THE SOCIAL ECONOMY THEMATIC NETWORKPROJECT
How to involve municipalities in the social economy
Peer review
Prague, 8th – 9th June 2017
Summary report
Author: Petra Francová
July 2017
Table of contents
Executive Summary
Introduction
Main characteristics of the good practice approach
The local service economy in Flanders
Summary of the case study
What works
Main points raised in the comment papers and peer review discussions
Conclusions on the relevance/utility/transferability of good practice cases
Social cooperative Adelante Dolmen and the municipality of Milan in Italy
Summary of the case study
What works
Main points raised in the comment papers and peer review discussions
Conclusions on the relevance/utility/transferability of good practice cases
Municipal social enterprises in Slovakia
Summary of the case study
What works
Main points raised in the comment papers and peer review discussions
Conclusions on the relevance/utility/transferability of good practice cases
General conclusions and policy implications
Implications for dissemination and stakeholder engagement strategies
Useful resources
Executive Summary
This report summarises the findings of the peer review on municipal involvement in the social economy, held in Prague on 8th – 9th June 2017. 12 member states (BEnl, CY, CZ, EL, ES, HU, IT, PL, SE, SI, SK, UKsc), along with the European Commission, took part in the learning process. During the peer review three cases were discussed, all related to the involvement of municipalities:
- The local service economy in Flanders
- Social cooperative Adelante Dolmen and the municipality of Milan in Italy
- Municipal social enterprises in Slovakia
Both the case studies and the discussions and workshops during the meeting supported the process of learning, and based on them many important lessons were learned by the participants. The most important lessons learned are presented below.
The local service economy in Flanders
The local service economy (LSE) in Flandersprovides jobs to people from disadvantaged groups, e.g. immigrants, people with low levels of education, and people above the age of 50. Such peopleimprove their competences and are provided with specific support and guidance inthe workplace, with the aim of finding them a job in the regular labour market.LSE provides services in niche markets that react to new social and environmental needs with strong local aspects, e.g. complementary home care, community-focused childcare, transport and shopping services, energy-saving measures, bicycle points and social restaurants.The LSE funding model is known as“cloverleaf funding”;it is a combination of revenue streams from different stakeholders. The LSE services are not economically viable and the employment of target group employees in the LSE qualifiesit as a Service of General Economic Interest.The Flemish system has been fine-tuned over the years and now it seems to be too complex to be transferable in its present stage but it can be developed gradually according to local needs and conditions.
Social cooperative Adelante Dolmen and the municipality of Milan in Italy
The case study presents the potential of social cooperatives for municipal involvement in the social economy, as Italy is seen as the cradle of social cooperatives, and demonstrates this with the example of the Adelante Dolmen social cooperative. Adelante Dolmen employs disadvantaged people, including the mentally disabled. When in 2013 the local police of the city of Milan looked for IT companies that would digitalise paper car fines, Adelante Dolmen, a type B social cooperative whose core business is IT, won the bid. The company subsequently gained two other tenders issued by the local police of the city of Milan and has grown into a sustainable social enterprise. Italian municipalities operate with smaller budgets than before, therefore social cooperatives including Adelante Dolmen tend to find customers not among public authorities but among private business companies.In spite of the different characteristics of the social economy sectors in all the member states, the Italian social cooperative legal structure is transferable because there are common elements, such as the presence of WISEs in every country. Key elements of the legislative framework can be taken over and adapted according to the historical context.
Municipal social enterprises in Slovakia
Municipal social enterprises (MSEs) in Slovakia are a specific model of social entrepreneurship typical to Slovakia that reflects its socio-economic situation. They are founded by a local government usually as a limited company.They work well in rural areas without local NGOs and often even without local businesses, where there is a lack of human and social capital, and where municipalities are the only functional entities that will never disappear. In such areas, MSEs have a strong work integration function and create work opportunities for the long-term unemployed, most often from Roma communities. In Slovakia, the presence of MSEs is considered very beneficial for the entire social entrepreneurship sector. The Slovak case was considered by the peer review participants to be very interesting and it raised a lot of discussions. Most of them concerned the dependence of MSEs on municipalities. Generally speaking, the membership or involvement of local authorities in social enterprises is allowed but its influence should be limited. Municipalities should support social enterprises mainly by creating a supportive social economy ecosystem. Independence from local authorities is crucial for social enterprises and when an enterprise is dependent on them, it is not a social enterprise.
General conclusions and policy implications
The peer review clearly demonstrated that local authorities are one of the most important stakeholders of social enterprises. Nevertheless, we can identify stages of development in the relationship of local authorities and social enterprises that are related to the stage of the development of the social economy ecosystem and the economic situation in the country.
The former socialist countries need to encourage the participation of employees,and strengthen cooperative movements and the independence of social enterprises. The way to improve this is systematic education and training, study visits and sharing good practice.
The matter of the independence of social enterprises from local authorities can also be seen in a historical perspective. In countries where social entrepreneurship and its ecosystem are not well developed, there might be bigger involvement of municipalities: they can be co-founders and board members but their membership should be limited, and gradually, as social enterprises get stronger, their influence should diminish. There are many other ways in which local authorities support social enterprises, cooperation and partnership being the best choices. The former socialist countries should be deliberate and develop their legal systems in such a way that they enable further development towards independence, otherwise the social economy ecosystem may be distorted.
The use of ICT and digitalisation are becoming more usual in social entrepreneurship and provide new opportunities. Both new and existing social enterprises should be supported during the transition. Social enterprise target groups and managers should be trained with the support of the ESF in ICT and in the use of social media. Social enterprises, in cooperation with municipalities, can also create new jobs in local services for people who lose jobs due to the 4th industrial revolution, in the provision of local services that are supported by municipalities. The next peer review in Spain will focus on ICT and new sectors.
Introduction
This report summarises the findings of the peer review on municipal involvement in social economy, held in Prague 8th – 9th June 2017. 12 member states (BEnl, CY, CZ, EL, ES, HU, IT, PL, SE, SI, SK, UKsc), along with the European Commission, took part in the learning process.During the peer review three cases were discussed, all related to the involvement of municipalities:
- The local service economy in Flanders
- Social cooperative Adelante Dolmen and the municipality of Milan in Italy
- Municipal social enterprises in Slovakia
Each case study was described in a separate document. On this basis, a background paper was prepared, summarising the main conclusions from the cases. After reading all the documents, members of the Social Economy Thematic Network prepared comment papers, which were sent to all members before the peer reviewmeeting. The network members described in their comment papers the situation regarding social economy and municipal involvement in their own country or region, comments and questions arising from the proposed good practices and referred to the cases from the point of view of relevance and transferability.This paper is based on all these materials as well as the peer review discussion.
The main aim of the Prague peer review was to exchange ideas, experiences and knowledge in the field of municipal involvement in the social economy.
Social enterprises have a wide range of stakeholders, with public administrations being among the most important. The central government creates the legal framework within which the social enterprise ecosystem operates, the regional government can be helpful by developing a policy framework at regional level, and the local government is important for the daily functioning of social enterprises. Social enterprises operate mostly at a local level and are supported by a network of local stakeholders.
Both municipalities and social enterprises have some common goals and make efforts to improve local development, social capital and well-being. They often share a common interest in integrating people at risk of exclusion from the labour market. There are different models for municipal involvement in social economy. Municipalities are highly important stakeholders, and they can have many different roles. They can be co-founders, partners or members of the board of the social enterprise. They can help financially by buying their goods and services and lowering the rental costs of premises. Last but not least, political support is very important.
Municipal involvement in social entrepreneurship varies from country to country depending on the historical context and public administration of the country in question; nevertheless, there are models that can be shared across the EU. Examples of good practice focus on the establishment and cooperation of municipalities and social enterprises.
The next chapter presents the main elements of each case study, with particular attention to those elements of the case studies that can be easily transferred to other countries. The chapter also presents the main issues discussed during the peer-review for each topic. The final chapter presents more general conclusions.
Main characteristics of the good practice approach
The local service economy in Flanders
Summary of the case study
Context
The local service economy (LSE) in Flanders has its origins in the mid-1990s, when the long-term unemployed provided local services for a few hours each week while maintaining their benefits and an additional remuneration. The first local and community services (predecessors of LSE organisations) emerged, with the goal of offering the long-term unemployed a real job, with at least part-time hours, in new forms of service provision. A key role was played by the King Boudewijn Foundation, which set up the Local and Community Services fund for subsidising projects, and an analysis and a report were prepared in cooperation with the key stakeholders. In 2008 a decree was issued that secured funding for the LSE from municipalities. In 2015 the Flemish Government launched a comprehensive reform of the social economy, with the local service economy acting as a pillar to support services that are not economically viable and to offer temporary jobs for people who cannot function in the regular labour market. The reform seeks also better permeability between social economy organisations and regular businesses.
Aim
The aim of the local service economy is the expansion of a complementary service provision from the government that closely aligns with societal trends and needs, whilst at the same time creating employment opportunities for people who cannot function in the regular labour market due to psycho-social issues.
Main characteristics
- The LSE provides jobs to people from disadvantaged groups, e.g. immigrants, people with low levels of education, and people above the age of 50. Such people improve their competences and are provided with specific support and guidance in the workplace, with the aim to find them a job in the regular labour market.
- LSE provides services in niche markets that react to new social and environmental needs with strong local aspects, e.g. complementary home care, community-focused childcare, transport and shopping services, energy-saving measures, bicycle points and social restaurants.
- Organisations with the LSE label have different legal structures: 58% are NGOs, 38% are local authorities and Public Centres for Social Welfare, with the remaining 4% taking other forms.
- The LSE funding model is known as “clover leaf funding”. It is a combination of revenue streams from different stakeholders (the LSE decree for compensation of higher costs for management, an employment measure for wages of disadvantaged employees, local or central government for costs specific to the service provision, customer contribution that covers only a part of real costs known as “socially corrected tariffs”). The LSE services are not economically viable.
- In accordance with a new government policy, ESF Flanders supports in the current programming period a transition of employees from subsidised jobs in the social economy to jobs in the regular economy with less, or completely without, government support. Two calls for proposals have already been launched; one of them is focused on the LSE.
- Thanks to the LSE, an innovative concept called “social flexibility” was developed. “Social flexibility” demonstrates how flexible, non-standardised services can be expanded while at the same time maintaining tailor-made jobs that take into account the personal situation of employees. The concept was replicated in related sectors in the regular job market.
Main outcomes
225 organisations have an LSE label. There has been continuous growth in the number of target group employees (1786 full-time equivalent jobs in 2015, which is 3.5 times more than 10 years ago).
What works
The LSE is an innovative concept that has developed gradually over two decades. All the important stakeholders, including the Flemish government, came to an agreement on how to tackle several problems at the same time. It reacts to social, economic and environmental changes in the Flemish society. The LSE intervenes both at the central and local level because it helps to support the employment of vulnerable target groups by providing local and accessible services in identified niche markets.
A multi-stakeholder system of financing (known as “clover leaf financing”) ensures that nobody has to pay the full price, and it is easier for institutions and donors to contribute partially. On the other hand, this system of financing is vulnerable - it takes more effort to keep all the stakeholders on board and secure their part of the financing.
The employment of target group employees in the LSE qualifies as a Service of General Economic Interest in the decree on LSE by the Flemish government. The services that these organisations provide have to be qualified as a Service of General Economic Interest by the government, who gives the assignment to the LSE company. Therefore they have to make an impact analysisaccording to a set of criteria; the LSE company has to prove that it serves a public interest and that without government intervention its services would not be provided at all, or would be provided insufficiently or at a low-level quality. As a part of the authorisation process, a financial calculation of the costs of an LSE service is carried out, including its compensation and arrangements regarding overcompensation. Then an agreement between the public service client and the local service economy enterprise is signed.
Flanders is a highly developed region with a well-developed social economy ecosystem. It has a working cooperation with stakeholders, who provide feedback and strive for continual improvement in the LSE. The umbrella organisation called De Koepel Local Service Economy ensures a constructive dialogue with important stakeholders, raises awareness, provides training and expertise, and strives to ensure a steady increase in the quality of services in this area.
Main points raised in the comment papers and peer review discussions
The LSE raised a lot of interest among the social economy network members. Some of them considered the model not to be transferable to their conditions (e.g. Spain, Cyprus, Greece, Poland). The discussion during the peer review showed that there is a bigger potential for transferability than was expressed in the comment papers.