Helsinki social enterprise conference 070205

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Social enterprises: Equal work and business opportunities

Helsinki, 5-6 February 2007

Final report

See also a news article

Contents

Introduction

The Social Enterprises: Equal Work and Business Opportunities seminar was organised by the Finnish Ministry of Labour, with the support of Italy, Poland, Sweden and the European Commission. It forms part of the series of events main-streaming the learning from the work in the social economy theme of the EQUAL programme. It followed seminars held in Warsaw in May 2006 and in Tivoli in December 2006, and led up to the policy forum on inclusive and social entrepreneurship in Hannover in June 2007.

Its objectives were to contribute to the mainstreaming of good practices in social enterprise; to bring new topics into the discussion of social enterprises and their employment potential, especially for the most disadvantage groups in the labour market; to broaden discussion by involving policy makers at different levels; and to provide a forum at which those from within and outside the EQUAL world could discuss the development of and support for social enterprises. The seminar took place at the prestigious Kalastajatorpppa hotel in Helsinki, site of high-level disarmament talks, on 5th and 6th February 2007, and some 200 people from 23 countries took part. Full documentation, including the programme, speeches, list of participants and workshop background papers, presentations and reports, is available at:

http://www.mol.fi/esr/en/ESF_in_Finland/Latest_news/social_enterprises.jsp

For further information, please contact Tommi Nordberg, Project Adviser, Ministry of Labour / EQUAL, PO Box 34, FIN-00023 GOVERNMENT. Tel: +358 10 60 49235, fax +358 10 60 49234, e-mail: tommi.nordberg@mol.fi.

Opening speeches

Eeva-Lisa Koivuneva, Senior Adviser, Legal Affairs, Director of Structural Fund Unit, Ministry of Labour

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Ms Koivuneva noted the importance of learning from other European countries and the grassroots influence on Finnish legislation on social enterprises. She pointed out the success of the EQUAL development partnership Pirkanmaan Syke (Pulse of the Tampere Region) which had helped to set up over half of the country’s social enterprises. Nevertheless, as a Community Initiative, the aims of EQUAL are qualitative rather than quantitative. She thanked the European partner countries, especially Belgium, Germany, Italy, Poland, Sweden and the UK, who have contributed to the series of EQUAL mainstreaming events of which this seminar is part. We must make sure this effort does not go to waste.

Walter Faber, Head of the Community Initiatives Unit, Directorate General for Employment, Social Affairs and Equal Opportunities, European Commission

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Mr Faber noted the vast scope of the social economy and the consequent difficulties in identifying it clearly. Social services are a fast-growing sector, and their future growth potential is even greater. Advanced economies seem to have more of it. So it should not be looked at as hindering growth. On the contrary, it contributes to growth employment and inclusion – all three thrusts of the Lisbon agenda. Social economy is at its crux.

He reassured participants that the EU would continue to support social enterprise after the end of EQUAL. The new Structural Fund regulations recognise the social economy and the fact that there are needs to which it is the best solution. Nevertheless it does come under attack from competitors and from managers of public budgets. This means that is has to be competitive, efficient and transparent, and to demonstrate that it is competitive, efficient and transparent. EQUAL has tried to help the social economy to become more competitive, and has supported over 400 projects in this area. But a lot remains to be done to transmit what has been learnt to mainstream policy makers and practitioners. This event is the third link in a chain of events stretching from Warsaw in May 2006 via Tivoli in December and continuing to Hannover in June 2007. The key to EU progress is that all countries work together to share and transfer knowledge as much as finance, and this seminar is an expression of that solidarity.

Jonathan Bland, Chief Executive Officer of the Social Enterprise Coalition (UK) – Social Enterprises Delivering Jobs and Services – The Road to Success

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Mr Bland outlined the British experience of social enterprises. He echoed the definitional problem, and noted that the British governments’ definition is there to help policy makers, rather than being a legal one. Drawing on examples such as Cafédirect, Bulky Bob’s, Hackney Community Transport and Greenwich Leisure Trust, he stressed that social enterprise is a very successful business model. Key aspects are the social and/or environmental objectives, ownership and governance, the triple bottom line and the wide range of legal and organisational forms. “Social enterprises come in all shapes and sizes,” he said. Their crucial characteristic is that, by contrast with organisations at the charitable end of the social economy spectrum, they trade in the market place, and make profits. “Social enterprise is about making lots of profit – and using it differently.”

The UK has some 55,000 social enterprises with a combined turnover of €40 billion and providing 500,000 jobs. It has four characteristics:

  • market led, value driven
  • about empowerment and opportunity
  • about innovation
  • better value

There are some remarkable success stories: Cafédirect comes sixth in brand recognition – this shows how social enterprises can change markets – it has changed the terms of trade in the global coffee market. The example of Baywind shows that local ownership can overcome “not in my back yard” opposition to wind farms. The ingredients for SE success are:

  • the right people – leadership
  • the right model – form follows function
  • the right support
  • investment
  • training

• (in public markets) alignment with commissioning

Government support for social enterprise raises six key issues:

  • awareness and understanding
  • investment finance
  • support and training
  • legal and tax issues
  • public contracting – the public sector can create and shape markets
  • measuring impact – do you do what you say you do?

So the priorities are to secure political support, promote social enterprises – in the media, through awards etc. – and create a movement.

There are no ‘no go areas’ for social enterprise – even the UK Ministry of Defence should be investigating it. It is the model for business in the 21st century. Gordon Brown, who is tipped to be the next British Prime Minister, says social enterprise is “the Great British success story” and “the new frontier for business”. The government is currently looking at the issues of quasi-equity and the transfer of public assets, and has just announced that it is setting up a health and social care fund worth €110 million.

Sepp Eisenriegler, Vice President of RREUSE network – Social Enterprises as an Important Part of EU Third Sector Policy

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RREUSE provides 16,000 temporary placement jobs, and has achieved a major lobbying success in placing reuse as the top priority in the EU’s Waste Electrical and Electronic Waste (WEEE) directive. Its unique selling proposition (USP) is to combine social and ecological objectives.

In the EU, 31.7 million people – 8.5% of the population between 15 and 64 – are excluded from the labour market, because they are long-term unemployed, discouraged, disabled, ill or have care responsibilities. There is a paradox in that there is a lot of work to do, yet we lack jobs and poverty is increasing: there has been a market failure. The ‘social market economy’ cannot offer solutions for people who cannot compete for ‘normal’ jobs. On the macroeconomic level, it costs €43,000 a year to support an unemployed person in Austria. This is money that could be better used than in making transfer payments, bearing higher health care costs etc. The social economy can produce a triple dividend. For example the creation of ‘handymen’ for old people has three benefits: it means that old people can stay at home for longer; it reduces the cost to the public of subsidising care homes; and it meets the demands of pensioners, who constitute a growing group of voters.

In Vienna, RUSZ (Repair and Service Centre) http://www.rusz.at repairs, reconditions and sells used electrical equipment, while its sister firm DRZ (Dismantling and Recycling Centre) dismantles those items that are beyond reuse. They provide both permanent jobs and temporary employment for long-term unemployed and handicapped people, with personal support and career development advice to help them to join the primary labour market. They provide 160 jobs, and repair 7,000 consumer electronics appliances and process 1,000 tonnes of WEEE a year. Of the latter, 10% is reused, either as second-hand equipment or in the form of spare parts, while 90% is broken up, sorted and sold as waste fractions. This reduces the proportion of waste to 3%-8%, of which 0.6% is hazardous waste.

A third enterprise, Trash Design Manufaktur http://www.trashdesign.at, makes creations such as jewellery from mobile phone keypads and plant pots from washing machine drums.

Projects now under way include: reducing the energy consumption of old washing machines; setting up CENTROPE http://www.recycling-network-centrope.net, a recycling network based in Bratislava involving Austria, Hungary, the Czech Republic and Slovakia; and creating a sustainability label for electrical and electronic equipment.

Matti Pukkio, Director, Ministry of Labour – Social Enterprises – Potentiality for Employment and Society in Finland

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Mr Pukkio welcomed the 200 people from 23 countries who had come to the seminar.

Finland’s law on social enterprises was adopted in 2003 and represents a broad consensus. It is only a three-year history and changes are expected soon. Its key objective is to employ people who are difficult to employ, and in particular those who are disabled or long-term unemployed. This is an appreciable problem, as, despite recently economic growth, Finland still has 150,000 long-term unemployed people, which is 6% of the labour force. Unemployment is 7%, down from 17% in the recession. Furthermore, the workforce will decline from 2010, while the share of over-65s will rise from 16% in 2010 to 27% in 2030. So Finland will need every active person in the workforce. It will need more workers to pay for the welfare state; the activity rate is 69%, but the target is 75%.

Forty percent of Finland’s GDP is generated by the public sector, and it employs one worker in four. The social economy provides about one-fifth of health and elderly care services. A definition based on objectives was not politically possible, and a social enterprise can be of any type – including foundations and co-operatives. Social enterprises must pay all employees a salary defined through collective bargaining as for all able-bodied people. At least 30% of the workforce must be disabled or long-term unemployed. This is the criterion for registration and gives the right to use the name ‘social enterprise’. There are no conditions as to objectives, capital or ownership. In practice most social enterprises are private companies – and as far as profits go a survey showed that most are still in the red! They receive a wage subsidy of €850-€900 per month, for a period of two years for long-term unemployed people, and three years for disabled people. In fact all businesses can receive this wage subsidy, but conventional businesses only receive it for 6-10 months. The subsidy can be extended indefinitely in the case of disabled people if their employability does not improve. Social enterprises can also benefit from a start-up grant, which can be paid to a promoting organisation. This has now risen from 50% to 75% of start-up costs.

There are currently 85 social enterprises employing 400 people, of whom 140 are disabled and 50 long-term unemployed. The target is to increase this tenfold.

Tarja Filatov, Minister of Labour

Owing to Mrs Filatov’s indisposition, her speech was delivered by Ms Helinä Tuominen, Director of the Information Unit. Social enterprises are enterprises that make a difference, the Minister said. She described their relevance in public procurement, which in Finland is worth over €22 billion each year – 15% of GNP – and in other EU member states is worth between 11% and 20%. Finland is moving towards a producer-provider system in public services, but is only just becoming accustomed to using social criteria in tenders. The local nature, adaptability and versatility of social enterprises bring a number of advantages for local authorities that work with them. The social economy should play the leading role in the intermediate labour market and the integration of disadvantaged people.

Workshop reports

Workshop A: Finance

See Helsinki 070205 workshop A finance

Workshop B: Growth sectors & business models

See:

Workshop C: Skills, training and support in the local context

See Helsinki 070205 workshop C support

Workshop D: Service provision and public private partnership

See Helsinki 070205 workshop D service provision

Closing plenary

Panel discussion – Where Lies the Future for Social Enterprises?

Chair: Toby Johnson (AEIDL, Brussels).

Panellists: Matti Pietarinen (Deputy Director General, Ministry of trade and Industry), Sepp Eisenriegler (Vice-President, RREUSE – Re-use and Recycling European Union Social Enterprises), Wolfgang Borde (Community Initiatives Unit, European Commission), Fintan Farrell (Director, European Anti Poverty Network)

The closing round table discussion started with a challenging question, by the chairman Toby Johnson of AEIDL in Brussels. “Social economy addresses needs, but does not necessarily serve markets. What are the major current needs?”

Fintan Farrell, Director of the European Anti Poverty Network (EAPN), stressed that EAPN works every day to put issues of poverty onto the EU agenda in order to answer the enormous needs of society. “There are 72 million poor people in Europe,” he said, “and there is a widening wealth gap. Last year’s City of London Christmas bonuses alone amount to thee times the entire EQUAL budget!” We need a benefit system that activates people, and this means one with a high level of benefits. The social economy can play a major role in facilitating access to the labour market by the most excluded groups. Where the market fails there is a huge space for social economy.

Matti Pietarinen, Deputy Director General of the Finnish Ministry of Trade and Industry, was confident that social enterprises will have a big market in the future, since they are one of the fastest growing economic sectors. The government should provide incentives in order to allow social enterprises to compete in the market.

According to Wolfgang Borde, responsible for the social economy theme in the European Commission's EQUAL unit, social enterprises need to improve the management skills of their workers so they can operate efficiently and achieve high quality standards.

Sepp Eisenriegler, Vice-President of the Europe-wide social enterprise federation RREUSE, affirmed that the social economy is a reaction to market failure. It solves many problems created by private sector actions, such as unemployment, especially in areas that the private sector is abandoning.

A Commission Communication?

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Jan Olsson, from the Swedish support structure Koompanion and member of the European Economic and Social Committee, thought that it is necessary to push the issue at higher level. The next Spring Summit will deal with the needs of different “priority groups”, so it should mention social economy. A Communication by the Commission on the social economy would be a powerful tool to make its voice heard at high level and to raise the sector’s visibility. Wolfgang Borde commented that such a communication would be the responsibility of the Enterprise DG, and would depend on creating visibility, lobbying and engaging in the political process.

Fintan Farrell noted that while the Council had made inclusion one of the priorities of the Lisbon agenda, the Commission was placing the emphasis rather on jobs and growth. The work of the URBAN initiative had been mainstreamed to a much greater extent than that of EQUAL. The message needed to be strongly conveyed that inclusion should be put back into the Lisbon agenda. EQUAL has helped social economy to be more visible and to show important results in terms of inclusion and employment. Some efforts have been made to mainstream EQUAL within the Structural Funds but it is not achieved yet. As Eva Ardvisson – a former MP and member of the Swedish EQUAL National Thematic Group on Social Enterprise – points out, the new Swedish government has just deleted reference to social economy from the National Action Plan. The sector is mobilising in order to put it back. ”Why are we always killing milking cows?” asked Paavo Saikkonen, secretary of the social enterprise implementation group at the Finnish Ministry of Labour. For him, the lack of collaboration between different ministries and departments is a perennial problem, and partnership a key tool in overcoming it.

To brand or not to brand?

“By establishing a brand, the fair trade movement has achieved 70% recognition within ten years,” said Keith Richardson from the INSPIRE project in northeast England. “A number of European networks exist, but social enterprises have no centralised voice at European level. Creating a single European brand for social enterprise might be a good way to boost visibility.” The discussion became very lively. Toby Johnson felt that the self-help principle should not be forgotten: social enterprises should work together, avoid sectarianism, use common tools to build visibility, and set up their own social investment funds.

According to Hans-Gerd Nottenbohm, from Innova in Germany, we should stress the economic side of social enterprise, and a brand is necessary to make the sector more independent from public programmes. Matti Pietarinen agreed that social enterprises should consider themselves as part of the business community and make common cause with them to lobby trade ministries more effectively.

“Social enterprises are the crux of the Lisbon strategy, as they create growth, jobs and inclusion,” said Wolfgang Borde. He supported the idea of a brand, but noted that the sector’s great diversity across Europe makes it difficult to define that brand. However according to Sepp Eisenriegler, branding the sector is not the right way to proceed: what is needed is quality standards, awareness and comparable data. “A lot of social enterprise activity is not labelled as such, even by the actors themselves,” he said. Nevertheless a horizontal European organisation and chambers and ministries for social economy at national level could be very helpful. Ted Fowler from the C3 partnership in Bristol agreed, pointing out that there is no brand for all small companies. What is needed is the pursuit of excellence along with coherent support from government, after which the snowball effect will do its work.

The future of transnationality

Fintan Farrell recalled that the scrapping of the Social Economy Unit within DG XXIII in 2000 resulted in a big loss of momentum, and that the sector should consider lobbying to reconstitute it. According to Toby Johnson maybe the Commission has not addressed a clear demand to work with the sector because competences are split. A horizontal task force to work on the economic and cost-benefit aspects might be useful.

Wolfgang Borde reassured the audience, and confirmed that after EQUAL transnational co-operation will not diminish. The Commission is supporting Member States in setting up transnational measures within their national plans. A good example was presented by Louis Vervloet from the Flemish Managing Authority, who explained that they have allocated 5% of their budget to transnational co-operation at four levels – between managing authorities, policy groups which decide European strategies, national thematic groups (NTGs) and individual projects that wish to work together (although this last is not a priority).

Dorotea Daniele from DIESIS asked the Commission to retain a degree of co-ordination or exchange of European activities, since it is difficult for European organisations to deal with many managing authorities. Transnationality within EQUAL has produced many positive results that should not be dispersed.

The final word was again about visibility. The social economy can make a major contribution to social cohesion, and the EQUAL Policy Forum in Hannover in June 2007 is a good opportunity to demonstrate it.

Matti Pukkio – Closing words

Mr Pukkio summed up the changes under way in the Finnish social enterprise scene. Ninety per cent of social enterprises in Finland are new starts, and the largest social enterprise employs 50 people. We can be optimistic that growth will be fast – and it will be helped by the forthcoming amendment to the Finnish Act on Social Enterprises. Finland also intends to launch a brand so that consumers can choose to buy from social enterprises. He ended by saying that we have seen huge changes over the last five years, and we shall no doubt see further huge changes over the next five years.

Postscript, 30 March 2007

Parliament adopted the legal amendments in February, and they will come into force in May. The most essential change is an increase in the wage subsidy granted to a social enterprise for employing a disabled or long-term unemployed person. The subsidy will be at least €822 per month, and can be 50% of the labour costs up to a maximum of €1,300. The duration of the subsidy will be two years in the case of a long-term unemployed person, and three years in the case of a disabled person. In certain conditions the wage subsidy for a disabled person can be renewed after each three-year period.

By the middle of March there were 91 social enterprises in Finland. In late 2009, the total was 209.