The role of social economy to deliver social outcomes. A social investment perspective.

This report presents the results of work package D3.3 of the project “Innovative Social Investment. Strengthening communities in Europe” (innosi). The focus of the report lies on the role of social economy in European welfare states, in the field of social investments and its importance for the realization and implementation of social innovations in four social policy areas: Child Care, Reconciliation Policies, Active Labour Market Policy, and Long Term Care.

In the context of the innosi project, the social economy is defined as a specific part of the economy that primarily pursues social aims and is characterised by participative governance systems. The social economy is usually referred to as a ‘third’ economy alongside market (private companies) and state (public organisations). It comprises a set of organisations which are usually grouped into four major categories: co-operatives, mutual societies, associations, and foundations. There are three subsectors of the social economy : (1) The community sector includes organisations that are active on a local or community level. Usually they are small, modestly funded and to a large degree dependent on voluntary, rather than paid, effort. (2) The voluntary sector includes organisations which are usually formal (as they have a constitution); independent from government and self-governing as well as non-profit-oriented and they operate with a meaningful degree of volunteer involvement. (3) Finally, the social enterprises sector includes organisations which “are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners” (Murtagh 2013: 204).

The results of our interview analysis show that, although in all countries under study social economy organisations are involved in welfare production we do not notice a general increasing importance of these players in the welfare mix. Quite the contrary: In Finland, Italy, Hungary, The Netherlands and the United Kingdom, interview partners even stated a decreasing importance of the social economy in welfare production. There are different reasons for this development: while countries like the Netherlands and the United Kingdom embarked upon a rigorous budgetary policy which affected the financing of social economy activities, other countries like Finland and Italy rather expanded state activities instead of developing the cooperation between state and social economy.

The greatest growth of importance of social economy organisations can be observed in most of the countries under study in the context of child care policies. In almost all member countries of the European Union the expanding of the child care sector has been the most important concern of welfare policies in recent years. And in contrast to reconciliation policies which are typically based on transfer payments (like parental allowances) from the public budget to the beneficiaries, child care is a generic person based service that requires facilities and human resources.

Organisations of social economy are involved in long-term care policies in all countries of observation to a highly differing extent. Where social associations, foundations or co-operations have a traditional role in the long-term care market of Germany, Hungary, Poland or the UK and are strongly present in France, Italy, Spain and the Netherlands, those organisations are rarely involved in the policy field in Finland, Sweden and Greece. Although social economy organisations have a tradition or are governmentally or municipally favoured for their social approach and profit limit in most of the countries, the prospects of the third sector in LTC are not promising.

Interestingly, the interviewed experts in many countries do not see an increasing importance of social economy in the field of active labour market policies (FI, FR, GR, HU, IT, PL). In some of the countries the importance of social economy has not increased in recent years or the policy field remains mainly in the responsibility of the public employment bureaus although we recognise a trend of communalisation in some countries.


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