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The European integration project is based –in part- on an attractive and ambitious idea of “uniting” the adherent member states along involvement in the so-called “social market economy” model. Among its most vital elements (mainly, in the social security system) are such issues as, e.g. occupational pension, universal health care and unemployment insurance. These “insurances” are funded by a combination of employee contributions, those of employers as well as the governments’ subsidies.
Background
The term “social economy” generally refers to some corporate (private and public) activities that are driven by a strong social mission with economically viable business components. Scandinavian countries (and Denmark, in particular) are vivid examples of a free-market capitalist economy with a strong social welfare safety net for its citizens. Generally, the social economy organisations can include: non-profit associations, cooperatives, mutual societies, various associations and foundations, as well as nd – social enterprises.
Social market economies aim to combine free initiative and social welfare on the basis of a competitive economy. The social market economy is opposed to laissez-faire policies and to socialist economic systems and combines private enterprise with regulation and state intervention to establish fair competition, maintaining a balance between a high rate of economic growth, low inflation, as well as low levels of unemployment, good working conditions, social welfare and public services.
Note. The term “social economy” (originated in Germany) was to prevent further reference to Christian socialism, which was used in the early party agenda of the Ahlener Program in 1947. The CDU program in the British occupation zone was openly critical of the capitalist economic system. With its support for economic planning and guidance, the decartelization and nationalization of large-scale industry, and extensive codetermination rights for workers, the program constituted the clearest expression of the Christian Socialist position within the CDU, even though the term itself was avoided. The CDU put the Ahlen Program to successful use in the campaign against left-wing parties in the Landtag elections in North Rhine-Westphalia in April1947. Source: https://ghdi.ghi-dc.org/sub_document.cfm?document_id=3093
More in: = A. Müller-Armack. Soziale Marktwirtschaft – Handwörterbuch der Sozialwissenschaften, vol. 9, Göttingen, 1956, p. 249. = James C. Van Hook, Rebuilding Germany: The Creation of the Social Market Economy 1945–1957, Cambridge University Press, 2004, ISBN 0-521-83362-0, p. 185; = Gabler Wirtschaftslexikon: Soziale Marktwirtschaft; = M. E. Spicka (2007), Selling the Economic Miracle: Economic Reconstruction and Politics in West Germany, 1949–1957, Berghahn Books, ISBN 978-1-84545-223-0 p. 80.
Public opinion on social enterprises
The European Commission is working to promote social fairness, strengthen social and regional cohesion and ensure equal opportunities for all. These priorities are widely shared among European citizens.
Thus, e.g. 88 percent of citizens consider that “social Europe” is personally vital for them, 54 percent believe there will be a more social Europe by 2030, and the issues of “living standards” are seen as the most important social priority.
Source: https://commission.europa.eu/priorities-2024-2029/european-social-fairness_en
Social enterprises combine societal goals with an entrepreneurial spirit. These organisations focus on achieving wider social, environmental or community objectives. The European Commission aims to create a favourable financial, administrative and legal environment for these enterprises so that they can operate on an equal footing with other types of enterprises in the same sector.
For example, Social Business Initiative published in 2011 some “identified actions” concerning further improvements in the social enterprises activities. Thus, among main social economy figures in the EU are the following: these enterprises occupy about 8-10 percent of the EU-wide GDP; more than 11 million people are employed, which is about 4.5 percent of the active EU population.
There are the following examples of social entrepreneurship among the EU member states: about 7.5 percent of the active population in Finland, 5.7 percent in the United Kingdom, 5.4 percent in Slovenia, 4.1 percent in Belgium, 3.3 percent in Italy, and 3.1 percent in France, etc. Thus, about one out of four new enterprises are set-up every year in the EU, as well as one out of three in Finland, France and Belgium. Generally, the share of the social economy in paid employment varies between 0.6 percent to about ten among the EU-27.
Source: https://employment-social-affairs.ec.europa.eu/policies-and-activities/european-employment-strategy/social-economy-and-inclusive-entrepreneurship_en
Among other definitions is the one that describes social enterprise as an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities.
Reference and citations from: https://www.socialeconomy.eu.org/the-social-economy/
Business in social enterprise
The Commission uses the term ‘social enterprise’ to cover the following types of business:
= Those whose societal objective of the common good is the reason for the commercial activity, often in the form of a high level of social innovation.
= Those whose profits are mainly reinvested to achieve this social objective; and
= Those to which the method of organisation or the ownership system reflects the enterprise’s mission, using democratic or participatory principles or focusing on social justice.
However, there is no single legal form for social enterprises in the EU: many such enterprises operate in the form of social cooperatives, some are registered as private “limited companies”, some are “mutual”, and a lot of them are non-profit-distributing organisations, associations, voluntary organisations, charities or foundations.
Social enterprises mainly operate in the following fields: a) work integration – training and integration of people with disabilities and unemployed people; b) personal social services – health, well-being and medical care, professional training, education, health services, childcare services, services for elderly people, or aid for disadvantaged people; c) local development of disadvantaged areas – social enterprises in remote rural areas, neighbors’ development and/or rehabilitation schemes in urban areas, development aid and development cooperation with third countries; and = those in recycling, environmental protection, sports, arts, culture or historical preservation, science, research and innovation, consumer protection and amateur sports.
The already mentioned social business initiative introduced in 2011 a short-term action plan to support the development of social enterprises, as well as activate the stakeholders in social economy and social innovation’ it also aimed at exploring perspectives in this part of national growth and wellbeing.
Thus, there were depicted eleven priority measures arranged in three items: a) making it easier to obtain funding, b) establishing an exhaustive register of social enterprises in Europe, and c) simplifying the rules regarding legal recognition as a European Cooperative Society, putting forward a regulation creating a legal status for European foundations, conduct a study on the situation of mutual societies.
Source: https://single-market-economy.ec.europa.eu/sectors/proximity-and-social-economy/social-economy-eu/social-enterprises_en
Other legal sources in: https://ec.europa.eu/docsroom/documents/14583/attachments/3/translations
On social enterprises in: https://www.integrin.dk/2024/02/24/european-social-market-economy-the-concept-of-stable-growth/
Social aspects in the EU growth
The EU’s targets for employment, skills and poverty reduction to be reached by 2030 continue to drive social policy actions at the EU-wide level:
= Employment: Solid employment growth, on average over the last two years, has put the EU well on track towards its headline employment target by 2030, i.e. from 75.3% in 2023 the employment rate will have to achieve the 78% target. Recent data points to sustained progress in all EU states: five countries have already achieved or surpassed their employment targets. In many states, the employment rates of the lower qualified labor have been the largest scope for improvement, followed by those of older women (55-64) and the youth (20-29).
= Skills: The share of adults participating in learning saw only limited progress in the EU, from 37.4% in 2016 to 39.5% in 2022, remaining significantly below the 60% EU headline target. The majority of EU states lost ground in the pursuit of their national targets, which require substantial further efforts for the states to remain competitive, innovative and inclusive in the green and digital transformations and against the backdrop of population ageing.
= Poverty reduction: Decisive policy action at both the EU-wide and in the states’ level has helped reduce poverty risks, despite a challenging socio-economic context over the past three years. In 2023, the number of people at risk of poverty or social exclusion decreased by 703,000, the second consecutive year of decline, following a period of stability over 2018-21. Half of the EU states have made some progress towards their national poverty reduction targets since 2019. Still further efforts and monitoring is needed to reach the national targets and achieve at least 15 million fewer people at risk of poverty or social exclusion in the EU by 2030, compared to 2019.
Source and reference to: https://ec.europa.eu/commission/presscorner/detail/en/qanda_24_6428
Social Convergence Framework, SCF
The proposal for a 2025 Joint Employment Report maintains a strong country-specific focus based on the principles of the Social Convergence Framework (SCF), now in line with the new economic governance framework which entered into force in early 2024. Relying on existing tools (the Social Scoreboard and an agreed traffic-light methodology), the EU states’ labour market, skills and social challenges are analyzed to identify potential risks to upward social convergence that requires deeper apprehension.
The SCF’s first-stage analysis points at the following issues: a) upward convergence in the labour market; b) dealing with risks to upward convergence regarding skills, despite slight improvements at EU level; and c) analyzing risks in upward convergence regarding social outcomes, despite the slight decrease in the at-risk-of poverty or social exclusion rate.
The Commission will conduct a more detailed second-stage analysis (using a wider set of quantitative and qualitative evidence) for the countries for which potential risks to upward social convergence are identified in the first stage (Bulgaria, Estonia, Spain, Italy, Lithuania, Hungary, Romania, which were subject to the second-stage analysis also last year, as well as Greece, Croatia and Luxembourg).
In addition, the 2025 Joint Employment Report, JER for the first time measured progress towards the 2030 EU and national targets on skills. With labour and skills shortages and an ageing population, broad participation in adult learning is vital to ensure that workers keep their skills up to date. Despite this, recent figures from the Adult Education Survey, AES indicate only a mild rise in participation rates in adult learning (excluding guided on-the-job training) in the previous year: from about 37 percent in 2016 to approximately 40 percent in 2022 for the EU-27, although with wide disparities among the member states.
The proposal for a new JER will be discussed in the advisory bodies of the Council, the Employment Committee and the Social Protection Committee; afterwards, the states’ employment and social affairs ministers are supposed to adopt the report at March 2025 meeting.
More information in the following Commission’s web-sites: = Press release – The Second part of the European Semester Autumn Package addresses Socio-Economic Challenges for 2025; = 2025 European Semester Autumn package – Documents; = Autumn 2024 Economic Forecast; and = The European Semester.