Social economy refers to the so-called ‘third sector’, meaning that it is between the private/business sector and the public/government sector. Social economy includes organisations such as NGOs, cooperatives, mutual societies and charities. These are also called social enterprises: enterprises that apply market-based strategies to achieve social purposes.
Social economy can lead to new strategies, ideas and organisations that meet social needs of all kind, such as training, education, health and social inclusion. For this reason, social economy is often associated to the concept of social innovation.
Social economy is important for several reasons:
a. It creates jobs for people at risks of social exclusion/with a low employability profile. To this end, social economy supports the social and employment integration of certain categories of people that find it difficult to be integrated through more mainstream pathways;
b. It provides social services that respond better to the real needs of people (for example the provision of services is more flexible and better tailored to the real needs of users);
c. It creates jobs and growth: social economy enterprises represent 2 million enterprises (i.e. 10% of all European businesses) and employ over 11 million paid employees (the equivalent of 6% of the working population of the EU): out of these, 70% are employed in non-profit associations, 26% in cooperatives and 3% in mutual societies.
The latest report by EUROCITIES is called ‘Cities and active inclusion: quality of social services and the social economy’. The report provides an analytical overview of trends, challenges and innovative practices on active inclusion at local level in 10 cities throughout the European Union. It is based on 10 research reports produced by 10 cities. 5 cities looked at the issue of providing quality social services (Barcelona, Birmingham, Brno, Copenhagen, and Sofia), and 5 cities focused on the role of the social economy in supporting active inclusion (Bologna, Krakow, Lille Métropole-Roubaix, Rotterdam and Stockholm).
Cities reported a number of challenges in delivering quality social services:
budget cuts and financial constraints;
legislation on ensuring quality standards that is not always adequate to measure the real quality of social services;
ensuring that social services employees fully understand quality criteria and indicators; and
recruiting and retaining a quality workforce in social services.
Cities reported a number of challenges in supporting the social economy:
dealing with budget cuts in public administration;
improving the financial sustainability of social economy organisations;
dealing with public procurement rules; and
raising awareness on the added value of social economy.
Citizens with multiple disadvantages and citizens at risk of social exclusion
Cities are dealing with citizens who have multiple disadvantages (homeless, people with disabilities, low skilled, migrants), as well as with new groups of people becoming increasingly at risk of social exclusion (ethnic minorities, elderly, single parents). Cities’ trends that have been observed in delivering social services are improving coordination, decentralisation, personalisation of services, outsourcing to social economy associations and taking a preventative approach. The social economy is supported through financial means as well as legislative measures which make it possible for these associations to win public tenders for delivering social services. Ensuring the delivery of quality social services and supporting the social economy pose challenges for cities. Budget cuts in public administrations, coupled with an increasing number of people in need of active inclusion are stretching cities’ capacity to deliver quality social services and to support the social economy.
Social economy in cities is in need of highly qualified staff
Other challenges identified by cities are the sustainability of social economy initiatives, too rigid and formal national legislation on quality for social services, the complex rules on public procurement as well as the recruiting and retaining of highly qualified staff in the social sector. However, cities have also put in place and are planning several solutions to deal with the challenges of ensuring quality social services, such as creating quality standards that better reflect the users’ needs, training employees in understanding quality issues, and improving working conditions of social workers. For the social economy, cities are helping to increase the business skills of people working in this sector, to raise awareness on the added value of social economy and to introduce social clauses in public procurement regulations for awarding tenders for delivering social services.
Click here to download the publication 'Cities and active inclusion: quality of social services and the social economy – Key lessons from cities'.
- Full report17 May 2011, pdf, 926KB