is the sole administrator. In addition, Raúl has put in place the mechanisms to create a secondary market for investors to buy and sell shares based on their technical accounting value. This advancement provides liquidity to each investment which eludes most socially oriented firms. IUNA’s unprecedented success in one Spanish State has already attracted considerable attention. The federal government recently asked Raúl to develop a plan to create a similar holding company for each region of the country—and a prestigious Spanish foundation is also pursuing plans to fund the project’s expansion. Raúl will replicate IUNA by creating a Network of Solidarity Economy Development Centers across Spain. The network aims to foster the social integration of the largest number of people by taking advantage of the synergies and power of the network to transform the current economic system. Like all aspects of IUNA, this expansion is being carried out based on solid business principles and thorough market research. Moreover, Raúl is working in close collaboration with companies to analyze their needs and find areas of mutual benefit. In doing this, he can design other models to insert marginal people into the labor market. For example, by using a temporary employment agreement for specific jobs and services, people may be placed in the gardening firm of the holding supplies personnel of another company. Similarly, Raúl is developing a “backpack firm” model as an efficient response to worker absenteeism and personnel turnover in large companies. Companies traditionally increase their permanent staff size or rely on temporary employment agencies to fill the gaps left by missing workers, but both methods result in high costs. The first requires a firm to expand its workforce without augmenting its production, while the later results in the continual training of temporary personnel; not able to fully master their work. Raúl’s “backpack firm” offers a better solution. Its contracts with large multi-national corporations permanently cover the number of positions required by a company; continually training a group of workers in one of a series of tasks that until it is mastered. Unlike temporary employment agencies, the “backpack firm” has substitute workers on its staff and will train them to rotate in all the positions required by a company. He offers an “outsourcing” of low-skill labor to cover the personnel needs of large corporations.Raúl’s backpack firms and holding companies lead toward his ultimate vision: a future where insertion firms are no longer necessary because companies see the benefits of employing diverse groups of citizens and thus become the main agents of economic inclusion. Beyond demonstrating that employing these groups can lead to success and profit, he has become involved in the development of public policies to provide incentives to companies and public institutions to hire groups liable to exclusion. Moreover, he has expanded his work with socially-conscious banks to develop the financial instruments and business services that socially-oriented businesses may lack—by providing loans with fair interest rates and collateral requirements. Building on his success Raúl is proving how another model of business enterprise is possible.

The Person

Raúl has a history of serial entrepreneurship in business and social work. At the age of 14, he was expelled from his religious school. Restless he went to work and continued his studies at night. He did a little bit of everything, enabling him, “to know other realities, mature, and gain some common sense”.A Boy Scout from the age of 6 to 26, this experience had a strong influence on his values and entrepreneurial spirit. It enabled him to have contact with young men who had spent time in reformatories, handicapped people and other marginalized groups. At 17, he set up his first business: a laundry to provide work for ex-reformatory inmates. Although it was not as successful as hoped, it helped him understand the additional difficulties faced by marginal groups of people in finding jobs in a labor market insensitive to their needs for support, in order to achieve true social integration.At 22, while an Economics Major at college, he decided to set up a “different” kind of company. Raúl set up a marketing and communications company, but decided to give it a social orientation because he did not like what he had experienced in the companies he had worked for previously. Ten years later, when it was the time for a change, he combined his business interests with his passion for rural life and set up a platform for marketing homemade rural food products.Both business experiences showed him the need to take advantage of what works best in the traditional economy and apply it to the social sector. Raúl succeeded in inserting people liable to social exclusion into his businesses, and the experience was very positive. To promote their inclusion on a greater scale became the center and core objective of his work—using his entrepreneurial know-how and his ability to communicate with the business sector. Raúl identified the sectors, professions and jobs where the integration of marginal groups could be carried out in an efficient and profitable manner, and began to develop new sustainable models for the market place. Raúl demonstrated that with certain support and training, all people could work and lead lives filled with greater dignity.