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Social economy answers for local development
February 2007
Local development was the theme of the second in the series
of mainstreaming platform in EQUAL's social economy theme, held near Rome in
December 2006. Cases from four countries showed how the social economy can
provide an excellent response to the intractable problems of structural change,
unemployment, addiction, migration and depopulation.
"All development is local," said Walter Faber, head of the
EQUAL Unit of the Commission, kicking off the seminar How can the social
economy contribute to local development? in the ancient spa resort of Tivoli
just East of Rome in early December. If this is so, how can people best organise
to improve their lot? It was Mrs Caruso from Italy's Ministry of Labour who
provided the answer: "EQUAL's experience seems to show that it is by identifying
the priorities, the impact, the quality of the solutions and the empowerment of
operators and beneficiaries that the social economy can contribute to local
development."
Four instructive cases
It was then the turn of the experts assigned to the four
workshops to present their cases. Maurizio Franzini from the La Sapienza
University in Rome introduced the case of the Intesa per lo Sviluppo della
Cooperazione Sociale, based in one of Italy's most prosperous regions, the
Veneto. The social economy is a recognised actor in social policy there, but
could still benefit from being more effective. The project there worked in
parallel on three major issues – finance, skills and demand – reasoning that
they are interlinked: adequate finance and skills will enable social enterprises
to respond more effectively to demand Hence the workshop's title – "Squaring
the triangle".
Second came Dorotea Daniele, of Brussels-based consultancy
DIESIS who presented the project of the Barka Foundation, based in Poznan
in western Poland. Barka has won global fame for the leading role it has played
in developing institutions to promote inclusion in Poland, such as the Centres
for Social Integration, and for its success in changing the country's
legislation. It work has already given rise to some 75 integration centres,
social co-operatives and clubs, and it is now leading an EQUAL project to set up
three local Social Economy Centres. Such is its standing that it is now advising
the British government on the problems of Polish migrants in Britain.
Sven Bartilsson from co-operative advisers Coompanion in
Göteborg introduced Basta, a workers' co-operative in Nykvarn near
Stockholm that employs 20 ex-drug addicts. It is notable that after the first
year, in which trainees receive a government grant, the co-operative is
self-financing. Basta has a remarkable level of success and is now being
replicated in three other locations. It is attracting a high degree of interest
as it may offer a way to greatly cut the costs – around €100,000 a year for a
male heroin user – that Sweden's 30,000 drug addicts impose on society.
Finally Toby Johnson of AEIDL in Brussels painted the
background of industrial decline in the coalfields of Saxony, and the success of
the Jobs for Young People in the Social Economy project, which has
converted a disused railway station into a multimedia centre and created some 30
jobs.
Go to your bank with a clear message
For the main part of the event, the 120 participants, from 13 countries, split
into four workshops, and used a simulation methodology to investigate the
processes that successful local development projects need to set in motion.
At the closing round table discussion, chaired by Wolfgang
Borde, responsible for the social economy theme in the European Commission's
EQUAL unit, finance was a major issue. For Maurizio Franzini, the main lesson of
the case he had presented was that you should tackle all the issues at the same
time – finance, skills and demand.
Steven Wallace of the UK government's Social Enterprise Unit said that social
enterprises certainly are real enterprises, but are nevertheless part of the
third sector along with organisations that will never be self-sufficient
businesses. As regards access to finance, a UK study gives cause for optimism in
that access to debt finance has improved over the last three years – but on the
other hand it has become harder to find equity. One thing that is for sure is
that social enterprises need financial management skills, he said. "Banks say
social enterprises are hard to understand – without proper accounts they can't
tell if a company is making good profit and reinvesting them, or is just a
terrible business. So social enterprises need to show their underlying profits
and their investments clearly in their accounts."
Eva Arvidsson from NUTEK in Sweden also took the view that
convincing the bank depends on distinguishing short-term from long-term
profitability and showing it in black and white. "We need to show good
examples," she said. "Some people have knowledge of the social economy, but few
have insight, and you need insight before you can act. When I show them Basta's
socio-economic report, the penny drops. In Sweden we are thinking of organising
a conference for banks, to start them competing for our business." Johnny Dotti, President of the Consorzio Gino Mattarelli (CGM), Italy's principal
consortium of social co-operatives, backed her up, mentioning the Banche di
Credito Cooperativo, Banca Intesa and Unicredit as three major financial
institutions that had made solid partnerships with social enterprises.
Knowing why – business with values
In Steven Wallace's view, social accounting can be a very
useful way for social enterprises to prove their value to potential customers,
particularly public authorities. But at the moment different families of
organisations prefer to use different measurement tools, and too often fail to
measure the factors that their customers care about. "We need to strip out the
complexity and develop a common method that looks at what buyers actually want,"
he said.
Johnny Dotti was proud to say that his members employ
135,000 people and turn over €1.1 billion a year. But nevertheless he cautioned
that in CGM's experience you could not turn everything into an enterprise. If
the task is to create social capital in an area, this is best achieved by
having a range of different types of organisation. What social co-operatives do
is not only to provide social services and inclusion, but also preserve sense
and significance. They are just the sort of flexible structure that we need to
deal with then rapid changes in demography, migration and industrial structure.
Governments must recognise that the third sector is not some sort of residue,
but is an equal player in a pluralistic mixed economy. Dorotea Daniele echoed
this, adding that social enterprises contribute not just know-how but 'know-why'
– they answer the question "why are we doing this?".
Endogenous versus export-led growth
According to Toby Johnson, a key lesson of the media
project in Saxony is that there is a potential for endogenous growth. It
shows that it is quite possible to create jobs very cost-effectively by meeting
local needs. In this case, some 30 formerly unemployed young people are now
active in the media sector, making anything from wedding videos to television
programmes. Other areas where unmet needs can create employment are elderly
care, childcare, environmental improvement and recycling. Attracting massive
inward investment and building high-tech factories is not the only way to
prosperity – in fact it's an extremely expensive way to create prosperity. What
is needed is meeting points where local people can get together to swap ideas
and develop new businesses – and that is why this project took over the disused
railway station at Wittichenau.
Johnny Dotti had a contrary view. "Today, nothing is
local," he said. "The Frascati wine made here in Tivoli is exported to Japan at
€400 a bottle. Today, success in local development is all about producing a
top-quality product. Social enterprises cannot compete on low price. They have
to rise to the challenge, and make links with other localities to survive. CGM
aims to be a network enterprise, which enables its member co-operatives to share
their good practice and develop a common mission."
Happily, Steven Wallace was able to contribute another
statistic on quality, as a social enterprise in Sandwell in the English Midlands
has just come second in the Sunday Times survey of the best employers. It
has zero absenteeism in some departments, and the workforce had to work
hard to convince the trade union representatives that working conditions really
are as good as they said.
We are the majority
Speakers also took up the theme of identity and
confidence. "My workshop viewed social enterprises as proper businesses –
but better than ordinary ones, as they undertake the job of creating social
added value," said Toby Johnson. "What's more, a recent survey in Britain shows
that social entrepreneurs are better qualified than people who start
conventional businesses. Social enterprises involve just the same element of
self-initiative as run-of-the-mill businesses, but also need to cope with the
added complications of managing different stakeholder groups and a broader
range of motivations. They recognise the value of risk-taking but also that of
diversity. In the end, this led us to a reflection on what 'normality' is. We
believe that what is normal is to want to earn an honest living and act for the
good of society. Far from being marginal, social enterprise is the standard of
normality."
He made a final point – prompted
by the contributions of the head of the EQUAL unit, Walter Faber, in his
workshop – that we need to mainstream what we have learnt into the
Structural Funds for 2007–2013. The message is that it is not too late. We have
seven years to mainstream our lessons. But if transnational learning is to
continue, we need the Commission to provide an infrastructure for
transnationality. At the moment, this is an open issue and different Member
States have different ideas as to the value of transnational work.
Documents from the seminar How can the social economy
contribute to local development? held in Tivoli on 5-6 December 2006 are
available at:
http://www.sns-equal.it/mainstreaming_eu/economia_sociale/tivoli.php
Full
report also available on this website
here
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