What is social economy?

What is social economy?

Social Economy is a different company approach, whose main engine is not financial profitability but profits for the whole of society. The Social Economy Act 5/2011 in its second article defines Social Economy as “the set of economic and business activities, carried out in the private sphere by those entities which, in accordance with guiding principles, pursue the general economic or social interest, or both.”

The guiding principles referred to in the definition on the basis of which the Social Economy entities act are the following:

  • The primacy of individuals and of the Social end over share capital, which is embodied by autonomous and transparent, democratic and participatory management, which leads to prioritizing decision-making more on the basis of individuals and their contributions to work and services provided to the entity or on the basis of the social purpose, than on their contributions to share capital.
  • Applying the results obtained from the economic activity mainly based on the work provided and the service or activity carried out by the partners or members and, where appropriate, the social purpose of the entity.
  • Promotion of internal and social solidarity that promotes commitment to local development, equal opportunities for men and women, social cohesion, the integration of people at risk of social exclusion, the generation of stable and quality employment, the reconciliation of personal, family and work life and sustainability.
  • Independence with respect to the public authorities.

The beneficiaries of this activity are usually generic groups of people: users, consumers, professionals, suppliers, workers, unemployed, disabled, etc., (not investors).

In some cases the beneficiaries are also the business owners (cooperatives, mutual societies, labour societies, agricultural processing companies, etc.), while in others this does not happen or at least not necessarily (associations, foundations, integration companies, special employment centres, etc.). But they are not conflicting models since, in the first case, anyone sharing the same need whose satisfaction is sought by the entity must be able to easily acquire the status of partner and benefit from the services provided. This characteristic is consistent with the principle of voluntary and open adherence of Social Economy entities and reflects their supportive nature. In addition, Social Economy entities typically give priority to their own User Members, also caring for community interests or general interests. It is therefore often argued that Social Economy entities merely pursue the general interest, either directly or in conjunction with the interests of their user members, which is reflected as one of the principles of Social Economy.

The said Social Economy Act lists the organizational models that are part of Social Economy, including social and labour integration companies: cooperatives, mutual societies, foundations and associations with an economic activity, labour societies, special employment centres, fishermen’s associations and agricultural transformation societies.

Social and occupational integration enterprises in the context of Social Economy

Social and occupational integration Companies (EIS) are corporations whose corporate purpose is the socio-occupational integration and training of people at risk of exclusion, and for this reason they form part of the Social Economy and are classified as a tool for the implementation of this system. Social and occupational integration enterprises pursue the general interest of society, either directly or in conjunction with the collective interest of their User Members.

Integration enterprises are a recognized model of Social Economy for the social and occupational integration of people with difficulties accessing the labour market. They are an important instrument for the implementation of active employment policies, since they offer, in an autonomous and economically viable manner, personalized training, employment and social and occupational integration trajectories to persons at risk or in a situation of social exclusion. According to Act 5/2011, integration companies are defined as “learning structures, with a commercial format, whose purpose is to enable access to employment for disadvantaged groups, through the development of a productive activity, for which, a process of integration is designed, establishing therewith a conventional employment relationship”. Their workforce must have a percentage of between 30% and 50% of individuals from groups for integration. 80% of the results are reinvested in the company.

Due to the EIS’s nature of service to society, all public administrations of Navarra are required to reserve 6% of their contracts for non-profit Special Employment Centres (CEE) and Social and Occupational integration companies (Regional Act 2/2018 of Public Contracts). In addition, all entities subject to this regional law must set and publish the conditions for achieving compliance with such 6% reserve with regard to contracts that they intend to award each year and after analysis of the possibility of such reserve through division by allotment. In cases where it is anticipated that it cannot be achieved, they shall set out the alternatives for achieving the specific purposes of these reserves.

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