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Finland: A National Support Structure for Social Enterprises

The Finnish Act on Social Enterprises defines a social enterprise as a company entered in the Trade Register, producing goods and services on commercial principles and aiming at making profit. The company must offer employment to the disabled and long-term unemployed up to at least 30 % of its total workforce. At least one of the employees must be disabled. Basically, a company fulfilling these requirements qualifies for the Register for Social Enterprises.

Social enterprises are obliged to pay the disabled and long-term unemployed workers the wage agreed on in the collective agreement and intended for those fully able to work. When employing a disabled or a long-term unemployed person, the company is entitled to employment subsidies from the employment authorities. The purpose of the subsidies is to compensate the shortage of productivity of each of these individual employees compared to the ‘normal’ worker. The support for employing the disabled and long-term unemployed is equivalent in amount for all companies. However, the subsidies granted to social enterprses are for a longer period than those granted to other firms. These provisions for employment subsidy and combined subsidy granted to social enterprises are laid down in the Public Employment Services Act and the Unemployment Security Act.

As social enterprises have to deal with special challenges due to their specific employee groups, the expertise of the existing support organisations was seen inadequate. Therefore, a specific support structure was created to decrease the know-how gap. The National Support Structure for Social Enterprises (NSSSE) consults and supports the establishment and development of social enterprises in a twofold way – first and foremost, it offers guidance and networks to the existing and potential social enterprises and, secondly, it increases the awareness for socal entrepreneurship in socety. NSSSE is also obliged to inform the steering group for the Act on Social Enterprises about possible deficiencies in the Act and other problems in the field of social entrepreneurship.

NSSSE has operated since March 3, 2004. The private VATES-foundation has the responsibility of the coordination of this hybrid organisation. Local consultancy and support activities are carried out by 14 regional actors and various regional public guidance and support service organisations. Six out of these 14 regional actors are foundations for public good, five are social enterprses themselves and the rest (3) are publicly owned consultancy organisations. The Ministry of Labour is financing the actvities, and has, thus, the ultimate responsibility for the functioning of the support structure.

There is a special labour market project subsidy available for social enterprses specified in the Act on Social Enterprises. Employment authorities may, within the limits of the national budget, provide support for the establishment of a social enterprise and the consolidation of its operations, if the specific aim of the tradings to employ persons in a poor labour market position. The subsidy may not be used to business operations. Support can also be provided for the promotion of social entrepreneurship specified in this Act.

NSSSE received EUR 395,000 from the Ministry of Labour for 2004–2005. In that time the network had 321 customers, of which 132 corporate customers, 54 private persons, 72 authorities and 63 third sector actors. NSSSE produced also brochures, web stes of their own and materials for the Ministry’s information services. Direct consultations were mostly given by e-mail. In total, there were 1,314 e-mail consultations during that time. The support structure distributed information also on the phone, in personal meetings and in training occasions. During 2004–2005 over 400 events were organised.

In the end of 2005 a telemarketing campaign was launched, which was aimed at ‘normal’ companies. Atogether 14,775 companies were contacted. About 750 of them were interested in additional information. In 2006 the service has concentrated on these companies providing them more knowledge on social entrepreneurship. In 2006 EUR 178,000 has been granted to NSSSE.

According to the evaluation of the implementation and functioning of the Act on Social Enterprises over 30 % of the registered social enterprises are satisfied with the guidance they have received from VATES or the regional actors of the structure. On the other hand, about 20 % of those studied find the consultancy received ‘very’ or ‘quite’ weak. It is not clear whether this dispersion is due to diverse needs among social enterprses or regional differences in the quality of services provided. As a whole, the evaluation found the hybrid model of NSSSE functional, but also some critique was laid the distribution of work and shortage of cooperation between NSSSE and the public financial planning services for businesses.

In spite of all these activities, social enterprises are not well-known to the public yet. According to the previously mentioned telemarketing campaign the term ‘socal enterprise’ was known only to 14 % of the Finnish companies interviewed. Nevertheless, the number of social enterprises registered increased continuously. By the end of February 2007 there were 84 companies in the Register for Social Enterprises. Of those, 11 have been registered in 2004, 21 in 2005 and 69 in 2006. The Ministry of Labour has stated that the actons for promoting social entrepreneurship have not been sufficient yet. Therefore, Finnish Parliament has accepted some amendments to the Act on Social Enterprises in February 2007. These amendments expand the scope of the Act to new groups of persons in a poor labour market position, lke persons on rehabilitation subsidy, persons rehabilitating after psychiatric probems, and pensioners who have suspended their pension. Also immigrants who have inadequate knowledge of either Finnish or Swedish could be included to the required 30 % of unemployable workforce in the social enterprse. Moreover, in the government bill the level of supplementary employment subsidy will be raised and the way it is calculated is redefined.

Oltermannintie 8
P.O.Box 40
00621 Helsinki


Practices and Polices in the Social Enterprise Sector
Austrian Institute for SME Research & TSE Entre, Turku School of Economics
for Enterprise DG, European Commission
Vienna, 2007