Social enterprise support in Lithuania

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Social enterprise support in Lithuania

Name of Measure: State support for social enterprises
Member State: Lithuania
Purpose of the Measure: To encourage the occupation of the disabled, by supporting their employment in social enterprises
Targeted Beneficiaries: disabled people
Policy Focus: Social exclusion
Geographical Scope: National measure
Implementing Body: Ministry of Social Security and Labor, Lithuanian Labor Exchange under the Ministry of Social Security and Labour

Contents

Main Results

  • Increased number of social enterprises and workplaces in the social enterprises: 49 social enterprises were operating in 2006, whereas in 2007 - 64 companies, i.e. the number of social enterprises increased by approximately 23 percent within one year
  • During 2007, 15 new social enterprises were established, 11 whereof were granted the status of the social enterprise for the disabled; now there are 64 social enterprises in operation, 40 whereof are the social enterprises for the disabled
  • More companies used the support as well as concessions, granted by the state, more disabled were involved in the labor market: during 2007, there were 87 new workplaces created and 20 workplaces accommodated for the disabled.

Context / Background to the Initiative

Demographical changes in the Lithuanian society – decrease in the number of residents (from 1990 to 2007 the number of residents decreased from 3,69 million to 3,38 million or 8,4 percent) and obsolescence of the society (residents, older than 65 years of age, in 1996 constituted 12,5 percent of all residents, and in 2007 - 15,6 percent, whereas the number of children up to 14 years of age during the same period decreased from 21,6 percent to 15,6 percent) – have a great influence on the Lithuanian labor market. During the period from 1998 to 2007, the labour force in Lithuania decreased by more than 100 thousand. Main cause of decrease in the labor force is intensive emigration of able-bodied population of Lithuania, which caused the lack of the labor force in the country.

Therefore, an important measure, with the view of increasing the number of the labor force, is involvement of economically inactive residents (unemployed students, pensioners, disabled, convicts, etc.) in the labor market.

The disabled persons are usually attributed to the group that has the most difficulties integrating into the labor market. Though the number of registered disabled unemployed people in Lithuania in 2006, as compared to 2005, increased by 23 percent, and the number of the employed disabled people increased by 19 percent, it is necessary to pay special attention to the occupation of the social groups, which undergo difficulties of integration into the labour market.

Therefore, it is necessary to enhance the motivation of the disabled to get actively involved in the labor market and help the persons, searching for work, to get back on the labor market.

Details of the Initiative

1. Timescale for the Implementing the Initiative: Continually as of the adoption of the Law on Social Enterprises in 2004

2. Specific Objectives: To encourage the occupation of the disabled by supporting the employment thereof in the social enterprises;- To encourage the development of social enterprises and improve the activities of these enterprises.

3. How did the initiative address these objectives?

The adoption of the Law on Social Enterprises of the Republic of Lithuania on 1 June 2004 with the purpose to support the persons, belonging to the target groups, indicated in the law (disabled, long-term unemployed people, persons of pre-retirement age, persons, returning from the custodial institutions, single parents, raising minor children), who have lost the professional and general working capacity, who are economically inactive, unable of competing on the labor market on equal terms, encourage the comeback of these persons on the labor market, their social integration, as well as reduce social exclusion.

Social enterprise is a legal entity of any legal form with the status of a social enterprise, where at least 40 percent of the employees belong to the target groups and the number of these employees is at least 4; which is engaged in training of the working and social skills of the employees as well as social integration, and income whereof from the non-supportable activities of the social enterprises amounts to not more than 20 percent. Such enterprise can be granted a partial compensation of the wages and state social insurance contributions, subsidy for the creation of the workplaces, accommodation of the workplaces for the disabled employees, acquisition or accommodation of the work means, as well as subsidy for training of the employees, who belong to the target groups.

Main subsidy, used by the social enterprises, is the partial compensation of the wages and state social insurance contributions. From January 2008, the compensation of the wages of the employees, who belong to the target groups, increased by 10-20 percent.

Additional types of state support have been provided for the social enterprises of the disabled. They are as follows: subsidy for the accommodation of the work environment, industrial premises, and restrooms of the disabled personnel, subsidy to compensate additional administration and transportation expenses, subsidy to compensate the assistant’s (sign language interpreter’s) expenses. In addition to the last-mentioned types of state support for the social enterprises, the following concessions have been provided: zero profits tax rate, public procurement can take place according to the simplified procedure. All this facilitates the implementation of the services as well as production, provided by the social enterprises. Moreover, the state and municipal property (premises) can be granted to the social enterprises on the loan basis for temporary gratuitous tenure and use, whereas the expenses, which are saved for not paying for the leasehold premises, are deemed to be the actual support of the state.

Since 2004, the social enterprises have been managed by the Lithuanian Labor Exchange under the Ministry of Social Security and Labor as well as 46 territorial job centres.

Monitoring and Evaluation

Social enterprises provide the territorial job centers with the following:

  • Reports on the employment as well as discharge from employment of the persons, belonging to the target groups, number and segment thereof among all employees of the social enterprise
  • Reports on the state support, received from any and all sources as well as used, and the annual financial statement.

Territorial job centers are entitled to organize and perform the control of the social enterprises in order to determine how this law is complied with.

Outcomes

1. To what extent have the specific objectives been met?

During 2007, 15 new social enterprises were established, 11 whereof were granted the status of the social enterprise for the disabled; now there are 64 social enterprises in operation, 40 whereof are the social enterprises for the disabled. Social enterprises have already been engaged in the activities in all counties of the country. 4 enterprises have organized training of general and special nature, which was attended by 138 persons, belonging to the target groups.

In 2007, there were 87 new workplaces created for the disabled, 20 workplaces were accommodated for such purpose. 64 currently operating social enterprises employ 2476 employees, 1529 or 61.7 percent whereof are the persons, belonging to the target groups. Upon application of the state support, 4 enterprises have accommodated the work and rest environment for 52 disabled people. Furthermore, 64 assistants work in the social enterprises for the disabled, who help 564 disabled people to perform their work functions.

2. What obstacles/risks were faced in implementing the initiative?

The problems are faced in search for the employers. According to many employers, the state support is useful; however, it is complicated to work with the disabled persons. The employers also fear that the activities of the social enterprise will not be profitable.

3. How these obstacles and risks addressed?

The territorial job centers organize seminars and training for the employers, explaining the legal, social, and psychological employment aspects of the disabled persons, etc.

4. Unexpected Benefits or Weaknesses

Value added:

  • Enhanced motivation of the disabled to be more actively involved in the labor market
  • Broader awareness and consciousness of the employers in respect of the need to employ those disabled persons, who want to work.

Shortcomings:

  • The threat that the disabled, working in such enterprises, will get less and less chance to get into an open labour market
  • Lack of attention to the monitoring and evaluation of the work efficiency of the social enterprises as well as generalization of experience of the social enterprises
  • The greatest concentration of the social enterprises is in Vilnius (1/3 of all social enterprises, operating in Lithuania), whereas in the regions the establishment of the social enterprises is inactive.


Source: Annex 1 to the National Strategy Report on Social Protection and Social Inclusion 2008-2010, at http://www.socialmap.lt/index.php?-748270002