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European Commission

László ANDOR

European Commissioner responsible for Employment, Social Affairs and Inclusion

What can social enterprises contribute to the Europe 2020 Strategy?

Conference of EESC various interests groups "Social enterprises & Europe 2020 Strategy" / Brussels,

3 October 2012

Thank you for your kind invitation and for the opportunity to share with you my thoughts about the importance of social enterprises and the social economy for the successful development of the EU economic model.

I have argued in various fora that the social economy and social entrepreneurship are inherently linked to the model of the social-market economy that we have all agreed to build in the context of the Europe 2020 Strategy.

That was also a point that the European Economic and Social Committee made in its opinion on social entrepreneurship and social enterprise in October 2011, and I wish to thank you for that.

Already today, the two million social enterprises in the EU form a strong European social economy sector that accounts for some 10% of all European businesses and employs over 11 million paid employees — which is equivalent to 6% of the EU’s working population.

I cannot over-emphasise the importance of the job-creating potential of social enterprises at the current juncture when Europe is hit with record-high and still increasing unemployment.

Turning around the adverse macroeconomic environment in the most affected countries to make it more conducive to job creation will take time. But time we do not have. Because the damage to the social fabric in those countries may have long-lasting negative effects and affect even their growth and development potential when good times return.

That is why it is crucial to tap all sources of job creation; and especially those which offer jobs that are sustainable and of high quality.

I am convinced that this is precisely what the social economy can offer. Its business models and objectives can be a real alternative to mainstream businesses, in particular where these have stopped being the engine of the economy in a number of our Member States - because of lack of confidence, funding sources or internal demand.

Social enterprises in particular are often pioneers in developing new markets and creating jobs in new promising and growing fields like health care, work integration, education and lifelong learning, culture, reducing emissions and waste, the digital society, fair trade, transport or community development.

Not only do they produce affordable goods and deliver high-quality services that meet collective needs, but they are also a factor in social inclusion and empowerment. For example, when they employ people from disadvantaged groups or when they provide social services to vulnerable persons.

Today’s crisis is not just economic and financial, but increasingly also a social crisis with severe consequences in many regions.

It demands a rethinking of our economic and social policy and action.

It calls for a fresh focus on social justice and solidarity.

Social enterprises are driven by those values. They are engaged in generating social impact and fostering innovations that deliver better social outcomes. Doing so, they not only help to step in where public policies and services tend to fall short, they also generate economic activity with strong growth potential.

That's one of the reasons why social enterprises have demonstrated greater resilience to the crisis than the economy in general.

Recognising this, Michel Barnier, Antonio Tajani and I put forward a "Social Business Initiative" that sets out an action plan at EU level to stimulate the establishment, development and growth of social enterprises.

I am sure that by now you are very much familiar with its key elements which are built around the three blocks of facilitating access to finance, raising the visibility of social enterprises and improving the legal framework.

The Single Market Act II adopted today recalls the need to further implement these actions. Particular attention will be paid in the coming MONTHS to developing a methodology to measure the socio-economic benefits of social enterprises. This will help to convince investors of the long term benefits that money invested in social enterprises can bring alongside the more immediate return on investment. This is also the idea behind the proposal for a "European Social Entrepreneurship Fund" currently discussed in Council and Parliament. This would provide a label allowing investors to identify the funds that focus on investing in European social businesses.

Out of all the factors that may hinder the development of social businesses, access to finance is indeed among the most important today.

That is why we have put strong emphasis on the funding of social enterprises and of the social economy in our proposals for the next multiannual financial perspectives.

The main sources of EU funding in this context are the cohesion policy funds, namely the European Social Fund and the European Regional Development Fund.

They already play a useful role in a number of countries and regions to support social enterprises and social entrepreneurship more generally. But I am convinced that they can be used even better in the future, especially if they would be used in the context of a truly integrated strategy.

This should be encouraged by the future cohesion policy regulations - closer link to the Europe 2020 priorities and the related targets including for social inclusion, better coordination between the various funds especially when it comes to territorial development, consistency with policies and last but not least simplification in the delivery are all innovations that should help Member States support the social economy and social enterprises in a more strategic manner. To underline this we also proposed a fully-fledged new ESF investment priority on "Promoting the social economy and social enterprises".

As the negotiations on the future programming period are set to start, I wish to make social enterprise support one of the priorities of the relevant ESF programmes. In this context, I have also asked my colleagues to step up the technical support that the Commission can give to the ESF managing authorities and other stakeholders. This is essential to overcome the reluctance that we sometimes see to venture into new types of support.

Apart from cohesion policy, the Commission proposal for a European Union Programme for Social Change and Innovation proposes to establish an EU level financial instrument to support the development of social enterprises. This 90 million euro fund would make hybrid funding available, including equity, quasi-equity, risk-sharing instruments and grants to support the establishment and development of social enterprises. Discussions with our partners in the Parliament and the Council are still ongoing, but I am pleased to say that the idea has gathered wide support.

Social entrepreneurs do not need money alone. They also need to develop skills and competencies. They need networks and they need role models — such as successful social entrepreneurs to give them inspiration.

We would like to help by providing a better picture of the situation of social enterprises in the EU. That is why we are about to start a large project with the aim to map social enterprises. This is in fact in response to the Economic and Social Committee’s call for an EU-wide comparison of approaches to public financing that are particularly suitable for social enterprises. To this effect, the mapping will involve a study of the existing financing instruments in the Member States.

Let me conclude.

Social enterprises are a largely untapped source of inclusive growth and sustainable jobs.

They can help us meet the Europe 2020 targets for employment, innovation, education, social inclusion and the environment.

And the Committee can help the Commission to achieve those goals. As the representatives of organised civil society, you can help disseminate this message among stakeholders in the Member States. I am confident that this conference will also contribute to this objective and wish you fruitful debates for the rest of the day.

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