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Last week the European Parliament’s Intergroup on Social Economy met for the first time since the summer recess. The hearing was about an EU legal framework for social economy enterprises. Representatives of the Spanish and Polish ministries witnessed how social economy is an important social and economic player in their respective countries. In Poland, the sector now amounts to 500,000 employees. In Spain, social economy entities produce 10% of the Spanish Gross Domestic Product (GDP).

Michel Catinat, from the European Commission’s Directorate-General for Growth, highlighted the reasons why so far it has not been possible to make progress in establishing European statutes for foundations, associations and mutuals: the requirement of unanimity in the Council of the European Union has been impossible to reach.

Grzegorz Buczkowski (Association of Mutual Insurers and Insurance Cooperatives in Europe – AMICE) reported that mutuals are not on equal footing with public limited companies and cooperatives who have a European statute: on the lack of a statute hinders mutuals in their cross-border activities, especially in and with those Member States were mutuals are not even recognised at national level (e.g. Romania, the Czech Republic and Baltic countries). Hanna Surmatz (European Foundation Center – EFC) recognised the lack of a European statute for foundations as a legal barrier that foundations meet in their cross-border activities, that adds to existing fiscal barriers. According to Patrick De Bucquois from Social Platform member European Council for Non-Profit Organisations (CEDAG), there are two main reasons why a European statute for associations is needed. At EU level, associations contribute to the diversity of service providers in domains such as health, education, culture and social services, and they are already recognised as service providers at national level. It is important that the obligation to mainly reinvest surpluses to achieve the organisation’s mission, which is a social or societal one, is legally established at EU level. Associations reinvest 100% of their surpluses. He considers that until this happens, accountability towards citizens and investors that wish to invest in the different forms of social economy enterprises will be undermined.

Several speakers pointed out that there is a lot of confusion between the concepts of social economy and social enterprises and that boundaries are needed between the two. Mr De Bucquois provocatively remarked that this confusion is on purpose. Pedro Black Da Silva from AIM pointed out that in 2011 the Commission recognised the concept of social enterprise in the Social Business Initiative,  but avoided a legal definition.

I agree with the speakers that there is a lot of confusion. I think that it is important to clarify that the social economy (foundations, mutuals, cooperatives, associations) is broader than social enterprises, but that social enterprises are embedded in the social economy. I also believe that even if the Social Business Initiative (SBI) does not provide a legal definition of social enterprise, it sets three main broad criteria that have to be met for an organisation to be considered a social enterprise. The three main broad criteria are: a social or societal objective of the common good as the reason for the commercial activity; profits (surpluses) are mainly reinvested to achieve this objective; and the method of organisation or ownership system reflects their mission, using democratic or participatory principles or focusing on social justice. A good starting point would be reaching a common agreement that these three criteria have to be cumulatevely met.

Sven Giegold MEP concluded the hearning by saying that there is a tendency in the social economy sector that everyone speaks about its own territory and interest, while there should be a more comprehensive vision, understanding and willingness to pursue a common strategy. I agree with him that we need to overcome internal divisions and put forward a more collaborative approach. Only in this way we will be able to be recognised as an important sector, as we are. This might pave the way towards having better legal recognition, including European statutes!