Social Economy in East Central Europe. Concepts and Perspectives Ewa Leś and Giulia Galera

Fundamental challenges facing the region Economic growth combined with the growing polarisation in living standards: high poverty rates social exclusion uneven access to the social safety net ethnic tensions

Issues of significant concern in the region Subregional territorial disputes Human right violations and the suppression of the independent media Wide variations in the enabling environment for civic society expansion Public apathy and lack of trust in civic initiatives Weak civic participation Inefficient and often corrupt public sector

Wha is Solidarity-based Economy? Self-help groups Associations Foundations Cooperatives Social cooperatives Mutual benefit funds Public benefit companies Social Integrations Centers and Clubs

Social Enterprises Supplying Social and Community Services Serbia Self-help groups specializing in welfare and social protection of the most vulnerable. Poland Parent and teachers-led high school cooperatives based on high level parents involvement. Slovenia Not-for profit organizations that provide services in the field of science, education, culture, sport, health and social affairs. Bulgaria Social service non-governmental organizations conducting income generating activities. Romania Telecentres community based non- governmental organizations facilitating the access of rural communities to information and communication technologies

SE Definition in Poland A concept of social enterprise in Poland is an emerging notion evolving out of: The concepts of third sector/non-profit sector/non-governmental organizations, cooperatives To a lesser extent also from the public and private sector (e.g. public social integration centres or sheltered enterprises in a form of limited liability company, limited by shares company and civil company)

Drivers of SE in CEE Pre-communist Se tradition –contributed to revitalize bottom-up initiative (Credit coops in Poland and Lithuania; Housing coops in Estonia) Neo-liberal regimes –Crucial role assigned to advocacy organizations = tool apt to enhace the construction and strengthening of democracy Foreign donors –Aid significant in all countries through training; stays abroad; financial support foreign donors still the main source of funding in the Balkans (Serbia; Macedonia) and CIS (Ukraine) Social/economic concerns –poverty; unemployment and gaps in social service provision

Rationale for SE in Poland  Social enterprise have come into being due to the structural pressures of the transition responding to its human costs: mass increase of unemployment, poverty and social exclusion the shrinking public welfare system generating the welfare gap

Rationale for SE in Poland  Other decisive factors to the SEs growth: Decentralization and redirection of tasks and responsibilities for services provision from central level to local government Evolution of local leadership: from vote base local government to local governance voice based and Introduction of the paradigm of subsidiarity Policy recommendations of the European Union to address problems of social exclusion and unemployment (e.g. National Action Plan, Local Employment Development, Structural Funds, Lisbon Strategy)

Social economy enterprises in CEE Dynamics Different degree of recognition of the S E in the region –New member countries: Se organizations legally recognized – associations/foundations most widespread organizations; right to form unregistered organizations guaranteed New laws apt to legitimize social entrepreneurship enacted in –Poland and Hungary (Social Coops); –Czech Republic; Slovakia; Hungary (Public Benefit Companies) –Slovenia (Not-for-Profit Institute); –Lithuania (Social Enterprise)

Social economy enterprises in Poland. Dynamics Increasing but still untapped potential of the third sector as social service producer and delivery agent: Appr. 3% of grammar schools are run by TS Appr.14% of clients are served by nursery homes run by TS Nearly 100% of the shelters for the homeless are provided by third sector

Issues raised by current legal frameworks Incomplete and unstable legal and fiscal frameworks Need of a fiscal system and support services for social enterprises comparable to those established for SMEs Debated issues: –Some authors in favour of expanding the existing forms of social enterprises and introduce limited liability company and stock company of public purpose (Barański 2006); –Other analysts (Izdebski, 2006) are against this evolutionary trend as well as opposing the social cooperative legal form

Social Economy/Social Enterprise Challenges in Poland Chronic financial instabilities of the part of SE (lack of funds for running services) Underpaid/poorly paid public contracts Restricted access to small grants from structural funds for grass-roots initiatives Scope of structural funds programmes focused exclusively on labour market issues: underestimation of gaps in social and community services

Social Enterprises in the Region To sum up: Se organizations acknowledged mainly as advocacy organizations Still far from being legitimized as actors of new welfare systems Social Entrepreneurship= rare practice

The Future Perspectives to the Development of Social Economy and Enterprises in the region (1) Fostering the development of social enterprises in the work integration sphere, as well as in the provision of social and community services Legal context allowing the carrying out of economic activities similar to SMEs Fiscal system acknowledging the social commitment taken on by social enterprises European policies allowing social and environmental criteria for the award of public contracts Ensuring access for the same financial, products aqnd service markets as SMEs, especially public procurement markets Creating an enabling envirnment for SEs, especially financial and business support bodies Supporting the development of self-regulatory federal bodies

The Future Perspectives to the Development of Social Economy and Social Enterprises in the region (2) making possible state and local authorities’ fair compensation for the production and delivery of goods and services by SEs; supporting, both organizationally and financially, grass-root TS organizations; building training capacity for TS/SEs organizations developing new research in the social enterprise sphere