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Small and medium-sized enterprises (SMEs)

Social Economy

A significant proportion of Europe's economy is organised to make profits not only for investors. The so-called Social Economy, including cooperatives, mutual societies, non-profit associations, foundations and social enterprises, provides a wide range of products and services across Europe and generates millions of jobs. When policy-makers work to improve the business environment in Europe, they need to ensure that their efforts take account of the specific characteristics of enterprises, particularly SMEs, in the Social Economy.

Introduction

Companies set up to make a profit for their owners are not the only form of enterprise.

In many areas of economic activity, groups of individuals have got together to set up their own structure to promote their own or general public interests. The basis of such structures is membership and solidarity.
Members vote on the direction the enterprise takes, and it then acts in their common interests. From the village farmers who set up a co-operative to market their produce more effectively, to the group of savers who set up a mutual-fund to ensure they each receive a decent pension, by way of charities and organisations offering services of general interest, the social economy touches a huge range of individuals across Europe.
There are more than 11 million jobs in the social economy across Europe, but membership of social economy enterprises is much wider, with estimates ranging as high as 160 million. Millions of members therefore depend on such enterprises in areas such as healthcare.

Social economy enterprises are characterised by a strong personal involvement of its members in the management of the company and the absence of seeking profits in order to remunerate shareholders capital.
Due to their specific way of doing business which associates economic performance, democratic operation and solidarity amongst members, they also contribute to the implementation of important Community objectives, particularly in the fields of employment, social cohesion, regional and rural development, environmental protection, consumer protection, and social security policies.

Social economy enterprises represent 2 million enterprises (i.e. 10% of all European businesses) and employ over 11 million paid employees (the equivalent of 6% of the working population of the EU): out of these, 70% are employed in non-profit associations, 26% in cooperatives and 3% in mutuals. Social economy enterprises are present in almost every sector of the economy, such as banking, insurance, agriculture, craft, various commercial services, and health and social services etc.

Social economy entities are enterprises - in the majority micro, small and medium sized enterprises (SMEs) - and, as such, they are part of the Commission's enterprise policy aiming at promoting enterprises, in general and more specifically SMEs, independently of their business form. The EU policy in this area aims at creating a favourable regulatory environment for social economy enterprises so that they grow and prosper alongside other enterprises.

The actions foreseen in the Small Business Act for Europe, adopted in June 2008 by the Commission, and designed to support all SMEs, also benefit social economy enterprises to face the challenges arising out of globalisation, rapid technological change and global economic downturn.

Common Characteristics of Social Economy Enterprises

  • They contribute to a more efficient market competition and encourage solidarity and cohesion.
  • Their primary purpose is not to obtain a return on capital. They are, by nature, part of a stakeholder economy, whose enterprises are created by and for those with common needs, and accountable to those they are meant to serve.
  • They are run generally in accordance with the principle of solidarity and mutuality and managed by the members on the basis of the rule of "one man, one vote".
  • They are flexible and innovative (they meet changing social and economic circumstances).
  • They are based on active membership and commitment and very frequently on voluntary participation.

Social Economy in the European Agenda

The economic and social significance of Social Economy enterprises is widely recognized.

Their importance is also growing in the face of new emerging needs. The aim of the Commission's policy towards "social economy" enterprises is to guarantee to them a level playing field in which they can compete effectively in their markets and on equal terms with other forms of enterprise, without any regulatory discrimination and respecting their particular principles, modus operandi, needs, particular goals, ethos and working style.

  • In December 1989 the Commission adopted a Communication on "business in Social economy sector". For several years up to 1998 various projects and activities were financed to promote the sector.
  • In 2000, the autonomous European Standing Conference (Conférence Européenne Permanente - CEP) of Co-operatives, Mutual societies, Associations and Foundations (CEP-CMAF) was created. Two representatives of the sector also have a seat on the Enterprise Policy Group. In 2008, the CEP-CMAF changed its name to Social Economy Europe.
  • The European Parliament, the European Economic and Social Committee, and the Committee of Regions have on several occasions pointed to the need for Community actions to take full account of the Social Economy's potential for economic growth, employment and citizen participation,
  • Social economy enterprises benefit from Community programmes aimed at helping SMEs, such as the Competitiveness and Innovation Programme.
  • As SMEs, they also benefit from specially targeted regional development funds and research programmes. In order to promote this special form of entrepreneurship, the Commission finances various projects in areas such as examining and reviewing legislation, identifying and sharing good practices, and collecting statistical data.

European Legislation

In 1992 the Commission submitted three proposals to the Council:

These three Regulations were accompanied by three similar Directives imposing the employees involvement in the decision making process of their European businesses.

In 2003 the Statute for a European Co-operative was adopted. The other two draft Regulations (and annexed Directives) were withdrawn in 2006 by the Commission due to lack of progress in the legislative process.

Events, projects and studies

Events

Projects

Satellite Accounts for Cooperatives and Mutuals

A call for proposals "Satellite Accounts for Cooperatives and Mutuals" was launched in 2009 under the Competitiveness and Innovation Programme (CIP). The objective of the call is to develop reliable statistics on the cooperatives and mutuals at national and European levels by the establishment of satellite accounts, the updating, improving and/or adapting already existing satellite accounts and the development of transnational co-operation and exchange of experience and good practices. Nine proposals were received before the closing date and five of them were approved for financing. All projects have to be finished by 31/12/2010 and the results will be published in 2011. The projects are the following:

  1. Name: Satellite Accounts for Cooperatives and Mutuals
    Beneficiary:Statistical Office of the Republic of Serbia
  2. Name: "Developing an information system of the Central Cooperative Union as a basis for the establishment of satellite accounts for cooperatives in Bulgaria"
    Beneficiaries: Central Cooperative Union; National Union of Workers' Productive Cooperatives and National Statistical Institute
  3. Name: Satellite Accounts for Cooperatives and Mutuals
    Beneficiary: CIRIEC section belge(http://www.ciriec.ulg.ac.be/en/iframe/2_3_belgique.htm)
  4. Name: Satellite Accounts for Cooperatives and Mutuals
    Beneficiary: State Statistical Office (FYROM)
  5. Name: Satellite Accounts for Cooperatives and Mutuals in Spain
    Beneficiaries:National Statistical Institute and CIRIEC Spain

Studies

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