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Improving Social
Inclusion at the Local
Economy Level through
the Social Economy
Report for Slovenia
Antonella Noya
Senior Policy Analyst OECD /LEED
Overview
• Mission and Methodology
• Context and Evolution of the Social Economy
• Contribution of the Social Economy to Social Cohesion
• Current Policy Environment and Supporting Strategies for the Social Economy
• Key Issues and Policy Requirements to Support the Social Economy
• Recommendations
Mission and Methodology
Mission
• Examine the role, real and potential, of the social economy in Slovenia
• Examine the support required for the social economy in Slovenia to realise its potential
Methodology
• Study visit by OECD LEED Secretariat members and external experts in Jan 2010 and Apr 2010
• Available statistics and research conducted prior to and after study visit
Slovenian Context: Evolution of the
Social Economy #1
Broad Context
• Economic and political transition
• Dominant state role in provision of public goods and services persists (impact on social economy development)
• High level of social and employment security but with some gaps in provision
• State of welfare dependency, growing social exclusion and labour market divisions (reforms undertaken to tackle these issues)
• Despite anti-crisis measures, employment and economic activity have declined sharply during the economic crisis
Slovenian Context: Evolution of the
Social Economy # 2
History
• Rich tradition of civil society organisations dating back to 13th century
• First law on cooperatives introduced in 1873
• By WW1 extensive network of associations, co-operatives, charities, and trade unions throughout Slovenia
• End of WW2 introduction of communist socialism broke tradition of strong social economy
• For 50 years, socialist welfare system largely replaced functions of the social economy
Slovenian Context: Evolution of the
Social Economy # 3
Current Landscape
• 22,000 civil society organisations
• 1.02 civil society organisations per 1000 inhabitants – one of the highest in the world
Organisations Detail
Inherited Co-operatives 437 organisations (2008)
Companies for the Disabled
168 organisations, 13,704 employees (2008)
Recently established
Zavods (Institutes) Largest number of employees and most entrepreneurial approach
Associations 94% of all civil society organisations, 1 million members
Other non-profit organisations
e.g. Foundations, church organisations, e.t.c.
Slovenian Context: Evolution of the
Social Economy # 4
However…
• Contribution of social economy to GDP is x4 below the EU average
• Contribution of social economy to employment creation is even less significant
Why?
• Concept of “Social Economy” not widely accepted in Slovenia
• Social economy initiatives lack visibility, are fragmented and sometimes over-looked
• Lack of understanding of their role and potential, but increasing political interest and will…
Contribution of the Social Economy to
Social Cohesion # 1
Current Contribution
• Mixed in composition and impact but examples of good practice
• Typical roles include service provision, work force integration, advocacy and self-help groups
Social Exclusion Themes Addressed
• Disability
• Disadvantage
• Urban socio-economic decline
• Rural socio-economic decline
• Community cohesion
Contribution of the Social Economy to
Social Cohesion# 2
Social Exclusion Theme
Role(s) of Social Economy Constraints / Opportunities
Disability • Provision of system of work integration
• Well developed funded but relatively closed system
Disadvantage • Develop relationships with SWCs and tenders via public works programme
• Lacks coherent and consistent policy framework
• Delivery of projects financed by temporary funding streams
• Social enterprises have funding access but may have cash flow or financial sustainability issues
Community cohesion
• Integration through sport and cultural initiatives
• Municipal youth culture and sports centres are quasi forms of social enterprise
• Advocacy with government policy-makers about public interests
• Enhanced role for social enterprises
Contribution of the Social Economy to
Social Cohesion # 3 Social Exclusion Theme
Role(s) of Social Economy Constraints / Opportunities
Urban socio-economic decline
• Provision of services to support local economic regeneration strategies
• Effective esp with environmental services, small Work Funds, business incubators and employment centres
• Restricted revenue and diverse set of small municipalities
• Reconstructing failed capitalist businesses
Rural socio-economic decline
• Service provision to reduce under-employment and stimulate regeneration
• Employment generation through effective training. Products sold to increase sustainability
Social exclusion
• Service provision • State major provider, few elements of mixed economy, no consistent capacity to develop service provision
Current Policy Environment # 1
Labour market policy
• Employment Service (ESS) e.g. Local and regional offices
deliver counselling, training and support
• Social protection benefit system e.g. Unemployment
insurance benefit
• Simplification of the business registration process
• Liberalisation of fixed-term contracts to support temporary working
• Growing emphasis on active labour market programmes e.g. “Public Works”
Current Policy Environment # 2
Labour market policy
• Minimum wage increase e.g. From EUR 597.43 to EUR
734.15 per month in 2010
• System of tax allowance for students in particular jobs
• Youth worker reintegration e.g. Second Chance Education
Programme
• Disability support e.g. Vocational, Rehabilitation and
Employment of Disabled Persons Act and associated fund
• Employment Centres
Current Policy Environment # 3
Welfare service policies
• Social Work Centres e.g. Administer welfare benefits
• Elderly and Disability support e.g. Homecare and Personal
Services Programme, EUR 8.4 million (2010)
• Child and family benefits well designed
• New Legislation e.g. Draft law on Long-Term Care and
Long-Term Care Insurance ( possible market for SE)
• Voucher system e.g. Voucher system for home care under
development
Current Policy Environment # 4
Social inclusion policies
• Ministry of Labour, Family and Social Affairs support e.g.
Co-finances social protection programmes for vulnerable groups often delivered by social economy organisations
• Specific Directorate of Social Affairs support e.g. National
Action Plan for Social Protection and Social Inclusion
• The Government office for Development and European Affairs plays a key role in development policy
• Need of policy coordination among Ministries
Current Supporting Strategies and
Policy Environment # 1
Supporting strategy
Constraints / Opportunities
Examples
Umbrella bodies
• Some established channels for representation
• Generally underdeveloped and lack recognition
• Lack of networking among the social economy “families”
• Chamber of Commerce, Co-operative Union, Trade Unions, Council for the Disabled
Fiscal and Financial
• Special funds and finance initiatives underdeveloped
• Lack of tax breaks • Strict fiscal rules limit
philanthropic activity • Some promising new activities
• Companies for disabled can make profit but must reinvest 60%
• National Lottery Funding • New gift-aid system (0.5% for
contributions) • Established culture of fundraising
Current Supporting Strategies and
Policy Environment # 2 Supporting strategy
Constraints / Opportunities
Examples
Business support
• Orientated to medium and larger rather than small business
• Focus on conventional not social entrepreneurship
• Potential to refocus traditional mechanisms to social economy
• JAPTI agency – one-stop shop for conventional entrepreneurs
Legislative frameworks
• Not major issues with legal structures
• Possible developments
• Co-operatives, associations, etc
• Law on soc entrship
Volunteering • Underdeveloped, but law now prepared for approval
• 7,000 volunteers per year as a result of public tender system
Capacity building
• Significant issue in Slovenia • Strong potential to transfer
international experience
• EUR 2 million project for social enterprise work integration activities
Key Issues and Policy Requirements
Opportunity
• New interest and political will could reinvigorate the social economy
• Potential to deliver public services more efficiently in light on budget constraints and rising costs
• Examples of excellent practice on which to build
Imperative
• the social economy:
– and its value-added are not well-understood
– sometimes has a negative image due to its socialist past
– and its drivers are not well focussed and coherently supported
• Requires reform, development and co-ordination of existing structures as well as capacity building and leadership
Recommendations # 1
Broad Recommendations
• Ensure legal and fiscal frameworks are not over-complicated or burdensome
• Better recognise and measure the costs of activities undertaken by social enterprises and the positive externalities they generate
• Ensure the institutional framework provides access to markets, particularly public procurement markets
• Draft legislation specific to social enterprises
• Implement a set of entrepreneurial policies consistent with distinctive features of social enterprise
Recommendations # 2
Broad Recommendations
• Develop a strategy to support the social economy sector in similar ways to the SME sector
• Allow the social economy to create its own representative structure
• Develop a system of partnerships and co-governance to support the design and delivery of policies
• Consider the introduction of a temporary quota for social economy organisations in the tender system
Recommendations # 3
Co-operatives
• Deliver modernisation measures to build capacity, assist in independence and strengthen trust
• Develop programme to promote new work integration co-operatives and user-based welfare services
• Improve information about and access to tenders and support structures
Not-for-profit organisations
• Address lack of seed capital and cash flow support
• Develop a programme to support NGOs to become social enterprises and encourage NGO and non-profit mergers
• Support the development of an asset transfer system
Recommendations # 4
• Support the development of philanthropic foundations, such as with US-type tax breaks, etc., with an appropriate regulatory system;
• Develop programmes for strengthening volunteer involvement, and facilitate this as a transitional arrangement for work integration, ensuring that such activities are compatible with the benefits system.
• Equalise the status of public and private institutes (zavods) in procurement systems such as tenders.
Recommendations # 5
Social enterprises
• Improve sustainability within the tender regime
• Ensure that any proposed law is well-communicated and “owned” by the social economy
• Use EU funding to develop a social enterprise strategy
• Develop a supporting environment through seed money, incubators, loan funds and new networks
• Develop a new WISE strategy for transitional employment
• Promote the development and adoption of measurement systems to show the added value of social enterprises (such as “Social Return on Investment” – or simpler tools
Recommendations # 6
Business partnership, CSR and other bodies
• New incentives for philanthropy and CSR
Policy Process
• Pursue processes of co-governance and co-construction