Anti-spread social business

by Beatrice Credi - 2012.07.23
Anti-spread social business
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Public debt, spread, default. It is a few years since we first read and heard words like these, associated with the economic crisis. A few people, however, realized that during the latest European Council, the so-called “Save the Euro” theme timidly pushed its way overcoming a traditional scheme: grants to social businesses.

The different EU institutions are more than convinced that the winning strategy to boost growth and employment is to stake on businesses producing goods and services  with a view to collective interest objectives and high social impact.

More than 11 million European citizens are employed in this sector, accounting for 6% of the total workforce. This phenomenon is anything but unimportant if you think that among economic activities established in 2004, 1 out of 4 is a social business. Here is the scenario: in a system of advanced capitalism, integrated economies and multinational firms, what is identified as a miraculous ointment are, for instance, dairy products cooperatives whose manpower is made of people with disabilities, or charities employing people at risk of poverty or exclusion. It really looks like David against Goliath. But in this case, it is not about subverting the system, as to make it flexible.

Modifying a social and economic model on these premises will not be that easy because the EU is in crisis, and this crisis is first of all economic.  If they really aim at encouraging this type of businesses, a review of EU law traditional content will be necessary. The notion that must be developed is “highly competitive market social economy”. This means that:

1) traditional operating fields such as competition, internal market finance and innovation will have to include and manage social business as fairly as other business forms.

2) However, social businesses are often small-sized and local, and going bigger or being competitive is not always a priority for them. This is an important aspect to take into account when thinking about “micro” rather than “macro” financial needs.

3) For this reason, they need a better access to capital. It is essential, for example, that structural funds are also applied to social businesses development, and that State aid regulations are reviewed.

4) At the same time, however, given their specific characteristics and the variety of juridical forms, these activities need different financial tools than those used by other subjects.

5) It is not to be underestimated the creation of social businesses captains, which need ad hoc programmes.

6) A mind-changing is also needed in terms of benefits recognition, that for these businesses cannot be measured with purely economic criteria.

A second problem must be faced then. One must not forget, in fact, that the EU is experiencing a strong loss of legitimacy. Even in this field we come across its original sin, a burden since its creation: national sovereignty. Even for the definition of social business, each Member State has its own opinion, which leads to different approaches and policies which are difficult to harmonize. Despite obstacles,  Internal Market Commissioner Michel Barnier, introduced a “European Social Entrepreneurship Funds” label, so investors can easily collect specialized private funds, and a “passport” to allow financial operators to collect capital in the different EU countries, overcoming national burocracy restrictions.

Europe is facing challenges that require solutions able to conciliate economic and social well-being. Promoting this type of entrepreneurship, especially in today’s difficult climate, means to exploit the potential of both aspects. The EU proves that it is heading towards a model of intelligent, inclusive and sustainable growth, but in the light of what has been said before, will it be up to?