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A major breakthrough for social enterprise in Europe gains momentum

Published: 8 February 2012


THE EUROPEAN COMMISSION’S RECENT ‘SOCIAL BUSINESS INITIATIVE’ published last October and presented at the Commission’s ‘Promoting Social Entrepreneurship in Europe’ conference on the 18th November in Brussels has been lauded as its most significant intervention on social enterprise to date.

President of the European Commission José Manuel Barroso, in his keynote speech at the conference, made the point that ‘action at EU level can be an accelerator for social business, by raising awareness of this sector and its huge potential. Social businesses are a growing and dynamic part of the European social economy, which represent millions of employees.’ He added that ‘the EU can help to foster the sector's further development by reducing the complexities of its regulatory environment, in particular, as regards funding and access to markets.’ President Barroso also spoke enthusiastically about how social enterprise could contribute to reducing many social problems across Europe including poverty and unemployment.

The social economy employs over 11 million people in the EU, and constitutes 6% of total employment[1]. The EU commission uses the term ‘social enterprise’ to cover the following types of business:

 ·         Those for which the social or societal objective is the primary reason for the commercial activity

·         Those where the profits are reinvested with a view to achieving this social objective

·         Those where the organisational structure or ownership system reflects their mission.

 Social enterprises networks across Europe have responded positively to the initiative – EMES, the third sector research network has welcomed the decision of the Commission ‘to give a specific definition of social enterprise, to recognise the economic and social importance of these organisations in the European Social Model, and to frame this Initiative within other larger policy actions, namely the Europe 2020, the Innovation Union and the Single Market Act.’ EMES has stated that ‘we consider as a major step and we broadly agree with the overall approach.’[2] According to Cooperatives Europe[3] ‘the new action plan is a good starting point with co-operative enterprises being one of the major players in there.’ 
Many present at the conference said that they believed this was a seminal moment for social enterprise in Europe.  According to Tom Daly, Managing Director of TSA Consultancy, and Chair of the Society of Co-operative Studies in Ireland, ‘this policy commitment from the EU will be a major fillip for the social enterprise sector to play an increased role in providing employment and in economic development across the EU. This is the most comprehensive commitment from the Commission to date’. This view is evidenced by contributions from two EU Commissioners who spoke at the Conference. Michel Barnier, European Commissioner for Internal Markets and Services and László Andor, European Commissioner for Employment, Social Affairs and Inclusion, both made significant contributions to the conference detailing how their departments would place social enterprise at the centre of future programmes aimed at developing the EU economy and addressing unemployment and delivering services.

 According to Commissioner Barnier, the European Commission ‘wants to facilitate social enterprise’s financing, not just with European money, but also through other funding, including a social investment fund. We want to raise awareness about these businesses, promote networking, labels and certification. We also want to create a more favourable legal environment, for instance by enabling easier access to public procurement for social enterprises.’ And already this is happening. The plans for the revision of the public procurement Directives was announced by the Commission at the end of December, and is part of an overall programme to thoroughly modernise public tendering in the European Union.[4]

 Commissioner Barnier has declared that ‘the Directives must move with the times. I would like to make sure that the public procurement Directives become simpler and more effective.’ Among the proposed reforms is a plan to enhance access to public procurement by SMEs. At the same time, the reform aims to facilitate improvements in the use of public procurement by ensuring greater consideration for social and environmental criteria and the integration of vulnerable and disadvantaged persons, thereby helping to achieve the objectives of the Europe 2020 Strategy. And in December 2011, Commission Andor addressed the European Parliament, stating that ‘the Commission has proposed to introduce a new investment priority in the ESF Regulation — the promotion of the social economy and social enterprises.  Further financial support will also be provided over the period 2014 to 2020 through the Programme for Social Change and Innovation. Under this programme, nearly €100 million will be allocated specifically to promoting social experimentation, and another €90 million to supporting social enterprises.[5]

 The ‘Social Business Initiative’ is one strand of activity which sees social enterprise and the social economy as part of a range of activities of the Commission. For example, the Commission’s recent measures on social innovation will also have implications for social enterprises across Europe. The Commission describes social innovation as being about meeting the unmet social needs and improving social outcomes. According to President Barroso, social innovation is about ‘tapping into the creativity of charities, associations and social entrepreneurs to find new ways of meeting pressing social needs, which are not adequately met by the market or the public sector and are directed towards vulnerable groups in society’.[6]

 Commissioner Andor has asserted that social innovation is a theme that runs through most of the seven flagship initiatives being developed at EU level in the framework of the 'Europe 2020' Strategy.
Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science, has also reiterated this view: 'When it comes to social innovation, I'm a believer! I put it at the heart of the Innovation Union Flagship Initiative because I am convinced that innovation must go much wider than research, science and business. We need it to flourish not just in our laboratories, factories and boardrooms, but also in our schools and community centres, our hospitals and care homes. For several years the European Commission has been working in partnership with and supporting Third Sector and social economy organisations, and there is no stronger supporter of social innovation than President of the European Commission José Manuel Barroso himself. But we are now stepping up several gears, and ensuring a coherent approach across the European Union in support of social innovation.’

 For Ireland, these developments are not only significant, but timely. The Programme for Government states that ‘the Government will promote the development of a vibrant and effective social enterprise sector.’[7] However, the mechanism for this has not yet been spelled out. Social enterprises are present in almost every sector of the economy across Europe - banking, insurance, agriculture, craft, health and social services amongst others.  In economic terms, they can give valuable support to the Irish economy on its road to recovery in a number of ways. Not only can they reduce and prevent long-term unemployment, they can provide training and re-skilling, and provide important services in marginalised communities where the public and private sector do not have the capacity nor the commercial interest to operate. The benefits to the State are obvious - the untapped potential of social enterprises could reduce State expenditure on social welfare payments and provide services in a cost effective way.  

The next stage of the Commission’s proposals will involve their transmission to the Council of Ministers and the European Parliament with a view to launching the legislative procedure for their adoption, scheduled by the Single Market Act to take place before the end of 2012.

[1][1] Ciriec ‘The social economy in the European Union’, page 48.

[2][2] EMES Position Paper on The Social Business Initiative Communication Liege, November 17th, 2011

[3][3] The Europe Region of the International Co-operative Alliance

[4][4] The reform of legislation on public procurement is one of the twelve priority actions set out in the Single Market Act adopted in April 2011 (IP/11/469).

[5][5] Commissioner László Andor European Parliament's Social Economy Intergroup seminar on “The social economy in the European agenda” Brussels, 8 December 2011

[6][6] Speech may by José Manuel Barroso, president of the European Commission, on 17th March 2011at the launch event of the 'Social Innovation Europe' initiative.

[7][7] Programme for Government, p. 13

  TSA Consultancy is Ireland’s leading third sector consultancy company, specialising in social enterprise development.

 35 Exchequer Street, Dublin 2.

Tel + 353 1 671 88 33



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