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Money not laws 23 June 2016

Posted by cooperatoby in EU, social economy.
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160623 EP SE report coverThe European Parliament has published a report on the social economy. I’m glad to see it features a lot of good practices we identified in SEN, like the UK’s Social Value Act and the Le Mat social franchise, although the authors seem never to have visited the SEN website.

The study packs a lot into its 120 pages. It has 6 big-country studies (DE, ES, FR, IT, PL, UK), boxes on EQUAL, DIESIS and Mondragón, and makes some interesting proposals on taking the social economy forward:
– a digital transformation – on the grounds that “The digital single market can help protect Europe’s economic and social model and increase citizens’ well-being, by being a key component of the renewal of public services”;
– indicators of added value other than GDP
and…
– a clear definition.

So it comes up with another new definition:
“Distinctive features of the social economy can be identified – par ricochet – on the basis of what sets them apart from other enterprises. These elements include:
(i) the primacy of people: the social economy is based on the primacy of the individual and of social objectives over capital,
(ii) sustainable growth: the overall aim of the social economy activities does not emphasise the pursuit of profit and its distribution to the owners as an ultimate goal,
(iii) social and economic balance: in conducting their activities, social economy actors are engaged in a social aim and
(iv) democratic governance: social economy entities function in accordance with democratic, transparent and participatory decision-making processes.”

I think the social economy could improve service delivery by using digital tools more, and that the EU agenda should give an explicit place to them. Measures of social value are definitely needed, and the SBI as well as SEN worked on this. The main issue is for stakeholders such as public authority customers to start using them.

It’s difficult to disagree with the four ‘distinguishing features’ above, but I’m not sure they are any clearer than all the definitions we’ve navigated between so far. I fear that the again repeated call for a supposedly clear EU-wide definition misses the point. Will it enable very much to actually happen? It’s much more to the point to improve access to public funding programmes such as the ESIFs and to private investment in projects on the ground, and to help the sector’s federal support bodies to do their job. As in: “Existing social innovation and social investment programmes tend to reflect a focus on investor-led models and could be opened up to innovation based on member capital and on participatory innovation.”

See: http://www.europarl.europa.eu/RegData/etudes/STUD/2016/578969/IPOL_STU(2016)578969_EN.pdf

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Bremain 18 June 2016

Posted by cooperatoby in EU, Uncategorized.
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Of course I’ve become infuriated and dismayed by the referendum campaign, and doubt that even Jo Cox’s incomprehensible murder will bring campaigners to their senses.
Of course also I’m something of a Brussels insider – but this is a rational choice, by a political refugee from Thatcher, you might say.
I’ve been dismayed by one of my oldest friends teetering on the brink of voting ‘out’ because he sees the EU as undemocratic (people who live in glass houses…) or – an argument even harder to counter – not up to the job of world unification (but it’s the best approach we have). I’ve been annoyed by facetious French calls that Britain should just go away and leave Europe alone (playing with fire). And I’m intrigued to wonder how much the referendum result will matter: whichever way it goes the Tory party will be riven down the middle so the sniping will go on. I’ve been given pause for thought by being called a ‘transnationalist’ in the ESF community, as if transnationality was something odd, rather than being the raison d’être of it all.
Multi-level governance and subsidiarity are complex arguments to make. It seems to me that the popular sentiment against ‘Europe’ is a matter of displacement, a sleight of hand by the UK’s own politicians. The government has hollowed out democratic accountability, stripped local government of its relevance though centralisation and privatisation, so that people have lost their sense of agency. The country they “want back” has been stolen from them not by Brussels but by Westminster.

A slight change of tack? 14 April 2016

Posted by cooperatoby in Social enterprise.
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It’s good news that Elżbieta Bieńkowska, the hitherto elusive Commissioner in charge of social enterprises (her portfolio comprises the internal market, industry, entrepreneurship and SMEs), has finally found the time to meet members of the European Parliament’s Social Economy Intergroup, as Social Economy Europe reports.

Sadly, one thing the Commissioner did not do is announce that the Commission is planning to launch a “Social Business Initiative II”, though this has been hinted at by officials. But she did at least signal her desire to avoid any potential rift between the two main tendencies in the social enterprise sector – those that institutionalise participation and democracy in their legal structures, and those that don’t. So the drift in terminology from “social business” to “social enterprise” continues and the buzzword is now “social economy enterprise”: “The Commissioner agreed on the necessity to share -within the different EU institutions- a common and inclusive understanding of the social economy. In this way, she stressed that the term “social economy enterprises”, seems to be the consensual one and therefore it should be used by the different institutions whilst developing its policies.”

Hopefully this hatchet-burying means that the Commission and the sector can concentrate on increasing the number, scale and impact of social economy enterprises. Their potential contribution is recognised. It would be a wasted opportunity if the Commission did not focus efforts on maximising it.

3 factors in mainstreaming social innovations: needs, social policy-makers and financers 24 February 2016

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I’ve just been at the kick-off meeting of the Social Innovation Community (SIC) project, which involves many of the big names in social innovation and is co-ordinated by AEIDL. Its job is to establish a Europe-wide community of social innovators, comprised of 8 or more networks on issues such as public sector innovation, corporate innovation, digital innovation and the social economy.
I was struck by the debate on which part of the phrase ‘social innovation’ is more important. For ZSI in Vienna, the more important point is that innovation policy should become more social. For me, the point is that social policy-makers should become more innovative.
It seems to me to be misleading to model social innovation too closely on the model of technological innovation. New products are often invented out of love for the product itself – a desire to improve the way something works. Inventions become innovations once they have successfully made it to the market – i.e. they are economically successful. The main beneficiaries are the producer and the purveyors of the new thing.
Social innovation on the other hand has to start with the apprehension of a human need, and the people who benefit will typically not be the inventor or the purveyor, but the clients. Ideally, as in the case of a co-operative, both producers and customers will benefit, and altruism and self-interest will both be satisfied.
In mainstreaming social innovations, it seems vital that the theoreticians of innovation as a process take a back seat and prioritise three things:
– the identification of need, through stakeholder participation and mapping
– the engagement of social policy-makers who are the people who can close the implementation gap
– the bringing on board of the institutions which can provide finance for social innovations – including public authorities, funds likes the European Social Fund and corporate philanthropists as well as crowdfunding platforms.

EU funding for sustainability and inclusion 22 February 2016

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The Green Group in the European Parliament has compiled a very useful compendium of sources of European funding for sustainability and inclusion. Your Guide to EU Funding covers the ESF (p14), CLLD (p19), FEAD (p25) and everything else from Horizon 2020 downwards.

Download: http://www.greens-efa.eu/fileadmin/dam/Documents/2014_2020_YourGuidetoEUFundingLowRES.pdf

By contrast, as part of building up the European Fund for Strategic Investments (EFSI), the Commission has issued guidance on how to combine public and private funds – for instance in a ‘layered fund’ where the Structural Funds can be used to limit the risk too private investors.

Webpage: http://ec.europa.eu/regional_policy/en/newsroom/news/2016/02/22-02-2016-investment-plan-for-europe-new-guidelines-on-combining-european-structural-and-investment-funds-with-the-efsi

Progress Microfinance not reaching social enterprises 13 May 2015

Posted by cooperatoby in Social enterprise.
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The European Progress Microfinance Facility (EPMF) was intended to open up finance to social enterprises as well as other microenterprises. By March last year the 28 EPMF intermediaries had made 13,250 loans worth €125m. However its interim evaluation reports that only 4% of the loans went to social enterprises.

Some reasons for this are that social enterprises don’t make enough profit to repay a loan, and that they require larger loans than other microcredit borrowers (the maximum loan size is €25,000), and hence the lenders demand more collateral, which they don’t have. It notes that in countries such as Bulgaria they lack experience of borrowing and prefer to stick to grants, so instruments combining loan with grant may be more accessible.

The evaluators comment that take-up by social enterprises might have been higher if they had been a higher priority for the microfinance institutions which have benefited from EPMF loans and guarantees.

The EPMF is shortly to be augmented by another fund specifically targeting social enterprises, funded under the EaSI programme.

Employee ownership stalling 15 January 2015

Posted by cooperatoby in cooperative, EU, Social enterprise.
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EO in Europe 2007-14Employee share ownership is almost the other side of the coin from the investor-led type of ‘social business’, in that it addresses the third dimension of social enterprise – participation – rather than a company’s objective (social or not) or profit distribution policy.

It is based primarily on an individualist model and is conceived of as giving individual workers an incentive to work harder, by sharing the returns with them through the payment of dividends, thus increasing returns for investors too. But it can have a collective dimension, as in the case of ESOPs, where worker shareholdings are held and voted by an employee trust. It is also generally held to improve the efficiency of work organisation. There is some overlap with the social economy in the case of Spain’s 11,500 sociedades laborales, in which pubic authorities can invest for local economic development purposes.

Employee ownership has progressive intents in that it shares the fruits of labour more equitably, and also deters hostile takeovers (though it does not prevent corporate takeover as in the case of Britain’s bus companies). Many governments have therefore enacted measures to encourage it, and until 2011 it has been steadily growing. The European Federation of Employee Ownership (EFES) annual survey reports that in 2013 8.75 million employees 31 European countries held fractionally under 3% of company capital, worth in total €267 billion (an average holding of €30,000). However its latest annual survey finds that although in 2014 this total rose to €310 billion, the number of employee shareholders has now stopped:

For the third consecutive year in 2014, the number of employee shareholders decreased in Europe. This should be a warning signal for everyone. In fact, the number of employee shareholders in continental Europe decreased by 500.000 persons (-8%) from 2007 to 2014, while the number increased by 200.000 persons in the UK (+8%). These changes are clearly related to the regressive fiscal policies in many European countries, while in contrast, the UK chose to double the fiscal incentives for employee share ownership, considering it is a key element of recovery and an investment for the future.

Employee ownership is one the tools we need to transform the economy, so the reversal of this growth trend is worrying as well as surprising.

Whatever the definitional difficulties, social enterprise is building the future 14 January 2015

Posted by cooperatoby in cooperative, EU, Social enterprise.
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Another excellent post from Les Huckfield, who traces the evolution (or degeneration) of the idea of ‘social enterprise’ in Britain since 1998, when Social Enterprise London was founded. the idea had collectivist roots but never succeeded in bridging the gap between the (democratic) cooperative model and the (more hierachical) voluntary sector/charitable model. Under New Labour the idea was transformed (or deformed) to include investor-driven enterprises. Under the Coalition it has degenerated to cover public service spin-outs majority owned by venture capitalists but misleadingly labelled ‘mutuals’. He concludes:

Public Service Mutuals, like Social Enterprise, are becoming a term of public derision, killing off what’s left of the cooperative and mutual idea.

The fatal loophole is the inclusion of the fatal word ‘primarily’ in the UK government’s definition of social enterprise:

A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

The most interesting point is made by Jim Brown, who in 2003 suggested that it was not so much the government as the co-operative movement that was responsible for this dilution of principle. This is logical for co-ops, whose members do indeed have a right to a distribution of trading surpluses, in the form of a rebate or bonus related to their contribution to the co-ops business (e.g. as customers, suppliers or workers). But the loose way it was phrased also conveniently leaves the door open for distributions to investors of capital. If it was due to co-operative movement lobbying, then one would also have expected participation (if not full democracy) to have figured in the definition – but it is absent.

European parallels

The Trojan horse that was inadvertently let into the gates of social enterprise by the different visions of the co-operative and voluntary sectors might never have been born had Britain made the distinction that exists in Italy between co-operatives in general and social co-operatives. Although Italy introduced a legal definition of the social enterprise (impresa sociale) in 2006, in practice it is synonymous in most Italians minds with the social cooperative (cooperativa sociale). Italian social cooperatives can in fact distribute up to 80% of profits may be distributed, however interest is limited to the bond rate and dissolution is altruistic (assets may not be sold off).

The ambiguity over profit distribution has been carried over into the European Commission definition, which to its credit does include the criterion of participation:

The Commission uses the term ‘social business’ to cover an enterprise:

– whose primary objective is to achieve social impact rather than generating profit for owners and shareholders;
– which operates in the market through the production of goods and services in an entrepreneurial and innovative way;
– which uses surpluses mainly to achieve these social goals and
– which is managed by social entrepreneurs in an accountable and transparent way, in particular by involving workers, customers and stakeholders affected by its business activity.

This definition has the necessary virtue of inclusiveness, and is leading to a European convergence, with successive Member States introducing legislation and support programmes. However in practice, operationalising the criterion of whether trading profits are ‘primarily’ or ‘mainly’ reinvested is problematic, because most businesses (excluding asset-strippers) reinvest a large part of their profits. A minimalist interpretation, as adopted by the UK’s Social Enterprise Mark, sets the bar at 50%. This criterion was a major stumbling block in the way of the Commission’s mapping study, whose summary was published last November. This study (led by Charu Wilkinson of GHK with me as a member of its scientific committee) had great difficulty setting the boundaries, and adopted the criterion:

It must have limits on distribution of profits and/or assets: the purpose of such limits is to prioritise the social aim over profit making.

Les Huckfield deplores the loss of co-operative self-confidence, but there is an upside. Even today, most social enterprises in European are co-operatives. Yet beyond that, the social enterprise meme is attractive to many people with varied political views who see the evident malfunctions of modern capitalism. It offers them a way forward, and its broad appeal should be seen as a sign of its success and its potential. It is clearly making a very cogent criticism, and saying that corporate social responsibility is not enough. A new economic model is needed. Whatever the definitional difficulties, social enterprise is building the future.

Inclusive entrepreneurship lives 10 December 2014

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Just as the COPIE website is about to disappear from cyberspace (but many of its results are preserved for posterity on Wikipreneurship), the European Employment Policy Observatory has published a report on start-up incentives across the EU which finds that they can have a positive effect on inclusion:

“Start-up incentives are more effective in reducing unemployment than other ALMP policies. Moreover, the positive effects seem to be particularly beneficial for the low-skilled.”

However the potential for scaling up these measures seems to be limited:

“Start-up measures tend to be small in scale with limited potential for a large-scale impact on the unemployment register.”

See: Activating jobseekers through entrepreneurship: Start-up incentives in Europe – EEPO Review

See also: OECD page on inclusive entrepreneurship, including policy briefs

Parliament discusses intergroup agenda 15 November 2014

Posted by cooperatoby in EU, social economy, Social enterprise.
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The European Parliament has not yet chosen which intergroups will exist in the 2014-19 mandate, but a sort of proto-Social Economy Intergroup met on 13th November. It was well attended and discussed an agenda for the next five years.

IMG_3938 EP hemicycleIt was encouraging to see the relatively large number of MEPs present, although at mid-point a bell summoned them to a plenary vote, leaving Jan Olsson in charge. Jens Nilsson (S&D, SE) chaired the hearing, and six other MEPs intervened: Patrizia Toia (S&D, IT), Marie-Christine Vergiat (GUE/NGL, FR), Heinz Becker (EPP, AT), Sofia Ribeiro (EPP, PT), Beatriz Becerra (ALDE, ES) and Georgi Pirinski (S&D, BG).

Will there be an intergroup?

The continuation of the Social Economy Intergroup is not a foregone conclusion. Each political group has a limited number of votes to cast – 22 in the case of S&D and EPP, and 8 in the case of GUE/NGL. And they are up against some attractive competitors, as Heinz Becker reported, such as the proposed intergroups on wine, beer and hunting. It is also true that the vote may be split with other potential intergroups such as the one on public services. The vote on which intergroups will be established is set for 11th December, so let’s hope that three groups – where are the Greens? – will sign up.
Germania Viglietta, Social Attaché of the Italian EU Presidency, announced the four themes of the Rome conference next week: visibility, the legal framework, access to funding and stronger relationships with the public sector. Some 200 people are expected to attend, from 25 countries. Jan Olsson hoped for two key results: a statement supporting the continuation of the intergroup, and a roadmap for the development of the social economy.

An agenda for the next five years

There was unanimous agreement on the crying need for the social economy, above all to address Europe’s employment problem. The hearing collected priorities for future work:
For Jens Nilsson the priorities are public procurement, job creation and participative democracy. Following the adoption last year of Patrizia Toia’s report on worker take-overs, she thinks that this should be a permanent EU budget line. Georgi Pirinski suggested that the mid-term review of the Europe 2020 strategy would be a good opportunity to move the social economy up the list of policy priorities.
The perennial issue of definitions cropped up: for instance it’s an issue in Spain, where the social economy in many people’s mind equates to employment for disabled people, whereas in fact it provides 2.5 million direct jobs and is the only sector of the economy that is creating jobs. While the MEPs are happy with the concept of social economy and social entrepreneurship, they are dubious about ‘social business’.
The potential intergroup’s agenda seems to be shaping up to include:

• follow-up on Europe 2020: meaningful jobs for young people, the white and green economies
• renewal of the SBI, including the EU-wide internet platform
• public procurement: ensuring the Member States don’t close the windows that the EU has opened when they transpose the directive
• cohesion policy: a voice for the social economy in the committees that control the Structural Funds
• co-operative banks and capital adequacy
• statutes: given the lack of progress on a European Association Statute. maybe we should look at a European statute for sociétés de personnes (+/- partnerships)

Stakeholder support

The hearing gave space to two stakeholder groups which support the intergroup’s continuation. Harald Hauven of Social Services Europe pointed to the immense potential for job creation in health and social services. Michel Mercadié of the Social Platform had three priorities: clarifying the status of profit-making in social enterprises, measuring social added value, and the role of finance. He pointed out that there is a difference between hybrid financing from multiple sources, and handing over the social economy to investors. He also said that the issue on job creation is not just about quantity but also quality: jobs for whom (the disadvantaged), for what (to meet needs), where (neighbourhood renewal), how (with participation) and with whom (volunteers). The ecosystem requires the structuring of the public sector, an inter-DG structure within the Commission, an observatory and a representative forum.
The intergroup is an important forum. Watch this space.

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