Social economy & local development

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Social enterprises and local development

From the background paper for the Tivoli social economy seminar on 5-6 December 2006

Among EQUAL Managing Authorities, Italy together with other supporting member states – Poland, Finland, Sweden, UK (GB), Germany and Belgium (Flanders) – has intended to develop the issues concerning Social Economy, focusing on local development, using the thematic platform provided by the Commission.

This theme has been particularly taken into account during the first round of Equal by 10 member states, and has been extended to new member states.

Social enterprises provide services to the environment and to people of a certain territory, and so doing improve the management in order to prevent marginalisation from market and society. It follows that the opportunity to increase the social capital of local communities and, as a result, of the national context requires a design of local development that gives social enterprises a central role.

The social capital representing the economy of the Third Sector is a real added value to local development and not only a side effect that releases positive outcomes. It is true to say, however, that the contribution provided by social enterprises is not a automatic achievement, assured by the simple presence on the environment, but shows an ecological opportunity, meaning one that requires specific conditions to emerge.

The experience of the EU Member States from 1st round of EQUAL indicates a considerable contribution of the social economy to a decrease of unemployment and reduction of social exclusion. On the one hand transnational cooperation in this field will be a chance to refine existing models of social economy in other Member States. On the other hand the diversity of social economy models in the Member States provides an opportunity for working out the solution that would be best adjusted to the labour market conditions and to the legal system.


As regards member states that have agreed the proposal, it can be pointed out that, in Poland, the cooperatives went through a period of crises after the regime fell. Nowadays a new concept of cooperation has been developing, connected to the fight against unemployment and the promotion of local development, sustained at a legal level, since the nineties, with the amendments to the 1982 “Law on cooperatives” and the “Law on social work”, of 2003. These laws consider social cooperatives as one of the tools in the fight against unemployment and the promotion of local and regional economy.

Out of 107 EQUAL Development Partnerships in Poland 27 are implementing projects on social economy. The budget allocation to Theme 2D is about 50 million euros and Polish DPs’ activities cover the following issues:

  • promotion of social economy on the Polish labour market through:
    • identification and dissemination of existing good practices, both at national and European level
    • raising the level of knowledge of society on third sector potential in context of job creation
    • developing the Polish model of social economy, including definition of its role and tasks in the field of regeneration of deprived areas, taking advantage of the experience of other Member States
    • developing effective mechanisms of supporting persons moving from the second labour market to the first one e.g. testing the methods of support for the establishment of social co-operatives
    • developing a platform of co-operation and understanding among the actors of the social economy, through the development of partnership and the creation of new models of activities
  • working out new instruments of social economy and model methods of activity adjusted to the needs of different social groups and to the specific character of geographical areas, where the development of the social economy will contribute to restoring the attractiveness of these areas from the point of view of the labour market situation and the availability of services, including social services
  • testing the methods of mobilisation of local communities in favour of co-operation in the process of revitalisation of local labour markets and development of rural areas, including the promotion entrepreneurs’ participation in development and implementation of revitalisation programmes
  • working out model solutions in building the potential of the third sector, in particular up-grading qualifications of employees in management of social enterprises
  • improving the availability of investment capital for social enterprises

The foreseen support for the development of new models of social economy will not only take the form of working out mechanisms to take advantage of social economy possibilities for persons at risk of social exclusion, but also in the revitalisation of deprived areas, as well as in bridging the regional gap.

As a matter of fact, the experience from Central East and South-East Europe shows that transition policies towards market economies overlooked the role and potential of the social economy in key areas of social inclusion such as employment, social services and healthcare. While democratisation policies have encouraged civil society development through the creation of charities, foundations and NGOs, a number of countries in the region are now looking to embed the further potential of such organisations by developing legal and governance frameworks built on local experience in order to promote the sector’s capacity and know-how in the delivery of goods and services towards social cohesion and labour market integration at local level. The need to develop policy tools and frameworks for a stronger involvement of the social economy in policy development and implementation is further supported by the trends towards effective decentralisation over the past 15 years, coupled with the opportunities offered by EU integration and/or accession.


As regards Finland, in December 2003 the Act for Social Enterprises was adopted, which identifies the main social enterprise objectives: to strengthen active job policies, by offering new forms of employment for disabled and long-term unemployed people, and to upgrade the provision of goods and services in sectors where there is already a demand.

In order to be labelled as “social”, enterprises in Finland should be included in the Register of Social Enterprises maintained by the Ministry of Labour and they are required to employ at least one disabled person however big they are. Social enterprises gain special fiscal benefits, but they are not required to have restraints in the redistribution of revenues.


In Italy the non-profit sector grew remarkably in the last 20 years. This growth required the establishment of an adequate legal framework, such as the “General policy law on charities (266/91)”, the “General Policy Law on social co-operatives” (381/91)” and the legislative decree on ONG (Onlus) (460/97). As a matter of fact, this sector encompasses several different types of organisation with different missions, social values and action strategies.

In 2005 a general law on social enterprises was adopted by the Parliament and asks the Government to introduce new rules addressed to this relevant economic subject that is not yet regulated by a specific legislation.

Italy has 20 years' experience of business creation policies, at national and local level. Those policies have been addressed to young people and women by means of specific financial support and to disabled people through the instrument of social cooperatives, providing a number of successful experiences.

In Italy the social economy evolved according to specific patterns in the different regions of Obj. 1 and Obj. 3 and it played a different role in supplying social services and supporting local development. In particular, social enterprises providing non-social services (such as environmental, manufacturing, etc) are remarkably innovative in the southern regions.

During the last ten years, business creation policies have been more closely connected to policies concerning local development, networking between enterprises and local services. The result is a strengthened governance, in which policy and decision makers gather, at local level, the guidelines for development.

The local dimension has gained a central role in the process of social dialogue, because it assures a better chance of reaching the specific cultural, social and economic needs of the local community, aiming at the widest and deepest social and territorial cohesion, as expected by the Lisbon strategy.

The experience of Equal in Italy concerning entrepreneurship derives from this background. Starting from the human resources of the territory and from the features of disadvantage, the actions implemented by the DPs are mainly related to the following issues:

a) building of structural networks and creation of new areas of employment, in particular in order to enhance environmental, cultural and touristic resources and the requalification of areas with social, territorial and economic delay, for which new professional profiles and services have been introduced;

b) planning of strategies for integration of policies of social cohesion with the actions of educational and labour policy;

c) providing a set of indicators for development of social enterprises, leading to integrated intervention model at local level;

d) promotion of cooperation among those responsible for local development, (public administration, employment services, firms, social partners, etc.) and institution of a territorial conference, with local actors, both public and private

In order to make possible the integration of the two Entrepreneurship themes, Social Economy will be developed following the same methodology as Business Creation.

Therefore the activities will include:

  • A. Creation of tools which will be used in assessing the models of social economy from various Member States
  • B. Building a network of practices developed by DPs
  • C. Producing policy recommendations and guidelines for strengthening the social economy at European, national and local level

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