The Role of European Social Enterprises in Economies and Public Policy

1. The Role of European Social Enterprises in Economies and Public Policy Prof. Marthe Nyssens CIRTES, Catholic University of Louvain Prof. Jacques DEFOURNY Center for Social EconomyUniversity of Liège Belgium

2. OVERVIEW • The socio-economic context of the debate • The EMES conception of SE • Social enterprises in the whole social economy • Social Enterprises between ideal-type and institutionalisation • Conclusion

3. 1. The socio-economic context of the debate The pioneering initiatives • Late 1970’ – beginning 1980’ • Context • Increasing structural unemployment • Unmet emerging social needs • Limits of public financing • Limits of traditional social and employment policies to tackle social exclusion : • Long term unemployed or low qualified people • Social problems • Refugees, immigrants • “De – institutionalisation” of mental ill people (Italy, Sweden…) • …

4. Innovative entrepreneurial behaviours driven by a primary social purpose mainly took place within the third sector (WISE, Personal services…) • Changes in public funding of the third sector played an important role: forms - rather than the volume - of public funding transformed: • quasi-market • second labor market programs • Key social actors shaping the debate • Federative bodies advocate for a better recognition of their specificities (for instance, the Italian Consorzi)

5. PUBLIC POLICIES PROMOTING SOCIAL ENTERPRISES IN EUROPE • Public policies focusing explicitly on the promotion of SE (UK since 2002, EQUAL programme,…) • Setting up of public or public-private funds providing seed capital, loans and other financial supports (France, Belgium,…) • Promoting access of SE to public procurement (e.g. local public goods) • New legal frameworks designed for SE

6. New legal frameworks related to the "cooperative model": • Italy (1991): "social cooperative« (pioneering role) • Portugal (1998): "social solidarity cooperative" • Spain (1999): "social initiative cooperative " • Greece (1999) " social co-operative with limited liability " • France (2001): "cooperative society of collective interest " • Poland (2006): " act on social cooperative " • New legal frameworks based on a more "open model": • Belgium (1995): "social purpose company"   • UK (2004): "community interest company" • Finland (2004): " act on social enterprise "  • Italy (2006): "social enterprise "

7. Characteristics of these laws reflecting • Economic democracy (14/16 laws) • limits in voting power • limits return on capital shares • cap on distribution of profit • asset locks • Multiple stakeholders ownership

8. 2. The “EMES” approach An « ideal-type » social enterprise defined by • An economic project • A continuous production with some paid work • An economic risk • Primacy of social aim • Limited profit distribution • A participatory governance • A high degree of autonomy • Stakeholders’ involvement • A decision-making power not based on capital ownership

9. THE EMES DEFINITION AS AN « IDEAL-TYPE » • These criteria are not conditions to be strictly met to deserve the label of social enterprise • They rather define an « ideal-type » (abstract construction) within the « third sector »like a star within the « galaxy » of social enterprises A methodological tool rather than a normative framework

10. The concept of social enterprise is double-sided: Social enterprises can be NEW ENTITIES OR ALREADY EXISTING ORGANISATIONS reshaped by new dynamics

11. 3. Social enterprises in the whole social economy A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS Co-operatives Non-profit Organisations

12. Non-profit Organisations Co-operatives Worker Co-ops Social Co-ops User Co-ops A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

13. Co-operatives Non-profit Organisations NPOs transformed into social firms Production- oriented NPOs Advocacy NPOs A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS

14. Co-operatives Non-profit Organisations SOCIAL ENTERPRISES A. THE SOCIAL ENTERPRISE AS A BRIDGE BETWEEN THE ASSOCIATIVE (NPOs) AND THE CO-OPERATIVE WORLDS . . .

15. B. LOCATING SE IN THE WHOLE ECONOMY Redistribution Social economy (third sector) State (public agencies) Not-for profit For-profit Public Private Community (households, families) Private companies Reciprocity Market Informal Formal

16. 4. Social Enterprises Between ideal-type and institutionalisation

17. Empirical field:Work Integration Social Enterprise (WISE) The major objective of WISE is to help poorly qualified unemployed people, who are at risk of permanent exclusion from the labour market. WISEs integrate them back into work and society in general, through productive activity. PERSE project : 15 WISEs by country (162 WISEs across Europe)

18. WISEs in Finland Pekka Pättiniemi STOfin = sosiaalinen työosuuskunta = labour cooperatives VOfin = vajaakuntoisten osuuskunta = co-operative social firms for disabled people TKfin = työkeskus = work centres MSJOYfin = muut sosiaalialan järjestöjen omistamat yritykset = other enterprises owned by associations for the disabled

19. Social Enterprise: between ideal-type …

20. SOCIAL ENTERPRISE a) Multiple Goals Social Enterprise Social Goals Economic Goals Socio-political Goals

21. b) Multiple Stakeholders Social Enterprise In the board : • not only in the hands of shareholders to avoid profit maximizing behavior (social benefit mission) • Different types of stakeholders for different goals

22. Market Public financing Donations, volunteers c) Multiple Resources Social Enterprise SOCIAL ENTERPRISE

23. (Social Enterprise: between ideal-type … …and institutionalisation

24. In the 1980’ : WISEs implementing Active Labor Policies (ALP) before their institutional existence • From the 1990’: With the process of institutionalisation, most of the WISEs are supported by (specific) public schemes. => These Active Labor Policies frame their action …

25. - New public schemes targeting work integration social enterprises : • Entreprise d’insertion, association intermédiaire, FR • Entreprises de formation par le travail, entreprises d’insertion,… Belgium • Social economy program, Ireland • Beschäftigungsgesellschaften, Germany • Integration enterprise program, Portugal • Integration enterprise program, Spain • Social Enterprise, Finland => This has even led to the concept of social enterprise, in some countries, being systematically associated with such employment creation initiatives

26. Types of work integration in WISEs TRANSITIONAL EMPLOYMENT SUPPORTED BY SHORT-TERM SUBSIDIES BWg KBg BLUIg SOCIALIZATION THROUGH PRODUCTIVY STOfin ILMOuk VOuk EIf AIf ETTIf GEIQf EFTb LVdk P E R M A N E N T S E L F - F I N A N C E D J O B S(*) COSOi RQf COs VOfin ONCEs EIs CEEs GFsw CBuk WCOuk SBGg EIp EIb IBb EINf CAVAf SWirl ESb SFuk Ruk SKsw AZCb ACTIVITY ETAb BWb SWb SHsw EPp SEirl Tkfin MSJOYfin BVdk JOBS SUPPORTED BY LONG-TERM SUBSIDIES Source : ELEXIES/PERSE

27. Main characteristic of target groups Women at risk Minorities Low- qualified young people «Social handicap» (alcohol, drug) «Hard-to-place» (long-term) BVdk PDLDuk CSFDPfin SOCOsw SHsw Aif RQf EIb SOLIDRb IBb AIf ETTIf EINf KBa BWa LDirl EIp SBGa UCSirl LCOfin CSFfin RQf GEIQf BLUIa LVdk RQf SOLIDRb ESRb SWb AZCb WCOuk BWb COSOi EPp CEEe ONCEe COe SBGa BWa EFTb WCOuk CBuk LDirl CSFfin EIe RQf ETTIf GEIQf CBuk ILMOuk CSFfin SBGa BWa CBuk KBa SEWirl LDirl SEWirl Eip Eie CAVAf RQf SEWirl CSFfin LVdk ETAb COSOi

28. SOCIAL ENTERPRISE a) Multiple Goals Social Enterprise Social Goals Economic Goals Socio-political Goals

29. Economics goals: support work and social integration • adapted to the capacities of disadvantaged groups

30. Type of production of European WISEs Nb WISE Source : PERSE Source : PERSE

31. Economics goals: support work and social integration • adapted to the capacities of disadvantaged groups • developing market niches : a successful strategy • collective dimension of the production : social services, environmental field • WITH THE PROCESS OF INSTITUTIONALISATION • no public financing for collective type of production… • pressures from new entrants : for profit firms

32. Social goals : • For all: work integration at the core of the mission • For some of them: collective dimension of the production • Empowerment of excluded workers through democratic management structure WITH THE PROCESS OF INSTITUTIONALISATION • Instrument to the integration in the first labour market based on a transitional model of WISE

33. Types of work integration in WISEs SOCIALIZATION THROUGH PRODUCTIVY P E R M A N E N T S E L F - F I N A N C E D J O B S(*) GFsw CBuk WCOuk SGg EIp EIb IBb EINf CAVAf SWirl ACTIVITY ETAb BWb SWb SHsw EPp SEirl Tkfin MSJOYfin BVdk JOBS SUPPORTED BY LONG-TERM SUBSIDIES TRANSITIONAL EMPLOYMENT SUPPORTED BY SHORT-TERM SUBSIDIES BWg KBg BLUIg STOfin ILMOuk VOuk EIf AIf ETTIf GEIQf EFTb LVdk Source : ELEXIES/PERSE

34. Social goals : • For all: work integration at the core of the mission • For some of them: collective dimension of the production • Empowerment of excluded workers through democratic management structure • WITH THE PROCESS OF INSTITUTIONALISATION • Instrument to the integration in the first labour market based on a transitional model of WISE => Weaker participation of workers

35. Economic goals : • as a support of work and social integration • Social goals : • for some : collective dimension of the production : social services, environmental field … • for all: work integration at the core of the mission • Socio - political goals • multiple interactions between WISEs and public bodies In tension

36. Multiple goals WISEs facing institutionalization WISEs’ mission = multiple goals ? or a tool of active labor policy => Contested nature of WISEs’ mission

37. b) Multiple Stakeholders Members of board of European WISEs Source : PERSE

38. Influence of stakeholder categories in multi-stakeholder European WISE Source : PERSE

39. Influence of stakeholder categories in multi-stakeholder European WISE => Linked to the transitional mode of work integration Source : PERSE

40. Market Redistribution 53% 39% Donations, volunteers 8% Source : PERSE Total resources : monetary and non – monetary (volunteer, tax deductions, loans of equipment) c) Multiple resources SOCIAL ENTERPRISE

41. Source : PERSE The origin of resources

42. Resources used CBuk COe CEEe ILMOuk SEirl RQf SOCOsw EFTb BLUIa BVdk CSFfin EPp SOLIDRb ESRb SFuk SHsw EINf ETTIf GEIQf SFuk Ruk COSOi BWb ETAb LVdk EIe WCOuk EIb IBb AZCb EIp SWb Donations/Volunteering ONCEe LDirl KBa LCOfin Non-market resources Market resources

43. Type of WISEs according resource mix structure Source: PERSE

44. Multiple resources WISEs facing institutionalization • Importance of market sales • Importance of the public sector • “Re-embedding” of market relationships • Voluntary resources embedded in civic networks • Diversity of resource mix according to the type of social mission But public schemes put WISEs « into the market or the non-market box »

45. => Managing hybridity constitutes a challenge: Bulwark against isomorphism or threat for their identity ? • Institutionalisation generates strained relationships between the different goals and put WISEs into « boxes » • Hybridity appears to be a channel to sustain the innovative capacity of WISEs linking people from different backgrounds and resources from different nature