Peer
Review on Social Economy,
Comments
paper: Greece France 2012,
(Paris,
10-11 December 2012)
Social
Economy: The Greek Case
Dionyssis
Balourdos
National
Centre for Social Research
Konstantinos
Geormas
Head of
Social Economy Registry,
Hellenic
Ministry of Labour, Social Insurance
and
Welfare
Introduction
Contrary
to the situation in other European countries, where social economy has
significant contribution to the creation of new jobs and the sustainable
development of local economies and societies, in Greece, social economy is not
particularly developed, as the implementation of policies and practices is still
on a basic level. As it is stated (European Social Innovation Research, 2012 )[1]
: “Today, there is a great need for Greece to
reinforce its social economy. The high rates of unemployment, the austerity
measures, and the reductions in wages, pensions and social services have
created the need for the enhancement of social economy and social innovation
that can offer alternative solutions to the Greek society”.
Kotalakides
and Parlalis (2010), state that while there has been a substantial effort made
on a scientific level, the design and implementation of policies and practices
on social economy is on an elementary level. Awareness and visibility of the
sector is low, both on the civil society level as well as on the level of
public administration, and that any further development is more connected to
the support by the EU structural funds.
However,
an increased focus on the social economy is expected in the following years. In
September 2011 a law for Social Economy and Social Entrepreneurship passed by
the parliament and the distinct legal form of Co-operative Social Enterprises
was created. Prior this legislation, the lack of institutional framework
created serious problems in the sector development. Research on social economy
was also restricted due to the lack of a national register, that would document
the actual number and range of sectors activities. The decision for the
establishment of a General Register for Social Economy was very recent, in
early February 2012. Nevertheless, even now we can only have a rough estimation
of the size and the activities of the field (Natioulas, 2012a).
The
current crisis has severely hit the Greek economy. Continuous adoption of
difficult austerity measures implemented by the Greek government, rising
unemployment rates especially for the young population and women, cuts in
wages, pensions and social spending resulting in a growing number of people
living under the poverty line, has created the vital need to develop social
economy.
The
question is, whether social economy constitutes an alternative to overcoming
underdevelopment, and proceeds to meet future challenges; is there a role
for social economy and social Co-operatives helping pull Greece out of its
awful situation?
1.
Brief note on the institutional framework and the policy context in Greece
The
institutional framework regarding social economy, consists of law No 2716/99
“Development and modernisation of mental health services”, and of the new law
4019/2011 on “Social Economy and Social Entrepreneurship”, are presented
shortly below.
1.1. Law No 2716/99
According
to the first law, Limited Liability Social Cooperatives (KoiSPE) constitute a
special category of cooperatives. They are legal entities of private law with
commercial faculty and are considered as mental health units, supervised by the
Ministry of Health and Social Solidarity. KoiSPE’s goal is the social-economic
integration and labor market inclusion of persons with mental illnesses[2]. The individual members of
KoiSPE are divided in three categories: a minimum 35% are mentally ill persons,
a maximum 45% are mental health professionals and a maximum 20% are third
actors. All members obtain only one (1) mandatory share in the cooperative and
multiple optional shares, with the latter having no voting rights.
KoiSPE’s
areas of interest are tourism, environment, agriculture, provision of services,
while their fields of activity are nutrition/ catering, cleaning services,
recycling, marketing of gifts and local goods, support of people with
disabilities, agricultural production/ beekeeping and joinery (Katsikarou,
2011)[3]. The institution of KoiSPE,
by law, is treated with a highly favorable status by the State: i) Financial
incentives, e.g.: social benefits for patients that are members. ii) Tax
incentives (exemption from income tax and municipal taxes, etc.). iii) Business
incentives (employment of mental health professionals without burdening KoiSPE,
trilateral program contracts, favorable regime for awarding contracts by public
entities and local authorities)[4].
In total, 16 KoiSPE
have been established until now[5],
of which 12 have been funded by the Operational Program «Health and Welfare
2000-2006» of the 3rd Community Support Framework with 5.2 million euros[6].
KoiSPE
have created hundreds of jobs, 200 of which for the mentally ill. Katsikarou
(2011) in a recent conference presentation claimed that the total number of KoiSPE
members is 2092 individuals and 405 employers[7].
Natioulas
(2012a), also states that the financial assistance provided by the European
Union Structural Funds, including in particular the Community Initiatives
HORIZON and EQUAL, have made a considerable contribution towards the gradual realisation
of psychiatric de-institutionalisation in Greece. He also claims that the
received funding from the EQUAL program for the creation of a nation-wide
technical support structure, which, through business consultancy and
organisational counseling, helped to lay the foundations for the newly-created
KoiSPEs.
However,
KoiSPE Chios «Orion», (2011, p. 79), stated that in the 12 years of
implementation of the law 2716/99, the KoiSPE have developed to a small degree,
as there are large geographical areas of the country that do not have a similar
structure. The bulk of their businesses involve the provision of services, as
the risk is lower. Though it is estimated that these businesses aren’t viable
and, for most of them, the operating time is small[8].
1.2. Law 4019/2011
Law
4019/2011 on “Social Economy and Social Entrepreneurship” identifies Social
Economy as “the sum of economic, entrepreneurial, productive and social
activities, undertaken by juridical entities or associations whose statutory
aim is the pursue of collective benefit and the service of wider social
interests” (Art 1). It also introduces the Social Cooperative Enterprise
(KoinSEP) as an entity of Social Economy. It is a civil cooperative with social
purpose possessing entrepreneurial capacity by law, having individuals or
juridical entities as members[9], participating with one
vote regardless of the cooperative shares they possess (Art. 2). Article 2, § 2
further elaborates on the specific fields of activity needed in order for an
entity to be identified as belonging to the Social Economy in Greece, as follows:
Figure 1. Type of KoinSEPs and targeting
Failure
of the labour market to provide adequate integration to vulnerable social
groups
|
a)
KoinSEPs of integration, which focus on integration of individuals belonging
to Vulnerable Population Groups[10] into the economic and social life; this
provision also covers Limited Liability Social Cooperatives of the Law
2716/1999. They are compulsory staffed - at a minimum percentage of 40% - by
persons belonging in Vulnerable Population Groups.
|
Failure
of the existing welfare structures to provide adequate goods and services of
personal and domestic care to certain vulnerable population groups
|
b)
KoinSEPs of care, which focus on production and provision of goods and
services of social-care character, towards certain population groups such as
the elderly, infants, children, disabled and chronically ill.
|
Failure
to provide adequate collective social goods and to promote local society
initiatives. In remote areas of the country such phenomena lead to economic
desertification
|
c) KoinSEPs
of collective and productive purpose, which focus on the production of
products and the provision of services to meet the needs of collectivity
(culture, environment, ecology, education, social benefit services, promoting
local products, reserving traditional activities and crafts etc) which also
promote local and collective interest, the development of employment, the
enhancement of social cohesion and the strengthening of local or regional
development[11]
|
Adapted
from Chrysakis (2012) and Geormas (2012).
Law
4019/2011 categorises KoiNSEPs according to the diversity of establishment
needs and needs for provision of incentives; scales the advantages and benefits
depending on the type of KoiNSEP. The law also provides for participation in
the corporate form of natural and / or legal persons. For the establishment of
a integration KoiNSEP at least seven members must be involved, of which sixty
percent (60%) are individuals and workers; Governing bodies: a) The General
Assembly b) The Steering Committee - (A three-member committee, which is elected
by the General Assembly and its members have a 2 year renewable term)
(Chrysakis 2012. Geormas 2012. Natioulas 2012b).
Participation
of Local Administration Organisations and Legal Entities of Public Law is not
allowed, except in the case of KoiNSEPs of integration. Profits are not to be
distributed to members, except in case such members are also employees. In that
case, 35% of the profits may be distributed to them, a 5% should be reserved
and the rest 60% should be invested in new jobs creation and in general in
promoting the KoiNSEP’s activities (Art. 7).
The
specific motives to start up a KoiNSEP are the following[12]:
·
A KoiNSEP is not subject to an income tax
for the part of its profits which is placed in reserve and its activities. The
part of KoiNSEP profits distributed to its employees is subject to a discharge
resulting from withholding income tax, according to the applicable tax rate on
the first band of income after deduction of the tax-free amount under Art. 9
(1) of L. 2238/1994 in force. As regards the profits made by the KoiNSEP and
its employees who belong to vulnerable social groups there is a discharging
effect of the retention of tax
·
KoiNSEPs may have access to funding
provided by the Social Economy Fund
·
They may have access to funding provided
by the Hellenic Fund for Entrepreneurship and Development
·
They may be eligible under L. 3908/2011 on
"boosting private investment in economic development, entrepreneurship and
regional cohesion”
·
They may be eligible under
entrepreneurship support programmes, OAED (Greek Manpower Employment
Organisation) work support programmes and all kinds of active employment
policies
·
They may conclude programme contracts with
the public sector, the wider public sector and first- or second-level local
authorities
Natioulas
(2012a, p. 166) argues that they also have access to funding by the “Social
Economy Fund” – which although is mentioned by the law, has not yet been
established - and the “National Fund of Entrepreneurship and Development”.
Nevertheless, it is not clear yet if all existing cooperative entities can be
beneficiaries of these funding opportunities.
Policies
regarding planning, coordination, monitoring and evaluation of the Social
Economy are primarily implemented through the Special Service for Social
Inclusion and Social Economy which is subject to the General Secretariat for
the Management of European and other funds at the Ministry of Labour, Social
Insurance and Welfare.
According
to the Greek legislation, social enterprises are registered in the registry of
Social Entrepreneurship, kept by the Ministry of Labour, Social Insurance and
Welfare; the Ministry audits the respective records and documents, unless
protected by professional confidentiality. Registration in the respective
registry is necessary for any favorable law provisions[13]. At present, there are 97
Social Cooperative Enterprises (KoiNSEP) in the registry, that have 920
members, and most of which are of collective and productive purpose, (Figure
2):[14]
Figure 2. Registered number and members of
KoiNSEP
Source:
Department for Social Economy Register, Directorate for Social Protection of
the Ministry of Labour, Social Security and Welfare.
2. Brief summary of recent policy
initiatives
At the
National Strategic Reference Framework (NSRF) 2007-2013, there are actions for
the promotion of social economy (e.g. supporting the creation of social
enterprises, creation of a social economy observatory at a national level,
etc.). Furthermore, both in OP Human Resources Development as well as in the OP
Competitiveness, more actions are provided for the enhancement of social enterprises.
Especially in the Systemic Axis of OP Human Recourses Development, there are
registered actions that should promote the development of the social economy in
Greece[15].
Currently,
a number of relevant initiatives are implemented. More precisely, it is
estimated that in the course of two ESF programmers implementation [Local
Integrated Programmes for Employment and Local Integrated Programmes for
Vulnerable groups (TOPSA and TOP EKO[16]), close to 200 social
enterprises will be established.
In
parallel with these initiatives, the Greek government in close coordination
with the European Commission (Employment, Social Affairs and Inclusion DG), are
discussing how the ESF resources could best be used to launch an integrated
support package for the development of an eco-system for social economy.
According
to László Andor, (2012)[17], this support package is
based on three lines of action:
·
Support to teams establishing and
developing a social enterprise;
·
Support to organisations or teams
providing information, advice, coaching and mentoring services to social
enterprise in their start-up and development phase; and
·
Support through loans and guarantees for
social cooperatives for social development and expansion[18].
As a
result of these discussions, an establishment of a steering committee for
social economy has taken place, staffed with Greek and international experts,
officers from public sector and the European Commission. The role of the
committee is to formulate an action plan for the creation of a supportive
eco-system for social economy in Greece. The steering committee has the overall
supervision on designing and planning Social Economy actions and meets
regularly at least once a month. The committee will also be responsible for
making proposals, monitoring the implementation phase of Social Economy actions
and suggest corrective actions. Head of the Committee is the Secretary General
for the management of European and other funds from the Ministry of Labour,
Social Security and Welfare. The participants are a) experts from Greece b) experts
from abroad and c) public administration staff. Out of a total of 18
participants, 10 of them are experts and 8 of them public administration staff.
More
specifically, the need for the establishment of a "social economy support
mechanism" has been discussed, of a technical team consisting of Greek
public sector officials, as well as Greek and foreign experts, with an overall
purpose to support[19] the Special Service for Social Inclusion and
Social Economy (EY KEKO) to develop the above mentioned eco-system for social
economy.
Moreover
3 sub-committees/groups have been set up:
1. A
working group on access to finance for social economy enterprises.
2. A
group of the steering committee with the scope of elaborating proposals for the
provision of grants to social economy enterprises (evaluation and selection
criteria of business plans, evaluation of applications for awarding grants,
funding social enterprises). This action will examine the possibility for
direct support to teams starting a social enterprise, or to social enterprises
during their first years of existence by micro-financing/ micro-lending the
KoinSEP with non-interest loans in consultation with the banks.
3. A
working group with the scope of creating a framework for the supportive
mechanism that will help social enterprises. This committee will make proposals
for central and regional supporting mechanisms. It will also provide tools such
as business plan guidance, and will serve as an observatory of social economy.
It should also investigate and probably prioritise the needs in financial tools
of the social enterprises.
Actions
two and three are envisaged to be launched by the beginning of 2013.
3. A brief assessment of the similarities/
differences of the policy with the experience of Greece
It
should be stated that, in contrast to the French experience where social
economy is highly developed, in Greece it has attained, thus far, only a rather
peripheral position. This, among other factors, is due to the fact that Greece
has only recently developed its legal environment. According to the existing
statistical data, the percentage of those employed in the social economy sector
in Greece is around 2.67% of total employment as compared to 9.02% in France
(CIRIEC 2012, Spear 2012). Besides, although the degree of recognition among
public authorities are similar (moderate level), they differ regarding the
degree of recognition by companies in the social economy (high level France and
moderate Greece) and the degree of recognition by academia/ the scientific
world (high level Greece and moderate France) (CIRIEC 2012).
One
essential difference is that in France, social economy is well supported with a
minister for social economy, several government departments are contributing to
the policy framework, and higher level strategies are being developed in line
with EU policy (Spear, 2012).
In
Greece, we are still at the beginning. Strengthening social economy is now
considered as one of the main intervention axes in National Strategic Reference
Framework (2007-2013). Actions that are designed by the Greek government are in
that direction, are expected to launch soon.
Overall,
it can be said that there is a recognised need in Greece to create the
appropriate environment and more favorable conditions for the development of
social economy initiatives. Their development however depends heavily on the
financial support and the supporting measures, which are currently discussed
and designed. As a result, the key challenges and the key elements for social
economy between the two countries have important differences. In Greece, the
development of social economy is at its infancy and is still heavily based on
the support by the EU structural funds. In France, we witness a different and
much more developed social economy with different perspectives and different
key elements of its policy and strategy.
Moreover,
when it comes to examining the social situation in Greece in relation to that
of France, one can observe certain differences. In particular, such differences
are identified at the risk of poverty rate (in 2011 the rate was 21.4% for
Greece and 14% for France), the percentage of working poor (in 2011 the rate
was 11.9% for Greece and 7.6% for France) and the percentage of poverty or
social exclusion (in 2011 the rate was 31.0% for Greece and 19.3% for France).
Unemployment and long term unemployment in Greece continues to affect
disproportionately young persons and persons of vulnerable groups.
We may
simply state that the key challenges between the two countries are totally
different based on financial circumstances, social issues, the degree of the
social economy sector development in each country and thus on priorities settings.
However,
the integrated support package for Greece and the initiatives undertaken by the
Greek government in commitment with the EU, have similarities with the French
public policy concerning social economy.
4. A brief assessment of the potential transferability
of the policy to Greece
Overall,
it can be said that there is a recognized need in Greece to create the
appropriate environment and favourable conditions for the development of social
economy initiatives. Yet, their development depends heavily on the supporting
measures and the funding mechanisms.
The
first element in the French social economy strategy is the improving
recognition by means of education and observatories. Both these elements have a
strong potential to be transferred in Greece, and have already been discussed
by the steering committee[20]. Besides, the National
Centre for Social Research is positive to the commissioning of the French
Minister of the Economy, Finance and Industry, to refine knowledge of the
social economy sector, including a national survey of associations’ economic
activities. We think that this is a basic activity for the improvement of our
knowledge concerning Social Economy. In Greece, the few survey initiatives are
concentrated on the KoiSPE’s[21]. A survey concerning the
needs and the improvement of the knowledge of Social Economy will be proposed
by the National Centre for Social Research, seeking funding through the NSRF.
Concerning
the second element (structuring the sector) we may state that in Greece we do
not have a national consultative body. A body like that is foreseen in the
newly developed Action Plan. Moreover, Law 4019/2011, Art. 16, introduces a new
context of Public Social Reference Contracts. Art. 16 § 1 states: “Public
Social Reference Contracts are those in which the contracting authorities in
the stage of committal take under consideration substantial social aspects as
criteria for this contract”[22]. For the development and
implementation of an Integrating Plan for the Integration of Public Policy for
Social Reporting, the competent ministry is the Ministry of Labour, Social
Security & Welfare. In this context, an inter-ministerial Commission is
recommended. So far, it has contacted each ministry in order for a
representative to be appointed, and the process of creating the committee is
underway[23].
In a
next step, a Higher Council for the Social Economy could be developed in
Greece, with functions equivalent to those that apply in the case of France and
further developing systems of co-governance, whereby social economy actors and
representatives can discuss and shape policy with government bodies.
Furthermore, actions should be promoted in all educational levels so as to
introduce courses on social entrepreneurship. We also think that "a wider
vision of innovation and of public action to promote it, making local areas the
first ecosystems to support social innovation and join the actors of social
innovation together in a network" will be a surplus for the support of
social economy at local, national and European level.
We
could consider that the integrated support package for Greece, briefly
described above, could be considered as a public policy support for the
development of the social economy in Greece. It has similarities with the third
element of the French social economy strategy, at least concerning the support
mechanisms. However it is unclear if there will be a similar experimental
approach as described in host country paper (p. 5)[24]. Due to the crisis it is
difficult to develop an investment program in Greece, and of course addressing
the issue of generational renewal could be discussed and examined at a later
time period.
We
think that the Future Investments Programme is vital for the sector, but at the
same time it is very ambitious and rather difficult to be currently implemented
in Greece. Also, the two new social economy structures provide interesting
models for serious consideration and could be seen as good practices in Greece.
[1] See, http://siresearch.eu/blog/greek-crisis-and-social-innovation-alternative-approach-social-problems
[2] According to a recent report in Greece (Hellenic Organization of
Small & Medium Sized Enterprises and Handicraft S.A., 2011), "Women's
Agrotourist Cooperatives" and the “Social Cooperatives of Limited
Liability” (KoiSPE) for people with mental health problems are referred as
“core social enterprises”.
[3] The first
social cooperative was established in November 2002 on the island of Leros
involving mentally ill persons from the Leros psychiatric hospital as well as
persons from the local community (Seyfried, with the collaboration of Ziomas
2005).
[6] 4 million were provided by ESF and the remaining 1.2 million by the
European Regional Development Fund (ERDF)
[7]Related
registers are kept at the Ministry of Health and Social Solidarity, which has
the right to judge upon the purposefulness of such a cooperative’s
establishment. The 2nd grade association (The Panhellenic Federation of the
Social Cooperatives of Limited Liability) was established in February 11th,
2011, providing for their collective representation. The Federation is
temporarily managed by a Committee of 7 members.
(http://www.pokoispe.gr/site/enus/homepage. aspx).
[8] The first income of cooperatives come from the obligation to purchase at
least a portion of the cooperative by each member, creating a cooperative
capital which varies by the number of members and the amount of cooperative
portions. Also, most of the cooperatives were funded by O.P. "Health and
Welfare" originally by ESPA. These funds are for the development of new
projects, the purchase of equipment and / or payment of wages (See KoiSPE, Chios
'Orion', 2011)
[9] The state also recognises existing legal
entities, which cumulatively abide by the following criteria: to have a
statutory purpose of social benefit, through the production of goods or the
provision of services of collective and social character, they present priority
of individuals and labor over capital, they employ a democratic system of
decision-making, they enjoy autonomy in management of their activities, their
profits are utilised primarily on the service of their statutory goals and
secondarily for any eventual restricted profit distribution (profits: not to
members, 5% reserve, 35% to employees, 60% to the activities of the enterprise)
and they operate on the principle of sustainable development. Women’s
agricultural cooperatives of Law 1541/1985 and civil cooperatives of Law
1167/1986 could also be considered as beneficiaries of Law 4019/2011.
[10] Such as the disabled, addicted, HIV-positive,
imprisoned/ released, juvenile offenders, unemployed young or women, unemployed
over 50 years of age, long-term unemployed, single-parents, large-families
members, abused women, illiterate, residents of remote regions, immigrants,
refugees.
[11]To
start up an integration KoiNSEP at least 7 members are required, while at least
5 members are required in order to start up a KoiNSEP of the other two
categories.
[12] 12 [Taken from ‘Start up Greece’: How to start up a Social
Cooperative Enterprise (SCE):
http://www.startupgreece.gov.gr/content/how-start-social-cooperative-enterprise-sce]
[13] Remuneration is not conventionally taxed but only under the
first tax level, with no other tax charge. One more favorable provision is set
by Art. 16, introducing the concept of “Social Orientation Public Contracts”;
all enterprises under Law 4019/2011 could be eligible as outsourcing contractors
under special favorable status.
[14] For one case (KoiSPE) no data was available
concerning the number of the members. As it was a relatively new KoiSPE we put
approximately a number of 7 members.
[15] Priority 4 “Full integration of all of the human resources
to a society of equal opportunities”, objective 2 “Utilisation of social
entrepreneurship for the inclusion of vulnerable social groups to labour
market”.
[16] A total of 132 Action Plans have been approved,
involving 12,000 beneficiaries and total budget of €60,000,000.
[17]See:
http://ec.europa.eu/internal_market/social_business/docs/expert-group/20120605-laszlo-andor_en.pdf.
[18] More than €60 million of ESF funding has already been
earmarked for supporting social enterprises, their business environment, and
social financing instruments.
[19] Furthermore, to provide scientific support, have
the responsibility for the implementation of the joint action plan on
supporting social enterprises, develop and implement the necessary tools and
methodologies, ensure the quality of the interventions.
[20] Recall that in the OP Human Resources Development 2007-13, there is
an activity referring to the development of an observatory.
[21] See: http://www.pokoispe.gr/site/21
[22] Such criteria may be: a) employment opportunities, b)
social integration of vulnerable social groups, c) equality of chances, d)
planning accessibility for all, e) sustainability criteria, including issues of
ethical commerce and f) the broader compliance with corporate responsibility.
[23]Moreover,
in the Inter-ministerial Commission may participate, representatives of other
ministries or appropriate representatives of other agencies or the public or
private sector or representatives of universities and scientific institutions
and organisations, representatives of bodies vulnerable groups and persons with
disabilities, representatives of associations or associations or chambers
defined by decision of the relevant Association or Chamber, representatives of
organisations and consumer associations, non-voting.
[24] In France, an experimental approach begun in five regions
and funded at a million Euros in 2010-12, aims to identify and organize a
global offer of services favouring the development of the social economy in a
given area, from identifying support needs to creating, developing and
consolidating projects.
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