The Role of the Social Economy in Restoring Economic Growth and Combating Unemployment

SEDEC-VI/004
115th plenary session, 3-4 December 2015

OPINION
The role of the social economy in restoring economic growth
and combating unemployment

THE EUROPEAN COMMITTEE OF THE REGIONS
highlights how social economy initiatives, being based on cooperation and civic engagement among the individuals who make up communities, contribute to boosting social, economic and territorial cohesion and to raising the level of trust throughout the EU, due to their commitment and degree of local rootedness, making them less vulnerable to relocation and consequently providing a higher level of security to their employees, aspects which are part of their corporate social responsibility;
urges the European Commission to present, a legal framework, which would encompass a body of common definitions applying to the different forms of social economy in Europe, i.e. cooperatives, foundations, mutual societies and associations in order to enable social economy enterprises to operate on a legally certain basis and thus enjoy the advantages of the internal market and free movement. This document should include a body of common definitions. These definitions could underpin the way EU partnership programmes with these organisations are framed, so that support can be tailored to the needs of each type of organisation, with a view to strengthening their role in promoting employment and fostering local and regional entrepreneurship;
calls on the Commission to be flexible when applying the rules on State aid for social economy organisations, to support local and regional authorities in understanding and applying these rules in a proportionate manner and, where possible, to increase the aid provided by the Member States or their local and regional authorities and the EU for partnerships, including social economy organisations;
considers it crucial to unlock the potential of the social economy by improving access by the social economy to various forms of financing (such as European funds, venture capital, microcredit and crowdfunding) and by tapping sufficient financial resources at local, regional, national and EU levels, reconciling the necessarily demanding economic and financial requirements with the acknowledged public interest of the work carried out in the field by these organisations;

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Rapporteur
Luís Gomes (PT/EPP), Mayor of Vila Real de Santo António

Opinion of the European Committee of the Regions - The role of the social economy in restoring economic growth and combating unemployment

1. POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS

1.considers that the social economy plays a key role in the EU's social and economic development, accounting for two million enterprises including associations, cooperatives and mutuals. It provides 11 million jobs, i.e. 6% of the employed population and 10% of all businesses in Europe;

2.notes that social economy institutions and actors have proved to be resilient during the crisis, helping to improve public well-being and keep people on the labour market, not without serious difficulty, even when other organisations and businesses have been unable to do so. This has been particularly evident in its inclusion of people who find it especially difficult to enter or to re-enter the labour market;

3.considers that taking better account of the social economy's contribution to achieving the social objectives of the Europe 2020 strategy must be given priority in the follow-up to the communication on strengthening the social dimension of EMU adopted by the Commission in 2012 and the Social Investment Package adopted in 2013; also considers that investments in the social economy should have a role to play not only in the European Fund for Strategic Investments, but also in the European Social Fund and other EU financing sources, since they often contribute to creating quality jobs for EU citizens;

4.highlights how social economy initiatives, being based on cooperation and civic engagement among the individuals who make up communities, contribute to boosting social, economic and territorial cohesion and to raising the level of trust throughout the EU, due to their commitment and degree of local rootedness, making them less vulnerable to relocation and consequently providing a higher level of security to their employees, aspects which are part of their corporate social responsibility;

5.welcomes the importance attached to the social economy inEU legislation such as Regulation (EU) No 1304/2013 on the European Social Fund, Regulation (EU) No 1301/2013 on the European Regional Development Fund or Regulation (EU) No 1296/2013 of the European Parliament and of the Council of 11 December 2013 on a European Union Programme for Employment and Social Innovation ("EaSI") and amending Decision No283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion. Also welcomes the new regulations for the ESIF programming period 2014-2020, which place social enterprise among the possible investment priorities of the ESF and the ERDF, strengthen the partnership approach and provide opportunities to promote partnership-based initiatives between the social economy and local/regional authorities through the use of instruments such as Community-Led Local Development;

6.points out that social economy organisations stimulate participation and a spirit of solidarity and enterprise among all people, including those pushed aside by the economic system, which contributes to the generation of economic activity that creates added value, and profitability, in the case of social enterprises, even in the economically weakest sectors;

7.emphasises the importance of facilitating public involvement and social co-creation processes, by means of dynamic partnerships between the public sector, the wide range of social economy institutions and the private sector, especially that part made up of social enterprises, while also adopting an approach geared towards socially innovative measures and policies;

8.highlights the relatively scant public recognition of entrepreneurial capacity in the social economy, deriving in part from the lack of connection between actors in different regions and countries. Exchange of best practices, the establishment of partnerships and the creation of incentive systems and funding to promote business skills,social innovation and social investment are therefore crucial. These are essential preconditions if the social economy is to be made more attractive and be given greater recognition;

9.suggests that a bigger role be given to research on the social economy in Europe, and to promoting the creation and dissemination of generic training programmes on the social economy for the general public, and students in particular, together with specialised programmes for social economy actors and jobseekers. Partnerships should be built up between social economy organisations, educational institutions, training bodies and local and regional authorities;

10.recalls that local and regional authorities, the Member States and the EU must foster partnership and support for the development of new tools and new opportunities for social support still being opened up by progress in the Information and Communication Technologies, enhancing the quality and accessibility of services provided, rationalising costs and helping to create a positive image of the social economy among the general public;

11.encourages the Member States to adopt measures to facilitate the activities of social economy actors in the market in view of their role in tackling problems, such as unemployment and social exclusion, by providing employment to groups considered to be suffering from exclusion;

12.urges the European Commission to present, a legal framework, which would encompass a body of common definitions applying to the different forms of social economy in Europe, i.e. cooperatives, foundations, mutual societies and associations in order to enable social economy enterprises to operate on a legally certain basis and thus enjoy the advantages of the internal market and free movement. This document should include a body of common definitions. These definitions could underpin the way EU partnership programmes with these organisations are framed, so that support can be tailored to the needs of each type of organisation, with a view to strengthening their role in promoting employment and fostering local and regional entrepreneurship;

13.notes that the positive role of social economy institutions and actors in tackling unemployment and promoting inclusive and sustained growth is particularly important in regions marked by emigration, a rapidly ageing population, lack of economic dynamism and a low level of entrepreneurship, with particular attention to rural areas. In such regions, the importance of the social economy goes beyond meeting local demand for social goods and services, because social economy organisations represent one of the few ways in which good intentions can coalesce to promote entrepreneurship and retain or attract economic actors who can make best use of local resources;

14.recommends promoting cooperation between the social economy and vocational education in all its areas, and supporting the development of student and school cooperatives in order to expand career opportunities for young people and so help to prevent youth unemployment. With this in mind, the Committee also supports the involvement of school and student cooperatives as participants in the social economy and suggests that the European Commission and the different Member States work together to include cooperatives and the social economy in business education as part of national syllabi and curricula in schools and higher education;

15.believes that wherever and by whatever means possible, national and EU support for partnerships involving social economy organisations should be increased in regions of low population density, regions with particularly high unemployment indicators and low rates of employment of vulnerable social groups, regions marked by poverty and social exclusion, as well as regions of particular environmental interest, with the aim of fostering their special role and creating and keeping value in such regions;

16.calls on the Commission to be flexible when applying the rules on State aid for social economy organisations, to support local and regional authorities in understanding and applying these rules in a proportionate manner and, where possible, to increase the aid provided by the Member States or their local and regional authorities and the EU for partnerships, including social economy organisations;

17.is pleased to note the recent adoption of the directives on public procurement and concessions (Directives 2014/24/EU, 2014/25/EU and 2014/23/EU), which include clauses and social criteria intended to promote social inclusion and innovation, among other aspects; calls on the Member States to ensure, at the current stage of the directives' transposition into national law, that contracting authorities are allowed to make full use of the specific provisions on reserved markets and the simplified procedures laid down to give social economy stakeholders a greater role at both national and regional or local level. Moreover, calls on EU institutions to monitor the implementation of these rules at national, regional and local level and to continue the debate on their improvement;

18.believes that the social economy can be a suitable and very effective instrument for combating the shadow economy and creating economic and social added value;

19.considers it crucial to unlock the potential of the social economy by improving access by the social economy to various forms of financing (such as European funds, venture capital, microcredit and crowdfunding) and by tapping sufficient financial resources at local, regional, national and EU levels, reconciling the necessarily demanding economic and financial requirements with the acknowledged public interest of the work carried out in the field by these organisations;

20.regrets that the Commission strategy for a digital single market makes no mention of the social economy and refers only in passing to the non-commercial cooperative economy which has major social potential;

21.highlights the need to foster a culture of follow-up in social economy organisations, improving their capacity to measure and report the social and economic dimensions of their actions and developing methodologies and indicators that are consistent with their nature and specific features. Experience of follow-up should be shared and made accessible in different ways;

22.welcomes the creation by the European Commission of a multilingual digital platform – the "Social Innovation Europe Platform" – to foster exchange of information in the field of social innovation but considers it necessary that the platform includes a separate section dedicated to social economy;

23.suggests that the European Commission establish a unit focusing on the social economy, since in the current circumstances the decision to merge units within the Directorate-General GROW in order to set up a unit on Clusters, social economy and entrepreneurship does not correspond to the scope and real-life situation of the social economy;

24.encourages EU institutions, Member States and local/regional authorities to take stock and promote dissemination of existing examples of new forms of dialogue, co-construction of policies and joint implementation of the latter by partnerships composed of local/regional governments, social economy and other players;

25.argues that the highly localised (or territorialised) scope of most social economy organisations means that the EU and the various Member States should promote and facilitate an expanded role for local and regional authorities in framing programmes and policies for the social economy, and in linking it with other public policies, making it possible to achieve the objectives set;

26.advises the European Commission to propose that the Member States which have not already done so create and adopt, as soon as possible, the legal framework necessary in order for the social economy to develop and function, once a clear strategy has been defined for the sector.

Brussels, 3 December 2015

The President
of the European Committee of the Regions
Markku Markkula
The Secretary-General
of the European Committee of the Regions
Jiří Buriánek

1. PROCEDURE

Title / Own-initiative opinion on the Role of the social economy in restoring economic growth and combating unemployment
Reference(s) / n/a
Legal basis / n/a
Procedural basis / Rule 41 b) ii
Date of Council/EP referral/Date of Commission letter / n/a
Date of Bureau decision / 18 March 2015
Commission responsible / SEDEC
Rapporteur / Luís Gomes (PT/EPP)
Analysis / March 2015
Discussed in commission / 29 April 2015
Date adopted by commission / 25 June 2015
Result of the vote in commission
(majority, unanimity) / Adopted by a majority
Date adopted in plenary / 3-4 December 2015 (tbc)
Previous Committee opinions / Opinion on Partnerships between local and regional authorities and social economy organisations: contribution to employment, local development and social cohesion[1], Rapporteur Ms Rahkonen (FI/PES), March 2002
Opinion on the European Union Programme for Social Change and Innovation[2], Rapporteur Mr Rossi (IT/PES), May 2012
Opinion on the Responsible Business Package[3], Rapporteur Ms Tietari (FI/ALDE), July 2012
Opinion on the Statute for a European Foundation[4], Rapporteur Ms Brunet-Lechenault (FR/PES), November 2012
Opinion on the EU Social Investment Package[5], Rapporteur Mr Aboutaleb (NL/PES), October 2013
Date of subsidiarity monitoring consultation / n/a

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[1]OJ C 192, 12.8.2002, p. 53–59

[2]OJ C 225, 27.7.2012, p. 167–173

[3]OJ C 277, 13.9.2012, p. 171–179

[4]OJ C 17, 19.1.2013, p. 81–90

[5]OJ C 356, 5.12.2013, p. 60–67