This December, the European Commission presented an action plan to assist the member states in delivering on the European social market economy’ concept with a particular emphasis on employment and job-creation issues, on fair and inclusive recovery, as well as on green and digital transitions. All these aspects in connection with business are included into the concept of “social enterprise”.
The EU’s concept of “social market economy” includes a variety of organizational, legal, corporate and businesses entities, such as social enterprises, cooperatives, mutual benefit societies (as a specific type of collective insurance), non-profit associations, foundations, etc. At the center of their activities, alongside creating profit, are people’s wellbeing and environmental protection, So-to-say, the bottom-up process is involved: e.g. businesses have to reinvest most of their profit into numerous specific social needs and circumstances.
Building on the Commission’s 2011 Social Business Initiative, the present action plan was prepared through extensive consultations with the states and businesses in the member states.
Social enterprise’s concept in EU
Social economy organisations represent such entities which put social and environmental purposes first, reinvesting most of their profit back into the organisation. Basically, there are about 3 million social economy entities in Europe: they offer solutions to key challenges in states’ agendas while they employ some 14 million people. Such “social-corporate” activities are diverse in range of sectors and organizational forms, e.g. from care services to recycling, from numerous cooperatives to social enterprises. The states’ enhanced support to the social economy creates not only jobs, but also allows organisations to increase their social impact.
The social entrepreneurship gains momentum: during last decade alone the share of the population involved in this social activities increased in numerous EU states: e.g. at about 4% in Belgium, 7.5 % in Finland, over 3% in France and Italy, 5.4 % in Slovenia and 5.7 % in the UK. Presently, approximately one in four businesses founded in the EU would therefore be regarded as a “social enterprise”.
Some examples can be seen in the Social Business Initiative “Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation”, SEC (2011) 1278 final. See press release at: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_6568
Within present post-covid conditions, the EU single market needs new, inclusive growth, focused on employment for all, delivering on growing desire of Europeans for work, consumption, savings and investments to be more closely related and aligned with “ethical” and “social business” principles. In order to promote a “highly competitive social market economy”, the Commission has placed the social economy and social innovation at the center of this European political guidance: both in terms of territorial cohesion and in search for new solutions to societal problems. Particularly, in the EU and the states’ actions aimed at combating poverty and exclusion, under the EU’s recent initiative concerning the innovation union, the platform against poverty and social exclusion, and the “Single Market Act, SMA”.
As soon as social enterprises are part of the EU’s “social economy”, their objectives are to have a “social impact” rather than making profit for their owners or shareholders; they operate by the idea of providing goods and services for the market in an entrepreneurial and innovative fashion and using profits primarily to achieve social objectives. Such enterprises are managed in an open and responsible way by particularly involve employees, consumers and stakeholders which are affected by their commercial activities. Therefore, the notion of “social enterprise”, as well as that of “social entrepreneurship” covers the types of business with the social or societal objective of the common good as the reason for the commercial activity (often in the form of a high level of social innovation) and those where profits are mainly reinvested with a view to achieving these social objectives.
Note. More in the following Commission’s documents: Europe 2020- a strategy for smart, sustainable and inclusive growth, COM (2010) 2020; Communication on the Innovation Union COM (2010) 546 final, 6 October 2010; Communication on the ‘European Platform against Poverty and Social Exclusion: a European framework for social and territorial cohesion’, COM (2010) 758 final of 16 December 2010; and “SMA- twelve levers to boost growth and strengthen confidence”, COM (2011) 206 final of 13 April 2011. Reference to: http://ec.europa.eu/internal_market/smact/consultations/2011/debate/index_en.htm.
However, the regulatory environment at European and national levels do not always take sufficient account of the specific characteristics of social enterprises in particular with regard to the rules on public procurement or existing statutes. This complicates mobilization of investors and access to grants or public contracts and sometimes forces them to use complex legal arrangements. Social enterprises which are not associations are thus sometimes unable to take advantage of the facilities offered by local authorities to associations, argues the Commission.
To remedy the existing situation, the Commission suggests the following three main actions:
a) The present action plan aims at improving good practice on socially responsible public procurement and promoting the social economy’s concept outside the EU: thus, creating optimal conditions for the social enterprises and the whole national social economy sector. In this regard, policy and legal frameworks are having important role in creating the right environment for the social economy to include taxation, public procurement and the state aid frameworks. The Commission will propose a Council Recommendation on developing the social economy framework conditions in 2023; it will also publish guidance for the member states on taxation frameworks for social economy organisations to facilitate easier access to state aid.
b) Opening opportunities for social economy organisations to start-up and scale-up: the social economy entities should benefit from support to business development’s startups; besides these entities shall be supported in re-skilling and up-skilling of their workers. For 2021-2027, the Commission is aimed at increasing such support with over €2.5 billion allocated (as was due in the social economy support during 2014-2020). Among other actions, the Commission will launch a new EU Social Economy Gateway in 2023 to ensure social economy actors can find all the information they need on the EU funding, policies, training and initiatives. It will also launch new financial products in 2022 under the InvestEU program and improve access to funding. In 2022, the Commission will set up a European Competence Centre for Social Innovation.
c) Making sure the social economy and its potential are recognized in national governance. Present Commission’s action plan aims at making “social economy” more visible while improving recognition of its work and potential. Thus, the Commission will: a) propose to the states recommendations concerning the increasing role and specifics of social economy, and b) launch a study to collect qualitative and quantitative data for a better understanding of social economy by citizens and businesses in the states. Commission will also organise training courses for public officials on various aspects of social economy and promoting social economy’s principles at regional and local levels by fostering cross-border exchanges. Besides, the Commission will launch a “transition pathway” in dialogue with public authorities and interested parties to help the green and digital transitions in the social economy.
The Commission seeks public views on the transition pathways through an EU survey open until 28 February 2022.