Nicolas Schmit, European Commissioner for Jobs and Social Rights
The European Commission is preparing an action plan for the social economy, to be launched this year. The plan will be aimed at improving social investment, supporting social economy organisations and social enterprises to start-up and scale their activities and their social impact, to innovate and create jobs. It will also draw on the unique characteristics of social economy organisations to ensure that the green and digital transitions leave no one behind, and that our communities strengthen their economic and social resilience.
The European Commission communication “A strong social Europe for just transitions”, published shortly before the start of the Covid-19 pandemic, has drawn attention to the fact that we are witnessing a time of great changes. Climate change and environmental degradation require urgent adjustments to our economy, industry and lifestyle. Artificial intelligence, robotics and other new technologies are also profoundly changing our lifestyle and the job market. The challenge is not only economic; it also concerns the defence of EU values. Although they bring about opportunities, technological shifts and the energy transition will not be enough on their own to bridge the gap between the rich and the poor. On several occasions, the President of the European Commission, Ursula von der Leyen, has reiterated that these transitions must not “leave anyone behind”.
The COVID-19 pandemic, with its significant economic and social repercussions, has brought further complexity, showing us that we must work for inclusion, to fight poverty and to provide better social services. In addition to addressing the immediate consequences of the crisis, it is clear that a profound shift in our societies towards a more sustainable model is needed, both from an environmental and a social point of view. In this sense, social economy organisations show the way forward, thanks to their commitment to putting people first.
This commitment to social and environmental impact, together with an organisational model characterised by the collaboration and participation of all interested stakeholders, explains why the social economy is able to rebound at times of crisis. Although social enterprises are often small and face financing difficulties, many of them have directly contributed to addressing the crisis during the pandemic, for example by producing health equipment, providing health care and other essential services to the most vulnerable. However, many organisations have had to suspend their activities. This has a very high social cost, given the role that the social economy plays in promoting social cohesion and in filling gaps in the provision of social assistance and general interest services.
Several recent Commission initiatives, such as the Action Plan for the Circular Economy, the European Agenda for Skills and the “Renovation Wave” strategy, have referred to the potential of the social economy. Indeed, many social enterprises are active in the circular economy, supply energy at affordable prices to the most vulnerable, thus helping to cushion economic shocks, help reskill and improve employment prospects for those far from the labour market. Finally, we must not overlook the contribution that the social economy can offer the recovery from the crisis we are going through. Their local presence, their organisational models and their propensity for innovation allow them to quickly identify the needs of the community and offer appropriate solutions. In addition, social economy helps implementing the principle of the European Pillar of Social Rights, which is our compass for a fair and sustainable recovery. The European Commission has made available an unprecedented recovery plan [1] and is encouraging Member States to include the social economy in their national plans.
In order to reap the full benefits of the social economy, it is essential to act with conviction at all levels, including the European one. This is what the European Commission is working on now, consulting all interested parties to develop the action plan for the social economy that President von der Leyen entrusted to me. Its adoption is scheduled for the end of 2021 and we are currently gathering information on the needs and challenges of social economy organisations and social enterprises. A study evaluating the impact of actions implemented as a follow-up to the Commission Communication on a Social Business Initiative of 2011 was recently published [2]. The study results show that, although the ecosystem of social enterprises and social economy organisations has developed a lot in the last decade, some obstacles remain.
An important obstacle is related to the lack of awareness and recognition of the social economy business models. The Commission recently carried out a mapping of social enterprises and their ecosystems in Europe. This study shows that, despite being present in all mapped countries, social enterprises enjoy varying degrees of public and private, political and legal recognition. Italy, France and Belgium have some of the most advanced ecosystems in Europe, while Spain has a long tradition of social economy organisations and an emerging social enterprise ecosystem. A significant number of social enterprises also operate and develop in countries such as Austria, Estonia, Germany, the Netherlands and Sweden, although they have not introduced specific legislation. In many countries where there is no political or legal framework, the concept of social enterprise is not well known and understood. This leads to a number of difficulties for social enterprises, such as more difficult access to finance and public procurement. Finally, there is still good scope for improving the appetite for social entrepreneurship among young people by providing them with the right skills and education.
Access to finance is often a weak point in the social economy, as businesses struggle to find the right financing to start up and scale up their impact, in particular due to their business models which focus on social, rather than financial returns, making them less appealing to traditional investors. To address this issue, the EU has already launched a package of instruments enabling investors to take more risks [3], including grants, loan guarantees, equity investments, advisory services, and Social Impact Bonds. Building on these instruments and on growing interests from banks, we will reinforce EU support through our action plan and through InvestEU’s dedicated policy window for social investment. Funding to support the social economy will also be available under the European Social Fund Plus. Member States should make strategic use of this funding, drawing on good examples from the past period, such as the Spanish Operational Programme for Social Inclusion and Social Economy. Member States can also propose to use some of the funds allocated to them under the Recovery and Resilience Facility in their national recovery plans.
These are just some of the challenges and opportunities we have gathered so far. In the coming months, the Commission will work on defining concrete actions to address these obstacles and ensure that the potential of the social economy can be fully exploited. In compliance with the principle of subsidiarity, for some of these actions we will count on the support of actors and authorities at national, regional and local level.
[1] https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
[2] https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8373&furtherPubs=yes
[3] Under the European Employment and Social Innovation Programme and the European Fund for Strategic Investments.
