Social economy in the EU

Social economy in the EU

• What they are - there are 2 million social economy enterprises in Europe, representing 10% of all businesses in the EU. More than 11 million people – about 6% of the EU’s employees – work for social economy enterprises. They have different legal forms and various objectives ranging from agriculture and banking to provision of employment and sheltered workshops.
• Main objectives - the primary objective of the traditional social economy enterprises is to serve the members and not to obtain a return on investment as the traditional mainstream capital companies do. The members act in accordance with the principle of solidarity and mutuality, and manage their enterprise on the basis of 'one man one vote' principle.
• Social enterprises - an important and growing group of social economy enterprises are the social enterprises. Their main objective is to have a social, societal or environmental impact for the general interest.
• Policy - when policy-makers work to improve the business environment in Europe, they need to ensure that the specificities of these enterprises like ethos, working style, corporate governance, specific accounting modes, asset lock, profits retaining, special 'social' objectives are taken into account.

Why social economy enterprises are important

Social economy enterprises are important because of their:

• Membership - up to 160 million people in Europe are members of social economy enterprises (mostly retail, banking and agricultural cooperatives, as well as mutual societies offering services complementary to social security regimes).
• Objectives - social economy enterprises contribute to the EU’s employment, social cohesion, regional and rural development, environmental protection, consumer protection, agricultural, third countries development, and social security policies.
• Size - social economy entities are mostly micro, small, and medium-sized enterprises (SMEs).

The external dimension of social and solidarity economy

• The European Commission works closely with the European External Action Service to participate in international development forums (Agenda 2030: Sustainable Development Goals, G20 Inclusive Business Platform and G7 Global Social Impact Investment Steering Group) to enhance the visibility of social and solidarity economy (SSE) and make SSE part of the global political agenda. The UN Inter-Agency Task Force on SSE and the International Leading Group on SSE (ILGSSE) are already observers to the Commission's expert group on social entrepreneurship (GECES) and the Commission is developing a constructive relationship with these two entities. The Commission is supporting the prospect of more EU countries becoming members of the ILGSSE, as stated during the 8^th GECES meeting on 24 November 2015 (see meeting agenda (240 kB) and minutes (416 kB)).
• The Commission's statement at the High Level Political Forum on Sustainable Development 2016 Side Event ‘Social and Solidarity Economy as a Strategic Means of Implementation of the Social Development Goals’ – New York, 20 July 2016.

Challenges and support available

• Access to finance - social enterprises are struggling to find the right funding opportunities due to the lack of understanding of their functioning and their small size. However, they can benefit from all European programmes such as COSME, or the Structural Funds such as the Regional Development Fund and the European Social Fund. The Commission recommended EU countries to prioritise the activities of social enterprises in the national operational programmes for the period 2014 to 2020.
• Low degree of recognition - the Commission finances projects to review legislation, share good practices, awareness raising events and projects for the collection of statistical data, for cooperatives and mutuals and social enterprises.
• Varying regulatory environments across EU countries and activity related obstacles for some legal forms of social economy enterprises - the Commission examines how best to respond to these problems in the area of state aids, public procurement or legal statuses to promote the appropriate policies.
• Lack of entrepreneurial skills - social enterprises managers and starting entrepreneurs are eligible under Commission's exchange programme - Erasmus for Young Entrepreneurs.

Commission actions

The Commission aims for a level playing field in which social economy enterprises can compete effectively and fairly, without regulatory discrimination and taking into account their particular needs. To promote a highly competitive social market economy, the Commission has addressed the issue in:

• Social Business Initiative (COM(2011) 682 final)
• Social innovation policy making
• Single Market Act 1 and 2
• Small Business Act
• the flagship initiative, The Innovation Union
• the Communication, 'Business in the social economy sector: Europe’s frontier-free market' (1989).

The Commission submitted the following proposals to the Council of the European Union:

• Proposal for a Council Regulation on the Statute for a European Cooperative Society (1992)
• Proposal for a Council Regulation on the Statute for a European Mutual (social security and insurance society) (1992)
• Proposal for a Council Regulation on the Statute for a European Association (1992)
• Proposal for a Council Regulation on the Statute for a European Foundation (2012).

In 2003, the Statute for a European Cooperative was adopted. The other two proposals of 1992 were withdrawn in 2006 by the Commission due to lack of legislative progress, while the last one on the European Foundation was withdrawn by the Commission due to lack of progress within the Council (December 2014).

Supporting information

• Social Business Initiative (COM(2011) 682 final)
• Council of the EU: 'The promotion of the social economy as a key driver of economic and social developement in Europe', Council conclusions (7 December 2015)
• Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society (SCE)
• Communication on the promotion of cooperative societies in Europe COM(2004)18
• Social Economy Europe
• Guide to social innovation
• International Center of Research and Information on the Public, Social and Cooperative Economy - CIRIEC

Events, projects and studies