Anna Kucinska
03 July 2014

Social Business Initiative under fire

At a hearing in the European Parliament on 2nd April 2014, representatives of Europe’s social economy were forthright in their dissatisfaction with the European Commission’s Social Business Initiative. They want the definition of ‘social enterprise’ tightened up regarding participative governance and non-distribution of profits.
This was the last meeting of the Social Economy Intergroup in this session of parliament and it was called to take stock of the Strasbourg conference in January. It was brief – just 90 minutes – and by accident or design there was no time for questions or debate. Chaired by Marc Tarabella, it also heard from two other stalwart MEPs, Patrizia Toia and Marie-Christine Vergiat. German Green MEP Sven Giegold could not be there.
Sector presses for more principle
Representatives of three families of social economy organisations made consecutive pleas. Alain Coheur, President of Social Economy Europe, stressed the need for an ‘SBI 2’ to tackle the issues of aging, housing and mass unemployment. The social economy cannot be confined to fighting poverty or conducting social innovation – its governance model needs to be valorised. The EaSI programme needs to be evaluated to see whether it can address the pressing issue of affordable finance.
Patrick du Bucqois, President of CEDAG, the European Council of Non-Profit Associations, was the most forthright. He didn’t even need his allotted five minutes to point out that with employment growing between 3% and 4% a year, associations are making the biggest contribution to job growth in Europe’s economy. In his view, the Commission’s definition of social enterprises is lacking in two respects:

  • The reference to internal democracy is not binding and may just be wishful thinking;
  • The criterion that most of the profits are reinvested is meaningless – all hedge funds reinvest their profits. A non-distribution criterion is needed if it is to succeed.

Next up, Conny Reuter, Secretary General of Solidar felt that although the Strasbourg Declaration represents progress, there is confusion about what social enterprises are. You need not just entrepreneurship but also social policies. Europe’s problems will not be solved by a free market. His members are not ‘trading’ – they are engaged in activities which have an economic aspect. The statutes are needed – the European Association statute has been held up for 30 years.
Thirdly, Bruno Roelants of CECOP, hotfoot between meetings in Seoul and Warsaw, stressed the importance of organisational structure. He pointed out that the ‘sector’ had been created by the EC, not by grass-roots organisations. The benefits that social enterprises are supposed to deliver are tilted towards social services of general interest (SSGIs) but the two policies are not linked. A better link is needed. Lastly, the social economy is based on shared values. The SBI’s emphasis is on outputs rather than structures. Yet the advantages of the co-operative model are strong. Enterprises need to accumulate capital before they can use financial instruments. Stakeholder involvement is crucial as it provides feedback on whether the SBI is working. Policy-makers should recognise that organisational structure is key to delivering social benefits. The scope of the SBI should extend from service delivery to the area of the prevention of social need.
By the end of the session, Marcel Smeets, Director of Social Economy Europe, had noted 13 issues. To sum up, he asked the panellists what their single chief priority was. The answers:

  • continuation of the intergroup in the next session of parliament and the recognition of the particular nature of the social economy approach
  • recognition of the social economy business model – a stakeholder economy
  • the European Association statute

EESC holding the baby
The institutions also put their points of view. For the Economic and Social Committee, Miguel Ángel Cabra de Luna of CEPES pointed out that the Strasbourg Declaration) is not an end in itself – it is only as milestone whose recommendations must be put into practice. The EESC has doubts about the way it is going and thinks that the SBI should target the whole of the social economy, and not just ‘social enterprises’. The EESC is ‘holding the baby’ of the SBI during the election period and will make a report to the incoming Commission. In its view the priorities are the European statutes for foundations, mutuals and associations. It believes that a renewed SBI should be led by the social economy unit of the Enterprise DG.
For the Member States, Alexandre Lesiw , Director General of Belgium’s Federal Public Service for Social Integration (PPS SI), said that the social economy plays a key role in maintaining social cohesion and inclusion, promoting innovation and giving access to social and health services and to credit. This is only possible given three conditions:

  • a strong partnership between the public sector and the social economy
  • co-ordination between different levels of power (responsibility for the social economy is being regionalised next year in Belgium)
  • dialogue with the European institutions (the new public procurement directive is very positive)

SBI wrapping up
From the Commission’s side, Jean-Claude Mizzi from the Internal Market DG gave a run-down of current progress on the SBI: 9 of the 11 actions have been completed. Of the remaining two, the results of the mapping study will be received in the summer. The study on impact measurement will be presented in December and will be put before the GECES consultative committee in June 2015.
An inter-service consultation on crowdfunding took place in June and the Commission is evaluating how the Member States and regions are taking up the priority on social enterprise that is available to them in the Structural Funds. With the new public procurement directives in place, the Commission will be talking to national governments about training for officials in how to use it.
There is certainly demand for another Strasbourg-style event but whether or not there will be an SBI 2 depends on who the new Commissioners are.
Almost as an afterthought, Mr Mizzi encouraged candidacies for the new round of appointments to GECES, which will be held in March-April next year. There were 254 candidates last time and this time the Commission hopes there will be more.
Agnès Hubert of BEPA (the Bureau of European Policy Advisers) and author of its 2011 report on social innovation, which is being updated, pointed out the exponential growth in policy interest in the social economy since EQUAL. Civil society has become much more vibrant and is transforming movement.
The social economy’s points may have some resonance. With the new Commission yet to be appointed, leadership of the SBI has been handed over to the Economic and Social Committee for the time being – and the EESC has always been somewhere where the organised social economy is at home.
See the minutes  of the intergroup
Toby Johnson