Improving Social Inclusion at the Local Economy Level

Improving Social Inclusion at the Local Economy Level through the Social Economy Report for Slovenia Antonella Noya Senior Policy Analyst OECD /LEED

Overview • Mission and Methodology • Context and Evolution of the Social Economy • Contribution of the Social Economy to Social Exclusion • Current Policy Environment and Supporting Strategies for the Social Economy • Key Issues and Policy Requirements to Support the Social Economy • Recommendations

Mission and Methodology Mission • Examine the role, real and potential, of the social economy in Slovenia • Examine the support required for the social economy in Slovenia to realise its potential Methodology • Study visit by OECD LEED Secretariat members and external experts in Jan 2010 and Apr 2010 • Available statistics and research conducted prior to and after study visit

Slovenian Context: Evolution of the Social Economy #1 Broad Context • Economic and political transition • Dominant state role in provision of public goods and services persists (impact on social economy development) • High level of social and employment security but with some gaps in provision • State of welfare dependency, growing social exclusion and labour market divisions (reforms undertaken to tackle these issues) • Despite anti-crisis measures, employment and economic activity have declined sharply during the economic crisis

Slovenian Context: Evolution of the Social Economy # 2 History • Rich tradition of civil society organisations dating back to 13 th century • First law on cooperatives introduced in 1873 • By WW 1 extensive network of associations, co-operatives, charities, and trade unions throughout Slovenia • End of WW 2 introduction of communist socialism broke tradition of strong social economy • For 50 years, socialist welfare system largely replaced functions of the social economy

Slovenian Context: Evolution of the Social Economy # 3 Current Landscape • 22, 000 civil society organisations • 1. 02 civil society organisations per 1000 inhabitants – one of the highest in the world Organisations Recently established Co-operatives 437 organisations (2008) Companies for the Disabled Inherited Detail 168 organisations, 13, 704 employees (2008) Zavods (Institutes) Largest number of employees and most entrepreneurial approach Associations 94% of all civil society organisations, 1 million members Other non-profit organisations e. g. Foundations, church organisations, e. t. c.

Slovenian Context: Evolution of the Social Economy # 4 However… • Contribution of social economy to GDP is x 4 below the EU average • Contribution of social economy to employment creation is even less significant Why? • Concept of “Social Economy” not widely accepted in Slovenia • Social economy initiatives lack visibility, are fragmented and sometimes over-looked • lack of understanding of their role and potential, but increasing political interest and will…

Contribution of the Social Economy to Social Exclusion # 1 Current Contribution • Mixed in composition and impact but examples of good practice • Typical roles include service provision, work force integration, advocacy and self-help groups Social Exclusion Themes Addressed • • • Disability Disadvantage Urban socio-economic decline Rural socio-economic decline Community cohesion

Contribution of the Social Economy to Social Exclusion # 2 Social Exclusion Role(s) of Social Economy Theme Constraints / Opportunities Disability • Provision of system of work integration • Well developed funded but relatively closed system Disadvantage • Develop relationships with SWCs and tenders via public works programme • Lacks coherent and consistent policy framework • Delivery of projects financed by temporary funding streams • Social enterprises have funding access but may have cash flow or financial sustainability issues • Integration through sport and cultural initiatives • Municipal youth culture and sports centres are quasi forms of social enterprise • Advocacy with government policy-makers about public interests • Enhanced role for social enterprises Community cohesion

Contribution of the Social Economy to Social Exclusion # 3 Social Exclusion Theme Role(s) of Social Economy Urban socio- • Provision of services to support local economic regeneration strategies decline • Reconstructing failed capitalist businesses Constraints / Opportunities • Effective esp with environmental services, small Work Funds, business incubators and employment centres • Restricted revenue and diverse set of small municipalities Rural socioeconomic decline • Service provision to reduce under-employment and stimulate regeneration • Employment generation through effective training. Products sold to increase sustainability Social exclusion • Service provision • State major provider, few elements of mixed economy, no consistent capacity to develop service provision

Current Policy Environment # 1 Labour market policy • Employment Service (ESS) e. g. Local and regional offices deliver counselling, training and support • Social protection benefit system e. g. Unemployment insurance benefit • Simplification of the business registration process • Liberalisation of fixed-term contracts to support temporary working • Growing emphasis on active labour market programmes e. g. “Public Works”

Current Policy Environment # 2 Labour market policy • Minimum wage increase e. g. From EUR 597. 43 to EUR 734. 15 per month in 2010 • System of tax allowance for students in particular jobs • Youth worker reintegration e. g. Second Chance Education Programme • Disability support e. g. Vocational, Rehabilitation and Employment of Disabled Persons Act and associated fund • Employment Centres

Current Policy Environment # 3 Welfare service policies • Social Work Centres e. g. Administer welfare benefits • Elderly and Disability support e. g. Homecare and Personal Services Programme, EUR 8. 4 million (2010) • Child and family benefits well designed • New Legislation e. g. Draft law on Long-Term Care and Long. Term Care Insurance ( possible market for SE) • Voucher system e. g. Voucher system for home care under development

Current Policy Environment # 4 Social inclusion policies • Ministry of Labour, Family and Social Affairs support e. g. Co-finances social protection programmes for vulnerable groups often delivered by social economy organisations • Specific Directorate of Social Affairs support e. g. National Action Plan for Social Protection and Social Inclusion • The Government office for Development and European Affairs plays a key role in development policy • Need of policy coordination among Ministries

Current Supporting Strategies and Policy Environment # 1 Supporting Constraints / Opportunities strategy Examples Umbrella bodies • Some established channels for • Chamber of Commerce, Corepresentation operative Union, Trade Unions, • Generally underdeveloped and Council for the Disabled lack recognition • Lack of networking among the social economy “families” Fiscal and Financial • Special funds and finance initiatives underdeveloped • Lack of tax breaks • Strict fiscal rules limit philanthropic activity • Some promising new activities • Companies for disabled can make profit but must reinvest 60% • National Lottery Funding • New gift-aid system (0. 5% for contributions) • Established culture of fundraising

Current Supporting Strategies and Policy Environment # 2 Supporting strategy Constraints / Opportunities Examples Business support • Orientated to medium and larger rather than small business • Focus on conventional not social entrepreneurship • Potential to refocus traditional mechanisms to social economy • JAPTI agency – one-stop shop for conventional entrepreneurs Legislative frameworks • Not major issues with legal structures • Possible developments • Co-operatives, associations, etc • Law on soc entrship Volunteering • Underdeveloped, but law now prepared for approval Capacity building • Significant issue in Slovenia • Strong potential to transfer international experience • 7, 000 volunteers per year as a result of public tender system • EUR 2 million project for social enterprise work integration activities

Key Issues and Policy Requirements Opportunity • New interest and political will could reinvigorate the social economy • Potential to deliver public services more efficiently in light on budget constraints and rising costs • Examples of excellent practice on which to build Imperative • the social economy: – – – and its value-added are not well-understood sometimes has a negative image due to its socialist past and its drivers are not well focussed and coherently supported • Requires reform, development and co-ordination of existing structures as well as capacity building and leadership

Recommendations # 1 Broad Recommendations • Ensure legal and fiscal frameworks are not overcomplicated or burdensome • Better recognise and measure the costs of activities undertaken by social enterprises and the positive externalities they generate • Ensure the institutional framework provides access to markets, particularly public procurement markets • Draft legislation specific to social enterprises • Implement a set of entrepreneurial policies consistent with distinctive features of social enterprise

Recommendations # 2 Broad Recommendations • Develop a strategy to support the social economy sector in similar ways to the SME sector • Allow the social economy to create its own representative structure • Develop a system of partnerships and co-governance to support the design and delivery of policies • Consider the introduction of a temporary quota for social economy organisations in the tender system

Recommendations # 3 Co-operatives • Deliver modernisation measures to build capacity, assist in independence and strengthen trust • Develop programme to promote new work integration cooperatives and user-based welfare services • Improve information about and access to tenders and support structures Not-for-profit organisations • Address lack of seed capital and cash flow support • Develop a programme to support NGOs to become social enterprises and encourage NGO and non-profit mergers • Support the development of an asset transfer system

Recommendations # 4 • Support the development of philanthropic foundations, such as with US-type tax breaks, etc. , with an appropriate regulatory system; • Develop programmes for strengthening volunteer involvement, and facilitate this as a transitional arrangement for work integration, ensuring that such activities are compatible with the benefits system. • Equalise the status of public and private institutes (zavods) in procurement systems such as tenders.

Recommendations # 5 Social enterprises • Improve sustainability within the tender regime • Ensure that any proposed law is well-communicated and “owned” by the social economy • Use EU funding to develop a social enterprise strategy • Develop a supporting environment through seed money, incubators, loan funds and new networks • Develop a new WISE strategy for transitional employment • Promote the development and adoption of measurement systems to show the added value of social enterprises (such as “Social Return on Investment” – or simpler tools

Recommendations # 6 Business partnership, CSR and other bodies • New incentives for philanthropy and CSR Policy Process • Pursue processes of co-governance and co-construction

• Thanks! • antonella. noya@oecd. org • www. oecd. org/cfe/leed