Social Cooperatives in Italy

1. Social Cooperatives in Italy Renate Goergen EXPERT GROUP MEETING ON COOPERATIVES AND EMPLOYMENT Shanghai, China, 15-19 May 2006

2. When and why Social co-operatives developed in Italy Social cooperatives in Italy have their origins in the end of the seventies, during the years and among the contexts of the great battles for the reformation of the social and sanitary system, the years of important reforms in many sectors of the Italian society, of struggle against closed institutions and circuits of segregation, against the disastrous effects of assistance based on charity and beneficence, the years of the battles for the full rights of citizenship and the practical access to all the rights of citizenship, the right to live one’s own life, to have a decent work , a house and the opportunity to live independent etc. In the late ’70s the failures of the quite poor Italian welfare model started becoming evident. The role of the family in providing social support declined, following also the growth of women participation in the labour market. At the same time, there was a growth of the aged population and the emergency of new needs connected to the so called “post-materialist poverties” as mental illness, homelessness, drug abuse, immigration and long-term unemployment. All overItaly, tied to specific local contexts, up from specific needs an increasing number of small organizations were born concerning themselves mainly with the “new poor”.. Initially they were organized mainly as associations and they relied heavily on voluntary work. But growing the size and the number of the organizations they came up against a legal restraint: in Italy an association could not engage in production or, in ecomically important activities. The idea arose of using the legal form of the co-operative for the organization of these activities, given that a co-operative: 1) had the status of an enterprise 2) was the sole organization not liable to tax on undistributed profits; 3) was characterized by members participation and democratic management; 4) needed a very small amount of capital to be set up.

3. The law 381/91 recognizing “social co-operatives” After ten years of parliamentary debate which involved both political parties and the co-operative movement and after many years where social co-operatives already had been active in the community, the act 381 was passed in 1991 by the parliament.. The Italian social co-operative society as provided by Act 381 represents an important innovation at both the domestic and the international level. The social co-operative, following the practical evolution during the years 1981 to 1991 can be of two types: B) co-operatives producing goods and services different from social ones – agricultural, industrial, commercial or other services activities – for private customers or for public agencies, with the objective of achieving the integration into work of so called disadvantaged people which means hardly employable workers as people with severe disabilities, people with mental illness, drug addiction or people in prisons amounting to the legally fixed minimum of 30% of the workers/members (they will be called social co-operatives type B). A) co-operatives delivering social, health and educational services (they will be called social co-operatives type A and generally the workers are social or health workers and professionals);

4. Law 381 admits different kind of membership, various kinds of stakeholders: Members who perform an activity in the co-op and yield a monetary compensation from it (workers, managers and in case of cooperatives type B disadvantaged members and workers) Members who benefit directly from the services provided by the co-op (elderly people, people with disability); Members who work voluntary for the co-op in a “personal, spontaneous and free manner without any profitable aim”; they cannot constitute more than 50% of the total workforce Financing members and public institutions. Social co-operatives are workers-owned cooperatives but theyhave to carry out their activities “for the general benefit of the community and for the social integration of citizens” which means that the beneficiary is above all the community or the groups of disadvantaged people within it, even if they are not members of the co-operatives. LAW N. 381/1991

5. Let’s look to type A co-ops • They stem from the experimentation conducted in a search for greater effectiveness and efficiency in the supply of public services; • They are the main customers and partners of the public bodies which supply social and health services; • They are both “substitutes” for the public sector in the social and health fields and autonomous subjects able to perform their activities; • They entail an organisational innovation by proposing entrepreneurial solutions also in the supply of social/welfare and educational services;

6. Which are the main factors of their expansion? • Their starting from the bottom up, from the needs of disadvantaged groups; their deep knowledge of the world of exclusion; • Their ability to increase the value of their human resources (the professional members) and the value of the material resources of the territory they work • The dismantling and overcoming of the traditional welfare State; • Their ability to be competitive vis-a-vis competitors which come (and will increasingly come in the medium term) from other types of companies interested in privatizing the Welfare State

7. Let’s look to type B co-ops • They work in a field where no other - either public or private – subject has ever operated; • They propose radically innovative intervention methods vis-a-vis disadvantaged people who are offered real jobs within these companies; • Not only do they become workers but also, in the overwhelming majority of cases, entrepreneurs; • They don’t seek to substitute or integrate the actions carried out by the public sector; • The innovation lies at the core of the very meaning of enterprise and its purpose inasmuch as they - directly and simultaneously – pursue business objectives and social objectives

8. Who are disadvantaged people to be 30% of the workers/members of the co-operative? • - People with physical, psychical and sensory disabilities; • - Former patients of psychiatric hospitals; • - People undergoing psychiatric treatments; • - Drug-addicts, alcoholics; • - Young people under 18 but of working age with family difficulties; • - Prisoners admitted to sentences which are alternatives to imprisonment • Other people excluded from the labour market

9. How many disadvantaged membersto be a social co-operative society? • At least 30% of the workers in the social co-op shall be disadvantaged members; • Disadvantaged people shall be members; • Social co-ops shall pay no mandatory contributions for old age pension and health covery with reference to the wages and salaries of disadvantaged people

10. Which are the main factors of their expansion? • Disadvantaged people, or people with disabilities are generally unemployed and are an increasing number of the population; • Their employment cannot be reached only by law; • TypeB practice a sort of “collective self-employment” of people with disabilities, that means active citizenship, empowerment, increasing abilities; they produce income, wealth and jobs; • The company mission provides the means to attain the social aims and, vice versa, the mission of the social enterprise would be meaningless without the attainment of specfici social objectives;

11. Let’s now look to the story, the diffusion and something else remarkable!!! Although social co-operative societies emerged at the end of the 70’s, they were practically unknown until the middle of the 80’s when they acquired a certain visibility. Anyhow, it is in the first half of the 90’s that social co-ops gained relevant dimensions – by tripling the number of firms – and started performing a social function: preserving the Italian Welfare State.

12. Strengthening Social co-ops after the legal recognition • Regional enactments subsequent to the national act were provided establishing concrete support to the development of social co-operatives. More and more local authorities like the municipalities started contracting-out policies in the field of their social policies. • Since their very first years of development, the strategy of social co-ops has been to set up local Consortia in order not to be obliged to increase the size of the single co-op too much, to match the growing demand for services, to spin-off new initiatives and to pursue a specialization strategy. • Consortia are mainly formed at a provincial level and then again at the national level. Over the last years an integrated entrepreneurial system has been developed. The system is characterized by three levels: • The first level consists of the single co-operative • The second level is represented by the local consortium structures. These function as strategic support of the co-ops that are grouped by developing marketing, administrative counseling, training and the development of human resources, organizational and managerial counseling of the partners and of the newly established organisations which are about to start up; frequently the local Consortia assumes a role of general contractor. • The third level – a national level – performs long-run strategic functions, such as research activity, training of the managers of the local consortia, counseling and developing activities. Sometimes the national Consortia assumes the role of general contractor.

13. The distribution of social co-ops is proportional to the population distribution all over the Italian territory, although they are more widespread in northern Italy. Type B make up only one third of all the social co-operatives while type A, mixed social co-operatives and Consortium of social-cooperatives form 2/3 of all the social cooperative societies. In general terms, it can be maintained that there is still a prevalence of social-health and educational aspects over those tied to the disadvantaged people' work integration. The national crisis of the welfare system – characterizes by “closed” structures (asylums, sheltered workshops) was tackled first where there was a widespread business culture (the north of Italy) which could use innovative forms, such as those proposed by Type B co-operatives. Type A social co-operatives are increasing prevalent in the south and, obviously, they fulfill the function of “substitutes” of the state. Nevertheless, recently the growth rate of type B cooperatives are much higher in the south of Italy.

14. Some quantitative data about development and the dimensions Social co-operatives are still constantly growing but it isn’t so easy to have precise data. In 1991, when the Act was passed, social co-ops numbered just under 2,000. By the end of 1997, social co-ops in Italy were estimated at around 4,500, at least 3,500 of which were certainly in operation. Social co-ops are estimated to represent about 4% of the whole co-operative movement and 10% of total co-operative employment. 70% of social co-ops are of Type A and 30% are social co-ops whose purpose is to integrate disadvantaged people into the labour market – so called Type B social cooperatives. The Ministry of Productivity collects data and recently the National Statistics Institute gave some data. In 2003 the IRES FVG – a research Institute did a special research on behalf of the development of Type B co-operatives. TAB. 1 – The macro economic dimension of Italian Social co-operatives: Number of co-ops, turnover (in millions of Euros), Employed workers Fonte: elaborazioni IRES-FVG su dati Ministero, ISTAT, CERVED ed Indagine IRES FVG

15. The turnover of social cooperatives type A in 2003 was 2.692.000.000 Euro (IRES 2003)

16. TYPE B social co-operatives and their special entrepreneurial and social performance

17. GRAF. 2 – Productive specialization of Coops TYPE B in % of employed workers (100%= 58.082). 50% of the workers are so called disadvantaged. The turnover in 2003 was 1.276.000.000 Euro (IRES 2003).

19. The leaders identikit

20. Previous professional experiences

21. 70% of managers and workers of social co-operatives in Italy are women

22. Recently Italian Social co-operatives type B with the help of the European Initiative Equal and in partnership with many other European Social Entrepreneurs developed an innovative networking strategy: Social franchising It is a development methodology for social entrepreneurs to rise their quality and social and economic impact throughout a specialized network and branding One of the first social franchisors is Le Mat – a network of social hoteliers www.lemat.org