Barriers to growth
How to start, survive, grow and exceed national borders? These question were focal points during the second big conference of the Social Economy Thematic Network. Meeting was held on 30 November and 1 December 2016 in Bratislava.
The first part of the network meeting consisted of the opening session of the Slovak EU Presidency conference Social economy as a key player in providing effective answers to current societal challenges in the EU and the world. The session was chaired by Branislav Ondruš, State Secretary, Ministry of Labour, Social Affairs and Family, Slovakia.
1. Conference opening session
Representatives of the Slovak and Spanish governments and of the European Parliament and Economic and Social Committee called on the Commission to follow up the Social Business Initiative by including the Social Economy Action Plan in the Commission’s work programme. The Commissioner promised action on a number of issues.
Robert Fico, Prime Minister of Slovakia, started by commenting on the paradox that Slovakia supports the social economy politically, while it has little experience of it in practice, It is hungry for exchange so that it does not make mistakes. He recapitulated the scale of the social economy in the EU (15 million jobs, 8% of GDP), remarking that it has grown during the economic crisis and so proved it can withstand shock without shedding jobs. He emphasised that it does not create unfair competition, and that state support is a justified investment for the better functioning of the economy. Far from distorting the market, it corrects market malfunction. It extends the labour market where the private sector is unable to invest. This is very important at a time when people are losing confidence in European integration.
We have had enough of unrealistic ideas; we have to return to reality. We ask the Commission to follow up the Social Business Initiative in its 2018 work programme, and to act on the GECES report. So as to bring social justice and social security, the Pillar of Social Rights should be included in the roadmap following the EU summit in Bratislava.
George Dassis, President of the EESC, noted that following the tradition of Presidency support for the social economy, the Dutch Presidency asked for an opinion on the contribution of the social economy to social innovation. In particular, we need satellite accounts to measure the impact of the social economy, and we need an adequate ecosystem to allow it to scale up. The Commission has failed to put the Social Economy Action Plan into its 2017 work programme. To loud applause, he concluded: “We have had promises – but no action, which leaves a bitter feeling.”
Ján Richter, Minister of Labour, Social Affairs and Family of Slovakia recalled that this conference is the culmination of 15 events concerning issues such as maintaining decent employment, digitisation and the reconciliation of work and family life. By providing decent jobs, the social economy can help stem the tide of anti-EU sentiment caused by deteriorating working conditions. It can also contribute to building the social market economy and to regional development, and deserves to be supported in this. In 2017 Slovakia will implement a new loan and grants scheme to finance the social economy. Economic growth requires a properly qualified workforce, and the ESF can support integration and mentoring centres for the social economy.
Elżbieta Bieńkowska, European Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs, appeared by video message to thank GECES for its report and to note that Europe requires business models that reconcile social with the business concerns. She said that the Commission considers the social economy to be of high political importance both within and outside the EU. Noting the launch of Start-up and Scale-up Initiative she promised that the Commission would work on various aspects: access to finance, framework conditions, new technologies, social innovation and the international dimension. Given the clear political momentum and high expectations, we must work together.
Jens Nilsson MEP, chair of the EP’s Social Economy Intergroup, noted that the Intergroup is supported by over 80 MEPs and 5 political groups. They all have personal experience of the power of the social economy. A year ago, all 28 Member States signed the Council conclusions following the Luxembourg Declaration – which is helpful to the Commission’s pursuing support for the social economy. “The omission of the Action Plan from the Commission’s work programme is not a disaster. It is only paper; we need action – and we can still act.”
There is currently a debate about whether money should be transferred from cohesion policy to the EFSI. But money is a tool to make society better for people to live in. If you diminish cohesion policy, then you also diminish local and regional bodies. The new cohesion movement is coming from the local level. Never forget that social policy is a factor of production, so the social economy has to be part of the EU’s summit discussions.
Fatima Báñez, Minister of Employment and Social Security of Spain, said that for Spain, the social economy was, is and will be part of a very important thing, social dialogue. It is part of social capital and of economic revitalisation. It makes up 10% of Spain’s economy and employs 1 million people, directly and indirectly. It creates the sustainable jobs and inclusive revitalisation that we want. It has enabled Spain to start recreating the jobs that were lost in the crisis, and the Programa de fomento e impulso de la economía social 2015-2016 has helped this. Spain’s ESF operational programme for social inclusion and the social economy has an unprecedented budget of over €1 billion between 2014 and 2020. There is much to be done and we want to co-operate with everybody. We have to enhance transnational co-operation, and learn from each other’s good practices in taking initiatives to support the social economy and implementing the Rome Strategy of 2014.
Spain, along with France, Greece, Italy, Luxembourg, Slovenia and Slovakia adopted the Luxemburg declaration in 2015, which insists that the EU should recognise the variety of the social economy and include it in the Single Market Programme. Spain has a roadmap with three pillars:
- the social economy as a source of opportunities and jobs,
- the creation of new jobs to replace those lost in the crisis (which is half completed),
- the position of the social economy in the international sphere.
The chair, Branislav Ondruš, summed up by saying that 10 Member States will sign the Bratislava conference declaration, and more will join. This poses very clear and concrete demands. It signals a strong political commitment and shows that the social economy is developing in the EU.
2. GECES report – presentation and debate
The second session of the conference heard the presentation of the report of GECES, the Commission’s expert advisory group on social enterprises. The Commission then made a spirited defence of its apparent inaction.
2.1 Ariane Rodert, vice-president of the Various Interests group of the EESC and of its INT section chaired the session. She recalled that GECES has been advising the European Commission on social enterprises since 2012. Its first mandate ran until 2014 and the second is for the years 2015-2017.
2.2 Denis Stokkink, President of European Think-and-do Tank Pour la Solidarité and the General Rapporteur of GECES presented the final report and called for action. It is a very political report, which underlines 5 positive contributions of the social economy in:
- Creation of decent jobs,
- Social inclusion and reduction of poverty,
- Integration of migrants and refugees,
- Strengthening regional and local economies through co-creation,
- The struggle against gender inequality and discrimination.
He pointed out 3 new trends within the social economy:
- Circular economy,
- Collaborative economy,
- Inclusive entrepreneurship.
The general report consists of 13 recommendations to be implemented by the EU institutions, as well as Member States, divided into the following 4 sections:
I. Improving the visibility, recognition and identity of social enterprises (gathering evidence, creating a supportive community, policy dialogue),
II. Improving access to finance,
III. Improving the legal environment (including a soft legal measure to help Member States to design a supportive framework, and work on public procurement),
IV. Enabling social enterprises as key drivers of international development and growth.
In conclusion, he noted that the Member States are looking to the Commission to bear its share of the responsibility too.
The Commission’s response was split into two:
2.3 Michel Catinat, Head of Unit, DG GROW, noted the accelerating political dynamic in support of the social economy. The GECES report is of high quality in that it makes concrete recommendation on how to do what it recommends. It is important to act. And the Commission will act – Commissioner Bieńkowska has said so. To address the needs of all the different types of social economy enterprise it has to articulate the many existing actions, and is very active in so doing.
He pointed out several actions undertaken (or planned) by the EC, which can support the development of social enterprises, such as:
- The public procurement directive, on which the EC will offer training for public authorities;
- The study on relations between social economy and traditional economy, which will start in 2017 and could open up private procurement;
- Support for establishing national legal frameworks in Member States, which do not conflate social enterprise and corporate social responsibility;
- €5m to build an SE ecosystem in the Mediterranean countries;
- Co-operation with non-EU countries;
- Support for new technologies, which would help SE to innovate and scale-up (fab labs, open platforms, virtual budget);
- Study on worker buy-outs;
- Support for entrepreneurship education (establishing the competence framework).
2.4 Ann Branch, Head of Unit, DG EMPL, replied mostly on financial instruments, which can support SE included e.g. in the Juncker Investment Plan (EFSI), risk-sharing instrument (to be funded by EFSI), 3 other innovative instruments on the way (incubators, business angels, pilot payment for results scheme), new call on hybrid finances and a support platform for intermediaries.
The guarantee scheme launched in June 2015 worth €96m over 7 years has been doubled through the EFSI. In October 2016 the EIF published new social impact instruments regarding equity investment. In 2017 a further 20 social finance pilot projects worth €20m will be launched, and 6 workshops will be held.
Regarding building a co-ordinated SE community, EVPA has received an operating grant for social finance outreach, and a call is about to be awarded for the capacity building of SE support organisations.
Social enterprise is recognised in the circular economy action plan. Social enterprise is an investment priority in the ESF, and €20m has been allocated it to it in the operational programmes.
She also mentioned that following the 2014 mapping study on the SE eco-system, in 2016 there has been an update including 7 new country reports. The aim is to catalyse policy development. DG EMPL is also working in partnership with the OECD on policy briefs on scaling up and social impact measurement and is organising capacity-building seminars in this field. The compendium on SE policy is nearly completed.
3. Round table 1 – the social economy as a driver for the development of regional employment
Dorotea Daniele introduced the Social Economy Thematic Network and referred to the Committee of Regions report on the role of the social economy in restoring growth in regions. She posed the question: How can the social economy contribute to local development and collaborate with public authorities?
Antonella Noya (OECD) said that in the light of a 40% increase in inequality in a generation, there is a need for businesses that are resilient and where the economic and social dimensions go hand in hand. Local development cannot be top-down, and requires synergy between actors in using local resources and intangible assets. There are a lot of common points between local development and the social economy:
- Social economy is based on meeting needs, and profit is a tool to meet them. Therefore the SE is not constrained by short-term targets and can support a long-term approach to local development;
- Governance is participative: some social economy enterprises include local authorities as member, making them very suitable to act in local development processes;
- They are to be seen as partners, not unfair competitors, in integrating vulnerable people in the labour market, and in providing services to poor people.
A whole range of strategies and tools are available. Local authorities should use them and support SE networks.
Debate on the GECES report: Felice Scalvini (REVES), Anton Marcinčin (SK), Antonella Noya (OECD), Dorotea Daniele (DIESIS), Josep Vidal Fàbrega (Catalunya), Veselin Penchev (Up Group - Chèque Déjeuner)
Josep Fabrega from the Cataluña regional government confirmed that the social economy sector is very strong in the region, but is badly distributed. Though it is strong in Barcelona, in many rural areas the only social economy enterprises are old-fashioned agricultural co-operatives and some tourism co-operatives. Looking at territorial support for SE in structural way, Cataluña is establishing networks of cooperatives in cooperation with local and regional government. A good analysis of the current situation is crucial for planning future actions. Actions under way include succession planning, work in schools and universities, and WISEs, which have a 40% success rate in work integration.
Anton Marcinčin from the Slovak government mentioned that in Slovakia the development of the social economy sector is strongly connected to revitalisation of the least developed districts. The objective is to create decent, dignified jobs, rather than obliging unemployed people to migrate to find work.
Felice Scalvini, President of REVES and councillor in Brescia (IT), said that to develop the social economy we need to start with ourselves (society), as the social economy existed long before SE ‘consultancies’, and the sector is developing on its own. Developing the social economy should not be done through market competition. The process should be to discuss with all actors and decide common criteria, accredit enterprises that are eligible for public funding, and continually push standards up. The main issue in the social economy is not finance but the quality of leadership and management. Cities, not only regions, should be eligible for public funding. He suggests organising campaigns where citizens could contribute.
Veselin Penchev from the international co-operative group Up Group described the group’s growth to its current size of 3,000 employee-members, through taking over conventional firms and including them in the co-operative. He mentioned a voucher system from local authorities to support social entrepreneurship.
- It is important to include SE in the discussion on the multiannual financial framework (starting now).
- Paolo Ferraresi (RREUSE) and Pierre Wolkowinski: How can social enterprises go global? Their lack of a European dimension can inhibit growth. For instance transnational companies would like to cooperate with SEs (e.g. H&M in clothes recycling), but want one coherent structure to work with across different countries. At the moment they have to deal with different actors in different cities, so the cooperation cannot be structured.
- Antonella Noya: a good example of international expansion is the partnership Specialisterne has made with SAP. Groupe SOS is another ambassador of the social economy to other countries.
- Felice Scalvini: The social economy grows in a different way from capitalist businesses, by building trust, and retaining capital within the community. Its strength is that is consists of tortoises, not hares, and it will prevail in the end. Governments should realise this and stop trying to turn social enterprises into hares!
4. Workshop 1 – Growth and sustainability of social enterprises part 1: Concrete tools for growth
4.1 Dorotea Daniele introduced the Social Economy Thematic Network.
4.2 Małgorzata Lublińska, Polish Ministry of Economic Development
Małgorzata presented the place of social economy within Polish development strategies. The main documents addressing the social economy are:
- The Strategy for Sustainable Development
- KPRES (National Programme for Social Economy Development)
- Short-term strategies for territorial development: social enterprises are seen as service providers mainly in health and care sectors, focus on rural areas and marginalised territories, creation of jobs and cooperation with local authorities (including in local plans for development).
Although the theme is present in the strategic documents there is still a need for better analysis and diagnosis on the local level.
4.2 Andrzej Radniecki, Polish Ministry of Family, Labour and Social Policy
Andrzej presented a wide variety of tools supporting social economy sector in Poland, such as:
Local support centres for social economy are financed within Regional Operational Programmes (OPs), also with ESF, but they are all accredited by the Ministry. Their activities include local animation, supporting start-ups, professional counselling for existing social enterprises. 59 centres are already certified.
Main financing institution for SE organisations: national bank (BGK) and 5 intermediaries in macro-regions. Loans will be transformed into guarantee fund. There is also a new fund prepared by the Ministry of Education, called Social Entrepreneurship State Fund.
National Committee (KKRES) and 16 Regional Committees (incl. representatives from the government, local authorities, SE organisations, universities.
An ESF project is under way in partnership with the Central Statistical Office.
Education, counselling, clusters, social franchising.
4.4 Social franchising – Sven Bartilsson, Coompanion (Sweden)
There are 25 regional Coompanions with 120 employees in Sweden.
The European Social Franchise Network has 34 registered social franchisers. Franchising is one of the methods to grow, but there is no need to define it specifically, as there is no legislation in place. There are different types, some are more like private franchises, others more like networks. All in all it is about transfer of knowledge from one social enterprise to another, based on a common brand and shared values. Examples of social franchisees: Rekommenderas, Macken, Mamas Retro, Le Mat, Casa, Vägen Ut!
Process: analyse -> conceptualise -> transfer -> expand
The bottleneck is the financing of the development phase.
Future actions: ESF-funded project 2017-2019 to strengthen the network, European Code of Conduct for Social Franchising, interregional project for knowledge transfer/start-ups, scaling analysis on more social enterprises.
4.5 Thierry Stropp, Cooperjob (Italy)
Cooperjob is a (social) private employment agency, which started in Trento and Bolzano regions. Now it is a multi-stakeholder consortium using a hybrid approach. It went through a transition from cooperative services to market-oriented institution. One of the target groups is migrants.
4.6 Michal Smetanka, Slovakia
Social economy is used in Slovakia as a tool for social inclusion in localities, and there is strong political commitment. Now they are working on establishing a framework to standardise the social economy. Municipal social enterprises are developing in Slovakia: they are founded by the local community and controlled by the municipality.
The comment from the audience was that social economy development does not have to be financed only by EU funds, but should be supported by local budgets. The role of partnership between various stakeholders was underlined.
5. Greetings from the European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen
The Commissioner presented the current context in which we consider the social economy regarding e.g. unemployment, youth and migrants, stating that European project must be rebuilt on solidarity and social justice. EC initiatives in this direction include establishing the Pillar of Social Rights and the Skills Agenda. The social economy is able to boost social innovation and rebuild trust with local communities. There are however some bottlenecks preventing social enterprises from scaling up, which are being addressed by Member States and the EU, e.g. through the EIB’s Social Impact Accelerator and financial instruments such as the ESIFs, which all in all mobilise an extra €3bn. At the end of the speech Commissioner Thyssen expressed her appreciation of the GECES report.
6. Round table 2 – Social economy and the national legal frameworks
Moderated by Denis Stokkink, Pour la Solidarité
6.1 Giulia Galera, EURICSE
Giulia stated at the beginning that the social commitment is growing (on all levels). However there is a big challenge of conceptual diversity in the MSs and no common concept of social enterprises on the EU level. The SBI does not replace existing concepts, so EURICSE conducted a mapping report of SE ecosystems in 2014.
Legal recognition of social enterprises
1. Framework laws
- Social and solidarity economy (FR, EL)
- Social economy (SP, P)
- Third sector (IT)
2. Ad hoc legislation
- Co-op legislation adjustment
- Social enterprise status
- Legal forms that do certain actions
6.2 Martine Pinville, State Secretary, Ministry of the Economy, France
In France the Act on Foundations is a part of the social and solidarity economy (2014), which provides new jobs and a consolidated implementation model. France uses the possibilities offered by the European Investment Bank to boost the ecosystem for social enterprises, engages citizens to take part in the co-operatives and encourages municipalities and regional authorities to support social enterprises. Therefore there are regional chambers for the social and solidarity economy and social benefit contracts. As for the future plans, there will be a webpage co-created with social enterprises and new international projects to promote social entrepreneurship (with Morocco and Tunisia). France sees the EC communication on start-ups as an important signal of EU support.
6.3 Tadej Slapnik, State Secretary, Slovenia
Slovenia was one of the first states to adopt a law on social enterprises (2011), which allows their registration, monitoring and evaluation. This was followed by the implementation of the strategy and action plan (2013-2016). The main areas of social entrepreneurship in Slovenia: social security (family, disabled people), social inclusion, health, eco-food, culture, tourism, development of local communities and education. There are 2 types of social enterprises: A (business oriented) and B (socially oriented). Regarding funding instruments, there is a big reliance on grants, but a loan system is being planned. There will be a new social enterprise strategy for 2017.
During the 2007-2013 ESF programming period there have been 2 calls for projects, in which 70 social enterprises were selected. At the moment Slovenian government is working on modifications of the 2011 law and introducing social impact through satellite accounts, as well as making calls for new projects.
6.4 Juan Antonio Pedreño, Social Economy Europe
Juan Antonio underlined the importance of the goals at the heart of social enterprises and expressed the intention to build a wide network with Spain, France and Portugal.
He summarised the Spanish law, which acknowledges the role and defines social economy in Spain, shows its importance in creating jobs, and raises its visibility by being engaged in different committees etc.
6.5 Gabriela Korimová, Matej Bel University, Slovakia
Gabriela explained the reasons why Slovakia doesn’t have a law on social economy. She pointed out that transformative economy has different target groups from developed economy: long-term unemployed and socially excluded people form a big part of society. Moreover there is minimal interest from the media. Slovakia needs evidence of how social economy can contribute to GDP, and a working group has been set up to work on that. The main challenges regarding social enterprises are now: education and funds.
7. Workshop 4 – Growth and sustainability of social enterprises part 2: Public procurement as a tool for growth of social enterprises
Chaired by Valentina Caimi, Social Platform
7.1 Bruno Roelants, CECOP
Bruno presented the new European directive on public procurement, which applies to procurements worth more than €207,000 (purchases below that value are not subject to European regulations). Nevertheless, it plays an important role in general standard setting (even for public procurement below the indicated amount).
The main innovation is that the 2004 regulation was only about ‘reserved contracts’, which is not the same as social clauses. In reserved contracts you define directly who can compete for the tender, while social clauses define only profile/characteristics and values. The new directive also covers all disadvantaged people, including long-term unemployed, not only disabled people. The directive also mentions enterprises involved in health and care services.
Transposition of the two last articles is optional for the Member States. The directive gives the possibility not to choose the cheapest offer, but the ‘most economically advantageous’ tender.
Bruno underlined that it is important to allow groups and consortia to bid for these tenders nationally. He also mentioned a new trend towards co-programming public tenders, where many actors shape the public tender, i.e. define the need together with the public authorities.
7.2 Kristian Kirkegaard Kornum, City of Copenhagen
Kristian presented social clauses used by the City of Copenhagen in the building and construction field (total procurement over €1bn a year). The Danish model requires authorities to comply with social clauses or to explain publicly e.g. on their website) why not. The state needs to report on it once a year, but regions and cities do it voluntarily.
In Denmark there are different types of clauses: strict clause, competition clause, agreement clause, partnership. The City of Copenhagen chose to use strict clauses for contracts over 6 months or 10m DKK (€13m). 10% of the relevant payroll should cover the trainees. If the contractor does not fulfil this condition he needs to pay a fee of €13,000.
Public Unemployment Centres and trade schools are involved in the process and help the contractors to find the trainees. 12 municipalities in Copenhagen have created an association to facilitate this process, which could be franchised across Denmark and abroad.
7.3 Elisabeth Díaz, Trinijove and ENSIE, Barcelona
Based in the municipality of Trinitat Vella in north Barcelona, Fundació Trinijove operates work integration social enterprises (WISEs) managing green points in the city. Barcelona city council, through the company TERSA (Waste Treatment and Selection SA), launches a negotiated procedure reserved only for WISEs, which must be accredited by TERSA. At the moment there is a 3-year contract running 2014-2017, whose beneficiaries are socially excluded people and migrants. In November 2016 the City of Barcelona issued the ‘Social Public Procurement Guide’.
7.4 Patrizia Bussi of ENSIE presented the state of play of the transposition of 2014 directive, which was obligatory for the Member States (the deadline was April 2016). Reserved contracts were included in the following states: BE, ES, FR, HU, IE, NL, RO, SK, UK. Specific situation: AT, CZ, HR, IT.
3 current initiatives to raise awareness:
- Spain – FAEDEI works with each regional government; they produced a handbook and template for a call for tenders.
- Croatia – trainings on responsible public procurement.
- Romania – recommendations for public authorities.
7.5 Elena Sivová, Regional Development Agency Banská Bystrica, Slovakia
So-called ‘reserved contracts‘ in Slovakia are used mainly to support disabled people, in sheltered workrooms and sheltered workplaces, while there is insufficient use in the promotion of social economy entities.
The main barriers are:
- the absence of legislation on reserved contracts for the social economy subjects (SPPI and SSE as defined by Employment Law), while the law only regulates reserved contracts for sheltered workshops and sheltered workplaces;
- limited experience and readiness / skills of actors, for example in the separation of orders, setting criteria for the application of social aspects in public procurements;
- insufficient public pressure / public opinion on the use of social aspects in public procurements.
Karel Vanderpoorten (Flanders), raised the issue of promoting social values within conventional companies. Flanders has just launched a new call on integration of workers within the mainstream economy, based on co-operation between 2 sectors, not only social economy.
Luigi Martignetti (REVES), emphasised the importance of mutual learning seminars on how to use all new possibilities in public procurement without legal risk.
Workshop participants recognised that social economy organisations need to lobby locally.
8 Workshop on coordinated calls
Aleksandra Kowalska (AEIDL) presented the outcome of the capacity building seminar on preparing and managing transnational calls, which took place in Brussels on the 7-8 November 2016.
The main action points are to enhance the visibility, number and impact of transnational projects within ESF:
- EC will send an official letter to ESF Managing Authorities and ask for their commitments regarding implementation of transnationality.
- AEIDL will launch a special task force on calls from January 2017, whose tasks will include:
- Review terms of reference,
- Synergy between themes,
- Streamline and agree TCA format, debug system,
- Stimulate national networks,
- Help organise partner search fora,
- Monitoring, impact maximisation,
- Member States are strongly encouraged to set up a national network on transnationality within ESF (like Finland did).
9 Present (10 Member States)
- Paulina Chodyra (PL)
- Natasa Kontaratou (EL)
- Akaterini Christofi (EL)
- Aleksandra Kowalska (AEIDL)
- Dorotea Daniele (Thematic Expert)
- Linda Maršíková (CZ)
- Jelle Debaenst (BE)
- Luigi Martignetti (REVES)
- Stefan Domonkos (SK)
- Victor Meseguer (Social Economy Europe)
- Nena Dokuzov (SI)
- Andrzej Radniecki (PL)
- Petra Francová (PPP, CZ)
- Małgorzata Saracyn (PL)
- Charlotte Grüber (ENSIE)
- Ancuta Vamesu (RO)
- Apostolos Ioakimidis (EL)
- Karel Vanderpoorten (BE)
- Toby Johnson (AEIDL)
- Ksenija Wasserbauer (HR)
- Sinnika Kauranen (FI)
- Anna-Lena Wettergren Wessman (SE)
- Erdmuthe Klaer-Morselli (REVES)
- Darja Zorko Mencin (SI)