Presentation by Antonella Noya, Senior Policy Analyst, OECD, on the occasion of the EESC conference on "Social economy and social innovation as drivers of competitiveness, growth and social well-being - Perspecitves and priorities for the new Commission and the European Parliament" (Brussels, 1 October 2014)
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Learning from outside the EU - What are other international organisations doing in the Social Economy Area?
1. “PERSPECTIVE AND PRIORITIES FOR THE NEW COMMISSION AND THE EUROPEAN
PARLIAMENT : SOCIAL ECONOMY AND SOCIAL INNOVATION AS DRIVERS OF
COMPETITIVNESS, GROWHT AND SOCIAL WELL BEING”
LEARNING FROM OUTSIDE THE EU
– WHAT ARE OTHER INTERNATIONAL ORGANISATIONS DOING IN
THE SOCIAL ECONOMY AREA?
Antonella Noya, Senior Policy Analyst and Manager of the Forum on Social
Innovations, OCDE
EESC 1st October 2014
Brussels
2. OECD raising policy awareness and visibility of
the social economy and social entrepreneurship:
why
• Reconciling economy and society » and « building a plural
economy » : that is re-embedding the economy in the
society as a policy strategy to foster inclusive and
sustainable economic development
• Since the late 90s analysis of the contribution of the SEOs and the
SE to the local economic development:
1. creation of economic, social ( and environmental) value
2. production of tangible goods and services to meet unmet needs
AND to respond to new opportunities in tailored and often
innovative ways ( not a residual role but a partner in the economic
development)
3. and of intanglible assets ( social cohesion, social well being,
communities ties, social capital, increased democratic participation)
3. OECD: raising policy awareness and visibility of
the social economy and social entrepreneurship:
how
• Since mid 90s the social economy and the social
entrepreneurship embedded in the OECD POW,
endorsed by OECD member countries
• Since 2000 a dedicated Forum on social innovations
http://
www.oecd.org/cfe/leed/Forum-Social-Innovations.htm
• Main tools and outputs: A number of reports,
publications, conferences, seminars, capacity building
seminars, country reviews
• Last year the OECD joined the UN inter-agency task
force on social and solidarity economy
• A dedicated cooperation with the EC on social
entrepreneurship: in depth reviews, policy briefs, CBS,
compendium.
4. Why public policies should support social
economy and social entrepreneurship ?
• Policies are needed to help SEOs and SE to overcome
barriers
• SE bring SOCIAL ADDED VALUE : their raison
d’être is to address social, economic and
environmental challenges
• they foster inclusive growth and increase social
inclusion, while pursuing the general interest and
benefitting the communities as explicit mission.
• Supporting SE creation and development allow public
policies to better meet employment, social and economic
challenges while better spending public money, as
some evaluations show.this results in ECONOMIC
VALUE
6. Legal and regulatory frameworks
• Legal and regulatory frameworks bring clarity by defining SE, its
mission and activites and help to open up opportunities for the
provision of forms of support and access to market and capitals.
Policy makers and investors need clarity
• In countries where no appropriate legal framework is in place, social
enterprises may struggle to have their dual bottom line recognised
and find themselves subject to legal and regulatory frameworks that
are inappropriate.
• Although an appropriate legal framework is needed, it is important
to carefully evaluate whether new legislation is needed or the
adaptation of the existing framework can be a better solution.
7. • SEs are financed by a combination of financial resources ( market,
non market, non monetary)
• Financing from Governments might be required in the short and
medium terms to help sustainability and following the SE life cycle
• Evolving landscape for social enterprises finances
• Range of different financing tools needed:
– Debt, equity and quasi-equity instruments, patient capital
• Government can contribute through:
– Credit guarantees
– Fiscal incentives for investors
– Partnerships with social finance intermediaries and investors
7
Access to capital
9. Business support structures
• Social enterprises, like conventional enterprises, benefit from the
existence of integrated support strategies and structures. Social
enterprises have specific features which create complex needs
demanding diversified solutions
• A ‘braided’ system of support, which includes both generic business
and specialist social enterprise components, could be an interesting
model to be developed (Daniele et al., 2009).
• Hubs and incubators need to be spread and supported
10. Training and research
• Social enterprise workers and managers need
appropriate training and skills provision if quality jobs
are to be created
• Research contributes to the identification and
articulation of social economy needs, functions and
potential : importance of co -constructed knowledge
10
11. Policy co-construction: cooperation and
coordination
Working
horizontally
across silos
Working
vertically
across levels
of government
Participation
of relevant
stakeholders
Reduction in
information
asymmetries
Reduction in
transaction
costs
Greater policy
coherence and
effectivness!
12. A coherent policy ecosystem for social entrepreneurship
NATIONAL
GOVERNMENT
Multi-stakeholder
SOU
International
Network
Social Economy
Actors and
Stakeholders
SUPRA-NATIONAL
Cluster of
Institutions (i.e. EU)
Horizontal
Spaces
REGIONAL
GOVERNMENT
Horizontal
Multi-stakeholder
Spaces
LOCAL
GOVERNMENT
Horizontal
Multi-stakeholder
Spaces
Intermediaries
SSE / SE
C
o
-
C
o
ns
t
r
u
ct
i
on
C
o
or
di
n
at
i
o
n
Source: Mendell, M (2010)
“Improving social inclusion at the
local level through the social
economy: Designing an enabling
policy framework” OECD Local
Economic and Employment
Development (LEED) Working
Papers, OECD Publishing
13.
14. THANK YOU!
• For further information on OECD work on
social economy and social
entrepreneurship:
Antonella Noya: antonella.noya@oecd.org
14
Notes de l'éditeur
Any private activity conducted in the public interest, organised with an entrepreneurial strategy but whose main purpose is not the maximisation of profit but the attainment of certain economic and social goals, and which has a capacity of bringing innovative solutions to the problems of social exclusion and unemployment” “Social enterprises” OECD,1999
influenced the debate in many OECD countries, but also inspired some national laws, such as those of: the United Kingdom on Collective Interest Companies; France on Cooperative Societies of Collective Interest; and Italy on social enterprise.
OECD defined social enterprises as private business that pursue a mission of general interest through an entrepreneurial approach. Their explicit raison d’être is to benefit the community and individuals and not to make profits for the sake of profit. But, in order to be viable on the market they do need to make profits although these profits are not re-distributed, on just partially re-distributed to the stakeholders. But re-invested in the business to fulfil its mission.
They exist in many economic sectors and are active in a wide spectrum of fields ( social and welfare services, education, housing, health, renewable energies, utilities, environment, culture and tourism etc)
They sell products and services and often re-integrate vulnerable individuals into the labour market by training them “on the job”
They contribute to create and maintain local social capital, they revitalise economic and social fabrics in distressed urban areas
They are ECONOMIC AGENTS OF SOCIAL CHANGE
Why should public policies support social enterprises,
There are several reasons why public policies should support social enterprises. Some relate to the role that they play in addressing social, economic and environmental problems providing innovative solutions to unmet needs. Others relate to the fact that the public money spent to support job creation or the provision of goods and services by social enterprises represents a more efficient way of using resources than alternative methods, as some studies show. Therefore public policies supporting social enterprises might allow governments to meet employment and other challenges in a more effective and efficient way, while at the same time improving the spending of public money.
)
The Askoha McKinsey (2012) study has analysed the economic and the social impact of ten social French enterprises operating in a range of sectors ( job insertion for the most excluded, employment, social housing, elderly care to fight against dependency) and it has demonstrated that public money spent to support job creation or the provision of goods and services by social enterprises represents a more efficient way of utilising financial resources than alternative methods The study calculates the profitability of the money invested in projects and by extrapolation, shows that they can make a significant contribution to solve a certain number of economic and social problems. The calculation is based on the savings realised by the public actors (direct costs, social charges, etc.) and on revenue generated for the state by the activity of the enterprises (taxes, direct revenue, etc.). The results show that the activity of social entrepreneurs systematically allows public institutions to save more money than what it costs.
The enterprise Actavista, for instance, which employs and reintegrates some 300 people in the labour market through the restoration of historical buildings using sustainable techniques, provides public savings of EUR 8000 for each worker reintegrated into the labour market. Moreover a national extrapolation realised by Mc Kinsey shows that 5000 jobs could be created yearly and that the public savings realised would be some EUR 45 million per year (OECD /CAS , forthcoming,)
Slide 7 to 11
What can public policies do to support social enterprise development?
Public policies should create an enabling eco-system to develop social businesses and facilitate, among others, access to funding. But establishing useful ecosystems for social enterprises implies that policy makers adopt a systemic vision of social entrepreneurship and fully understand the contribution that it can make to the improvement of economic and social wellbeing. This way the framework would be tailored to suit the needs of social enterprises, and created in such a way as to optimise their impact. The OECD has highlighted some key areas for national and local policy action. These are:
The promotion of a culture of social entrepreneurship to attract talent;
the establishment of enabling legal, regulatory and fiscal frameworks to bring clarity in the field;
the provision of sustainable finance that is really tailored to the needs of social enterprises, which might differ from the needs of traditional business ;
the support of access to markets by, creating a level playing field for social enterprises which might be given access to support measures applicable to SMEs and by making public procurement policies more open to the social enterprise sector,
the support to the establishment of business development services and support structures fostering a braided system of support, including hubs and incubators ;
the support of further co- constructed research to increase the knowledge of the sector and its needs, including issues such as measuring the social impact.
Legal and regulatory frameworks are important when they bring clarity. It is important not to over regulate when legislating and to leave outside the law what does not necessarily need to be inserted in the law so that the regulation can easily handle it.
It is important to note that whilst legislation itself is necessary, it is not enough and must be accompanied by a wide-range of strategies to support the development, growth and maintenance of the social economy .
Ex: TUSEV, a Turkish advocacy organisation, following consultation with the Ministry of Finance and the Ministry of Development, reached the conclusion that the best way to create an enabling legal environment for social enterprises was not by the passage of new laws, but by regulating the existing framework through circulars and communications made by Ministries. Another similar example is provided in the UK, alongside the specific ‘Community Interest Company’ legal form, the Charity Commission provides a range of online guidance documents which clarify the guidelines used by officials in regulating charities, including those providing goods and services. (http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/default.aspx (Spear et al. 2012).
Access to capital is k for SEOS like for any other business SEO require access to capital at all stages of their life cycle. International experiences confirm the need to develop a diversity of financial products to meet SE needs
Whilst significant and positive changes have taken place over recent years through the provision of social financial institutions and investment products – these are not always well spread, nor overly well developed. The preponderance of debt finance available needs to be re-balanced with a range of effective tools which meet the life-cycle needs of social economy organisations.
These include debt, equity and quasi-equity instruments.
Governments can also contribute to access to capital through such tools as:
credit guarantees
fiscal incentives for potential investors through tax credits.
partnerships with social finance intermediaries/investors - such partnerships not only contribute to access to capital, but also can help leverage private investment by reducing the perception of risk.
Solidarity finance, venture philantrophy, instututional investors, individual investors, impact investors and social capital markets
There is a need to develop markets for social enteprises;
There are three key elements to promoting greater access to markets:
Strengthening managerial capacity – there needs to be investment in vocational managerial training (by government) for social economy organisations and potentially also through the development of taught courses at university level which specialise in the management of social economy organisations.
Social enterprises, in particular, need to be able to access the same enabling policy measures and support as are provided to SMEs.
Procurement is an important way in which governments can support social enterprises and the contribution they are making to addressing poverty and social exclusion. By creating a market for enterprises which focus on the vulnerable and disadvantaged or on the provision of new goods and services which meet a public interest, governments can recognise that whilst the procurement costs may be higher, the added value of the wider contribution which social economy organisations make should also be taken into account.
Public procurement These contracts make up a significant share of the EU market, accounting for about 16% of its gross domestic product (GDP). Buying Social
A Guide to Taking Account of Social Considerations in Public Procurement
These are distinct areas requiring different policy responses.
In particular, the labour force of social economy organisations require appropriate training which will contribute to the creation of sustainable, ‘jobs with value’. A wide range of skills is required to create and develop a social enterprise and these skills range from skills for social inclusion (these are needed when working with individuals on employability and integration into the labour market and include life skills, social skills and work skills to support entry in the labour market), skills for entrepreneurship and management (marketing and finance, business planning and development, skills for growth and scaling), skills for workforce development, essential to achieve sustainability and growth (Spear et al. 2012). Such skills reflect the complexity of the “missions” undertaken by social enterprises, and highlight the need for training which recognises that complexity to be made available. Putting in place the educational and training programmes to meet the needs of various types of participants: community leaders, administrators, and managers of social enterprises, is crucial to social enterprise development.
Another area is research Research conducted by academics, and research collaborations between social economy organisations and researchers, is important for the contribution it makes to interdisciplinary analysis and understanding of the social economy, and its needs (such as management, human resources, financing) , roles and potential.
A coherent policy framework to support social enterprises is essential to maximise their impact. However the policy processes are just as important as the policies themselves. Policies are more effective if they are built through horizontal co-operation and vertical co-ordination within government, and in co-operation with stakeholders
When this happens: the information asymmetris are reduced, and so are the transaction costs.
The final result is that there is a greater policy coherence and therefore greater effectiveness
.