human development, social justice and sustainable social systems

The potential of the social economy in the recovery

Originally published in Euronews under the title Unlocking the potential of the social economy is one way to ensure a COVID-19 recovery.

While the world goes through an unprecedented health and economic crisis due to Covid-19, a Social Economy Enterprise, Ecosol, has reinvented itself in the Spanish town of Girona, showing its resilience and social commitment. Ecosol operates in the fields of textile, bike delivery, and cleaning services, and helps long-term unemployed people enter back into the labour market. As demand for its usual services has vanished, it is now providing food delivery to isolated people, and masks and personal protection equipment for health care professionals and social workers. Ecosol’s maintenance and cleaning line has further transitioned into a service to disinfect public places.

This is just one example of why Social Economy Enterprises (SEEs) must continue to play a key role in the world we seek to build, as we aim to remain resilient even after the Covid-19 pandemic. Lockdown measures have affected everyone, the impact of which, however, has been uneven, resulting in exacerbating inequalities. Meanwhile, the climate emergency has not disappeared. Strong social and environmental ambitions should thus drive Covid-19 recovery. Governments should ensure that investments and recovery plans enable social and environmental benefits for the whole of society. In this regard, the fundamental role played by SEEs should be acknowledged, and specific measures should be put into place to unlock their potential.

SEEs combine public interests with a private sector mindset. They meet the needs and interests of society with the dynamism and inventiveness often characteristic of traditional enterprises. While they produce and sell services and products, their goal is not to maximise profits and generate individual wealth, but rather to contribute to social and environmental goals with a strong return to the community. They create both jobs and deliver common goods, such as targeted care, local and sustainable development, education and skills. SEEs mobilise atypical resources, such as voluntary work, and can tap into multi-sectoral cooperation. They play an important role in reintegrating the unemployed as well as socially marginalised people, including those with disabilities or criminal records.

While social economy is a growing sector, it still lacks expansive recognition by the majority of policy makers and wider public. In the European Union, the sector counts over 2.8 million entities or enterprises; it generates over 13.6 million paid jobs and accounts for 6.3% of the working population.

The anticipated contributions of SEEs in responding to the Covid-19 crisis is twofold. On the one hand, they can help vulnerable communities and individuals face the lasting consequence of the pandemic. On the other, they can provide an opportunity for socially excluded people to play a key role in providing relief during the emergency. “A few years ago, I was on the margins of society, and now I feel I am supporting it by helping others deal with this unprecedented health and social crisis. I’m not afraid to go to work every day as a result”, confirmed a former prisoner who is now preparing and delivering food to isolated elderly populations in Spain.

Despite the proven resilience of SEEs, their workers and communities are being impacted hard by the crisis, similarly as are traditional companies. In Austria, the Magdas Hotel – an extraordinarily successful example of refugees’ inclusion into tourism management – had to close in mid-March, with estimates of a 75% revenue loss by the end of 2020. Preliminary projections, collected by Caritas Spain, of the impact of the crisis on SEEs indicate that an estimated loss in revenue varies on average from 50% to 80%. More than 45% of SEEs have a medium to high risk of closing by the end of 2020.

In some countries, SEEs do not have access to the same recovery plans foreseen for Small and Medium Enterprises, due to a lack of clear legislative frameworks. At Caritas Europa, we believe governments should ensure that financial assistance in the form of grants, affordable loans as well as temporary tax exemptions, be made accessible to SEEs. They should actively promote SEEs by supporting the development of social economy ecosystems to foster innovation, create quality job opportunities, encourage participation, and generate social and economic benefits at the local level.

What the EU should do to support governments

The European Union’s adoption of the Coronavirus Response Investment Initiatives (CRII and CRII+) was a good start. It will support EU Member States to strengthen healthcare systems and support micro, small and medium-sized enterprises, short-term working schemes, and community-based services. Regrettably, SEEs are not specifically mentioned. The “SURE” scheme, tabled by the European Commission, should be accessible to all forms of enterprises and organisations. Additionally, urgent and extraordinary EU investments will be needed to support Member States in designing and implementing impactful and innovative employment policies.

At Caritas Europa, we urge EU institutions to approve an ambitious Multiannual Financial Framework 2021-2027 as soon as possible, taking into account the new socio-economic situation. As part of that, effective investments on social economy should be mobilised through the ESF+, the InvestEU and the ERDF, among others.

They should also make use of opportunities to place social economy at the forefront of sustainable recovery policies, for instance, in the European Action Plan for the Social Economy and the Action Plan to implement the European Pillar of Social Rights, both of which are expected to be launched in 2021.