THE EUROPEAN SOCIAL ECONOMY: CONCEPT AND DIMENSIONS OF THE THIRD SECTOR

Authors

  • José Luis Monzon,

    1. University of Valencia, Spain
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  • Rafael Chaves

    1. University of Valencia, Spain
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    • *

      This work is largely based on a study which the European Economic and Social Committee commissioned in order to take stock of the Social Economy in the 25 member states of the European Union. The authors are very grateful to a number of persons and institutions, but especially to D. Demoustier, L. Frobel and R. Spear, members of the expert committee of the study. Thanks to Mrs Georgina Harding for her translation into English.


  • **

    Résumé en fin d'article; Zusammenfassung am Ende des Artikels; resumen al final del artículo.

Abstract

ABSTRACT**: In recent years a new context has emerged in Europe characterized by a larger growing Europe, the creation of a new European platform for social economy named ‘Social Economy Europe’ and an improvement in research, networks and initiatives in this area from certain European Institutions such as the European Social and Economic Committee.

This paper focuses on recurrent, but needing clarification, topics such as the question of definitions, the national recognition of the concept of Social Economy and the size of this European third sector. It begins with a proposition of a conceptual delimitation of the Social Economy and of the different classes of company and organization that belong to it. Second, it identifies the different agents which, irrespective of their legal form, are part of the Social Economy in each of the member states of the European Union and to compare the different national definitions that are related to the Social Economy concept. Finally, it provides quantitative data on the European Social Economy.

1 Introduction

Although the Social Economy was relatively prominent in Europe during the first third of the 20th century,1 the growth model in Western Europe during the 1945–1975 period mainly featured the traditional private capitalist sector and the public sector (Tomás-Carpi 1997). This model was the basis of the Welfare State, which faced up to the known market failures and deployed a package of policies that proved highly effective for correcting them: income redistribution, resource allocation and anticyclical policies. All of these were based on the Keynesian model, in which the great social and economic actors are the employers' federations and trades unions, together with the public authorities.

The consolidation of mixed economy systems did not prevent the development of a notable array of companies and organizations – co-operatives, mutual societies and associations – that helped to solve socially important and general interest issues concerning cyclical unemployment, imbalances between geographical areas and in the rural world and the skewing of power between retail distribution organizations and consumers, among others. However, during this period the Social Economy practically disappeared as a significant force in the process of harmonizing economic growth with social welfare, where the State occupied almost the entire stage.

In Central and Eastern European countries, linked to the Soviet system and with centrally-planned economies, the State was the only figure of economic activity, leaving no space for the Social Economy agents to act. Co-operatives alone had a considerable presence in some Soviet bloc countries, although some of their traditional principles such as voluntary and open membership and democratic organization were totally annihilated.

It was not until the crisis of the Welfare State and the mixed economy systems in the last quarter of the 20th century that some European countries saw a reawakening of interest in the typical organizations of the Social Economy. This interest sprang from the difficulties that the market economies were encountering in finding satisfactory solutions to such major problems as massive long-term unemployment, social exclusion, welfare in the rural world and in run-down urban areas, health, education, the quality of life of pensioners, sustainable growth and other issues. These are social needs that are not being sufficiently or adequately supplied either by private capitalist agents or by the public sector and for which no easy solution is to be found through market self-adjustment mechanisms or traditional macroeconomic policies.

In this recent period, although a series of demutualizations of major co-operatives and mutual societies has taken place in some European countries, the business sector of the Social Economy (co-operatives and mutual societies) has experienced substantial growth overall. Major studies have highlighted the considerable growth of the Social Economy as a whole in Europe. One of the most significant of these, carried out by CIRIEC for the European Commission within the framework of the ‘Third System and Employment’ Pilot Scheme (CIRIEC 2000), highlights the increasing importance of co-operatives, mutual societies and associations for creating and maintaining employment.

Spectacular growth in the Social Economy has taken place in the field of organizations engaged in producing what are known as social or merit goods, mainly work and social integration and providing social services and community care. In this field, associationism and cooperativism seem to have reencountered a common path of understanding and co-working in many of their projects and activities, as in the case of social enterprises, many of them co-operatives, which are already legally recognized in various European countries such as Italy, Portugal, France, Belgium, Spain, Poland, Finland and the UK (CECOOP 2006).

After the soviet bloc crumbled, many co-operatives in Eastern and Central Europe collapsed. Furthermore, they were severely discredited in the eyes of the public. Lately, however, a revival of citizens' initiatives to develop Social Economy projects has been taking place and is being reflected by proposals for legislation to boost the organizations in this sector.

Nowadays, the ‘families’ of the European Social Economy have a strong presence in Europe: In the EU-25, over 240,000 co-operatives were economically active in 2005 and have 143 million members (Cooperatives Europe 2006). They are well-established in every area of economic activity and are particularly prominent in agriculture, financial intermediation, retailing and housing and as workers' co-operatives in the industrial, building and service sectors. Health and social welfare mutuals provide assistance and cover to over 120 million people. Insurance mutuals have a 23.7% market share (see Association des coopératives et mutuelles d'assurance). In 2005, associations accounted for over 4% of GDP and a membership of 50% of the citizens of the European Union (Jeantet 2006). In the year 2000 the EU-15 had over 75,000 foundations, which have seen strong growth since 1980 in the 25 member states, including the recent EU members in Central and Eastern Europe (Richardson 2003).

In recent decades the Social Economy has not only asserted its ability to make an effective contribution to solving the new social problems, it has also strengthened its position as a necessary institution for stable and sustainable economic growth, fairer income and wealth distribution, matching services to needs, increasing the value of economic activities serving social needs, correcting labour market imbalances and, in short, deepening and strengthening economic democracy. The Social Economy has positioned itself in European society as a pole of social utility between the capitalist sector and the public sector. It is certainly composed of a great plurality of actors. Old and new social needs all constitute the sphere of action of the Social Economy. These needs can be met by the persons affected through a business operating on the market, where almost all the co-operatives and mutual societies obtain the majority of their resources, or by associations and foundations, almost all of which supply non-market services to individuals, households or families and usually obtain most of their resources from donations, membership fees, subsidies, etc.

This plural Social Economy which is asserting and consolidating its part in a plural society does not signify a hotchpotch with no identity or interpretative value. On the contrary, the shared core identity of the Social Economy is fortified by a large and diverse group of free and voluntary microeconomic entities created by civil society to meet and solve the needs of individuals, households and families rather than to remunerate or provide cover for investors or capitalist companies, in other words, by not-for-profit organizations. Over the past 200 years, this varied spectrum (market and non-market, of mutual interest or of general interest) has shaped the Third Sector, as identified here through the Social Economy approach.

The aim of this paper is to study topics which are recurrent but require clarification: the question of definitions, the national recognition of the concept of Social Economy and the dimensions of this European third sector. It begins by proposing a conceptual delimitation of the Social Economy and of the different classes of company and organization that belong to it. It then identifies the different agents which, irrespective of their legal form, form part of the Social Economy in each of the member states of the European Union and compares the different national definitions that are related to the Social Economy concept. Finally, it provides quantitative data on the European Social Economy.

2 Identification and institutional recognition of the Social Economy in Europe

Identification of the Social Economy as it is known today began in France in the late 1970s, when the organizations representing the cooperatives, mutual societies and associations created the National Liaison Committee for Mutual, Cooperative and Associative Activities (CNLAMCA)2 after a long period in which the term ‘Social Economy’ had fallen out of everyday use, even among the ‘families’ in this sector of economic activity.3 This new vision of the notion of the Social Economy progressively spread during the eighties to other Latin countries in Europe, such as Belgium, Portugal and Spain, and to the European institutions (Demoustier 2006). European conferences of co-operatives, mutual societies and associations were held under the auspices of the European Economic and Social Committee in 1977 and 1979 (EESC 1986). Coinciding with its 10th anniversary, in June 1980 the CNLAMCA published a document, the Charte de l'économie sociale or Social Economy Charter, which defines the Social Economy as the set of organizations that do not belong to the public sector, operate democratically with the members having equal rights and duties and practise a particular regime of ownership and distribution of profits, employing the surpluses to expand the organization and improve its services to its members and to society (Monzón 1987).

These defining features have been widely disseminated in the economics literature and outline a Social Economy sphere that hinges on three main families, co-operatives, mutual societies and associations, which have recently been joined by foundations. In Belgium, the 1990 report of the Walloon Social Economy Council (CWES)4 saw the Social Economy sector as being the part of the economy that is made up of private organizations that share four characteristic features: ‘a) the objective is to serve members or the community, not to make a profit; b) autonomous management; c) a democratic decision-making process; and d) the pre-eminence of individuals and labour over capital in the distribution of income’.

The most recent conceptual delimitation of the Social Economy, by its own organizations, is that of the Charter of Principles of the Social Economy promoted by the European Standing Conference on Co-operatives, Mutual Societies, Associations and Foundations (CEP-CMAF),5 the EU-level representative institution for these four families of Social Economy organizations, which has recently changed its name to Social Economy Europe. The principles in question are:

  • • The primacy of the individual and the social objective over capital
  • • Voluntary and open membership
  • • Democratic control by membership (does not concern foundations as they have no members)
  • • The combination of the interests of members/users and/or the general interest
  • • The defence and application of the principle of solidarity and responsibility
  • • Autonomous management and independence from public authorities
  • • Most of the surpluses are used in pursuit of sustainable development objectives, services of interest to members or the general interest.

The rise of the Social Economy has also been recognized in political and legal circles, both national and European. France was the first country to award political and legal recognition to the modern concept of the Social Economy, through the December 1981 decree that created the Inter-Ministerial Delegation to the Social Economy (Délégation interministérielle à l'Économie Sociale – DIES). In other European countries, such as Spain, ‘Social Economy’ is a term that has entered the statute book. At European level, in 1989 the European Commission published a Communication entitled ‘Businesses in the “Economie Sociale” sector: Europe's frontier-free market’. In that same year the Commission sponsored the 1st European Social Economy Conference (Paris) and created a Social Economy Unit within DG XXIII Enterprise Policy, Distributive Trades, Tourism and the Social Economy.6 In 1990, 1992, 1993 and 1995 the Commission promoted European Social Economy Conferences in Rome, Lisbon, Brussels and Seville. In 1997, the Luxemburg summit recognized the role of Social Economy companies in local development and job creation and launched the ‘Third System and Employment’ pilot action, taking the field of the Social Economy as its area of reference.7

In the European Parliament too, the European Parliament Social Economy Intergroup has been in operation since 1990. In 2006 the European Parliament called on the Commission ‘to respect the Social Economy and to present a communication on this cornerstone of the European social model’.8

The European Economic and Social Committee (EESC), for its part, has published numerous reports and opinions on the Social Economy companies' contribution to achieving different public policy objectives.

3 A definition of the Social Economy that fits in with the national accounts systems

A reason for the institutional invisibility of the Social Economy is the lack of a clear, rigorous definition of the concept and scope of the Social Economy that could usefully be employed by the national accounts systems. The national accounts systems perform a very important function in providing periodic, accurate information on economic activity, as well as in working towards terminological and conceptual harmonization in economic matters to enable consistent, meaningful international comparisons to be drawn. Recently, the European Commission has developed a Manual for drawing up the Satellite Accounts of Companies in the Social Economy (co-operatives and mutual societies)9 which will make it possible to obtain consistent, accurate and reliable data on a very significant part of the Social Economy, made up of co-operatives, mutual societies and other similar companies.

As the Social Economy company satellite accounts Manual says, the methods used by today's national accounts systems, rooted in the mid 20th century, have developed tools for collecting the major national economic aggregates in a mixed economy context with a strong private capitalist sector and a complementary and frequently interventionist public sector. Logically, in a national accounts system which revolves around a bipolar institutional reality there is little room for a third pole which is neither public nor capitalist, while the latter can be identified with practically the entirety of the private sector. This has been one important factor explaining the institutional invisibility of the Social Economy in present-day societies and, as the Commission's Manual recognizes, it lies at odds with the increasing importance of the organizations that form part of the Social Economy.

Such a definition needs to disregard legal and administrative criteria and to centre on analysing the behaviour of SE actors, identifying the resemblances and differences between them and between these and other economic agents. At the same time, it needs to combine the traditional principles and characteristic values of the Social Economy and the methodology of the national accounts systems in force into a single concept that constitutes an operative definition and enjoys wide political and scientific consensus, allowing the main aggregates of the entities in the Social Economy to be quantified and made visible in a homogeneous and internationally harmonized form.

The working definition of the Social Economy is the following:

The set of private, formally-organized enterprises, with autonomy of decision and freedom of membership, created to meet their members' needs through the market by producing goods and providing services, insurance and finance, where decision-making and any distribution of profits or surpluses among the members are not directly linked to the capital or fees contributed by each member, each of whom has one vote. The Social Economy also includes private, formally-organized organizations with autonomy of decision and freedom of membership that produce non-market services for households and whose surpluses, if any, cannot be appropriated by the economic agents that create, control or finance them.10

This definition is absolutely consistent with the conceptual delimitation of the Social Economy reflected in the CEP-CMAF's Charter of Principles of the Social Economy. In national accounts terms, it comprises two major sub-sectors of the Social Economy:

  • a) the market or business sub-sector11 and
  • b) the non-market-producer sub-sector.

This classification is very useful for drawing up reliable statistics and analysing economic activities, in accordance with the national accounting systems currently in force. Nonetheless, from a socio-economic point of view there is obviously a permeability between the two sub-sectors and close ties between market and non-markest in the Social Economy, as a result of a characteristic that all Social Economy organizations share: they are organizations of people who conduct an activity with the main purpose of meeting the needs of persons rather than remunerating capitalist investors.

According to the above definition, the shared features of these two sub-sectors of the Social Economy are:

  • 1) They are private, in other words, they are not part of or controlled by the public sector;
  • 2) They are formally-organized, that is to say that they usually have legal identity;
  • 3) They have autonomy of decision, meaning that they have full capacity to choose and dismiss their governing bodies and to control and organize all their activities;
  • 4) They have freedom of membership, in other words, it is not obligatory to join them;
  • 5) Any distribution of profits or surpluses among the user members, should it arise, is not proportional to the capital or to the fees contributed by the members but to their activities or transactions with the organization.
  • 6) They pursue an economic activity in its own right, to meet the needs of persons, households or families. For this reason, Social Economy organizations are said to be organizations of people, not of capital. They work with capital and other non-monetary resources, but not for capital.
  • 7) They are democratic organizations. Except for some voluntary organizations that provide non-market services to households, Social Economy primary level or first-tier organizations apply the principle of ‘one person, one vote’ in their decision-making processes, irrespective of the capital or fees contributed by the members. Organizations at other levels are also organized democratically. The members have majority or exclusive control of the decision-making power in the organization.

A very important feature of Social Economy organizations that is deeply rooted in their history is democratic control, with equal voting rights (‘one person, one vote’) in the decision-making process. Indeed, in the previously-mentioned Satellite Accounts Manual for companies in the Social Economy that are market producers (classed in the S.11 and S.12 institutional sectors of the National Accounts) the democratic criterion is considered essential for a company to be considered part of the Social Economy, as the social utility of these companies is not usually based on their economic activity, which is an instrument to a non-profit end, but on their purpose and on the democratic and participative values that they bring to the running of the company.

However, the working definition of the Social Economy established in this Work also accepts the inclusion of voluntary non-profit organizations that are producers of non-market services for households, even if they do not possess a democratic structure, as this allows very prominent social action Third Sector organizations that produce social or merit goods of unquestionable social utility to be included in the Social Economy.

3.1 The market or business sub-sector of the Social Economy

The market sub-sector of the Social Economy is made up, in essence, of co-operatives and mutual societies, business groups controlled by co-operatives, mutual societies and other Social Economy organizations, other similar companies and certain non-profit institutions serving SE companies.

As well as all the features shared by all Social Economy entities, the working definition in above emphasizes three essential characteristics of Social Economy companies:

  • a) They are created to meet their members' needs through applying the principle of self-help, i.e. they are companies in which the members and the users of the activity in question are usually one and the same.
  • b) SE companies are market producers, which means that their output is mainly intended for sale on the market at economically significant prices. The ESA 95 considers co-operatives, mutual societies, holding companies, other similar companies and non-profit institutions serving them to be market producers.
  • c) While they may distribute profits or surpluses among their user members, this is not proportional to the capital or to the fees contributed by the members but in accordance with the member's transactions with the organization.

The fact that they may distribute profits or surpluses to their members does not mean that they always do so. There are many cases in which co-operatives and mutual societies make it a rule or custom not to distribute surpluses to their members. Here the point is only to emphasize that the principle of not distributing surpluses to members is not an essential trait of Social Economy companies.

Although democratic organization is a shared feature of all SE organizations, certain non-profit voluntary organizations that provide non-market services to families may be part of the Social Economy despite not possessing a democratic structure, as will be seen further on. For a company to be considered part of the Social Economy, however, the democratic criterion is considered essential.

Accordingly, the different groups or families of agents in the market or business sub-sector of the Social Economy are as follows:

  • A. Co-operatives
  • B. Mutual societies
  • C. Social Economy business groups
  • D. Other Social Economy companies
  • E. Non-profit institutions serving Social Economy entities

3.2 The non-market sub-sector of the Social Economy

The great majority of this sub-sector is composed of associations and foundations, although organizations with other legal forms may also be found. It is made up of all the Social Economy organizations that the national accounts criteria consider non-market producers, i.e. those that supply the majority of their output free of charge or at prices that are not economically significant.

As mentioned in above, they are private, formally-organized entities with autonomy of decision and freedom of membership that produce non-market services for families and whose surpluses, if any, cannot be appropriated by the economic agents that create, control or finance them. In other words, these are non-profit organizations in the strict sense of the term, since they apply the principle of non-distribution of profits or surpluses (the non-distribution constraint), and as in all Social Economy entities, individuals are the true beneficiaries of the services they produce.

The national accounts have a specific institutional sector, S.15, called ‘non-profit institutions serving households’ (NPISH), to differentiate them from other sectors. The ESA 95 defines this sector as consisting of non-profit institutions which are separate legal entities, which serve households and which are private other non-market producers. Their principal resources, apart from those derived from occasional sales, come from voluntary contributions in cash or in kind from households in their capacity as consumers, from payments made by general governments and from property income (ESA 95, 2.87).

The NPISH sector includes a variety of organizations, mostly associations, that perform non-market activities for their members (entities of a mutualist nature) or for groups of non-member citizens (general interest entities). Most of these entities operate democratically and possess the characteristic features of the Social Economy. They include charities, relief and aid organizations, trades unions, professional or learned societies, consumers' associations, political parties, churches or religious societies and social, cultural, recreational and sports clubs.

Certain voluntary non-profit organizations that are producers of non-market services for households are included in the Social Economy under the name of social action Third Sector despite not possessing a democratic structure, because the services they provide free of charge are social or merit goods of unquestionable social utility.

NPISH that do not possess legal personality or are not very large, which the ESA 95 places in the Household sector, S.14 (ESA 95, 2.76), also form part of the Social Economy.

Lastly, there may be other private, non-profit institutions (NPI), funded by non-financial corporations or financial corporations, that produce cultural, recreational, social etc. services which they supply free of charge to individuals. Although the 1995 ESA conventionally considers these to be serving the non-financial or financial corporations in question and therefore includes them in the respective (market) institutional sectors (ESA 95, 2.23 and 2.40), always providing that they meet the requirements set out in the definition they form part of the non-market sub-sector of the Social Economy.

NPISH that are market producers engaged in producing non-financial market goods and services, financial intermediation, or auxiliary financial activities are excluded from this group, as are business associations funded by voluntary parafiscal fees paid by non-financial or financial corporations in return for the services they provide.

4 National acceptance of the concept of the Social Economy in Europe

As explained before, despite the efforts of academics, governments and movements a definition of the third sector as ‘Social Economy’ is far from being widely agreed, accepted and used in Europe. Moreover, for most of the new European Union member states it is a concept which is very new and not yet clear. The purpose of this section is to shed light on the diversity of concepts and terms to refer to this reality that exists in Europe, assessing the level of recognition of the Social Economy in three important spheres, namely the public administration, the academic and scientific world and the Social Economy sector itself in each country, and to identify and assess other similar concepts. The present article adopts the methodology used in The enterprises and organizations of the third system. A strategic challenge for employment (Vivet and Thiry in CIRIEC 2000), which assimilated the third system into the Social Economy.

The gathering of information from primary sources was based on the semi-open question targeted at correspondents who were all privileged witnesses with expert knowledge of the concept of Social Economy and similar ones and of the reality of this sector in their countries. The questionnaire contained semi-closed questions concerning the Social Economy and similar notions in the different countries of the Union. The correspondents are university researchers, professionals from the federative and representative structures of the sector in the countries and top officials from the national public administrations with powers in the field of the Social Economy. The degree of recognition has been divided into three relative levels across the different countries: (*) when there is scant or no acceptance of this concept; (**) when there is a medium level of acceptance; and (***) when there is a high level, denoting in this latter case an institutionalized acceptance of the concept of the Social Economy in the country in question.

The results appear in Tables 1 and 2, relating respectively to the level of recognition of the concept of Social Economy (and the term); to the recognition of similar concepts (‘Social Enterprises’, ‘Non-profit sector’ and ‘Third sector’) and, finally, to the recognition of other concepts.

Table 1 –.  National acceptance of the concept of ‘Social Economy’
CountryBy public authoritiesBy Social Economy companiesBy academic/scientific world
  1. Note: Questionnaire question: Could you tell us whether the concept of ‘Social Economy’ is recognized in your country?

Belgium*******
France********
Ireland*******
Italy*******
Portugal*********
Spain*********
Sweden*******
Austria*****
Denmark*****
Finland******
Germany****
Greece******
Luxembourg******
Netherlands***
United Kingdom****
New Member States
Cyprus******
Czech Republic****
Estonia****
Hungary***
Latvia******
Lithuania****
Malta*******
Poland******
Slovakian/an/an/a
Slovenia*****
Table 2 –.  National acceptance of other recognized concepts related to the ‘Social Economy’
CountrySocial enterprisesNon-profit SectorThird Sector
  1. Note: Questionnaire question: Which other concepts related to ‘Social Economy’ enjoy scientific, political or social recognition in your country?

Belgium*******
France*****
Ireland******
Italy******
Portugal*******
Spain****
Sweden*******
Austria******
Denmark******
Finland********
Germany******
Greece*****
Luxembourg***
Netherlands*******
United Kingdom********
New member states
Czech Republic******
Estonia*****
Hungary****
Latvia*****n/a
Lithuania*****
Malta******
Poland*****
Slovenia****

Even assuming the existence of markedly different, hardly comparable, national realities and theoretical ideas for the same term, ‘Social Economy’, three groups of countries have been identified from the data obtained in the field work, using the level of recognition and acceptance of the concept of Social Economy (see Table 1).

Countries in which the concept of the Social Economy is widely accepted: in France, Italy, Portugal, Spain, Belgium, Ireland and Sweden, the concept of Social Economy enjoys greater recognition by the public administrations and by the academic and scientific world, as well as the Social Economy sector itself in these countries. The first four (all of them Latin countries) stand out, especially France, the birthplace of this concept.

In some of these countries the representative associations have surpassed the sector level and created intersectorial organizations that explicitly refer to the Social Economy. Examples of these are CEPES, the Spanish Business Confederation of the Social Economy; its counterpart in France, CEGES, the Council of Social Economy Companies and Institutions; in Belgium the Flemish VOSEC and the Walloon CONCERTES organizations; the Social Economy Platform in Luxembourg and the Social Economy Standing Conference in Poland.

In addition, most of these countries have a high-level body within the national government with explicit, acknowledged responsibility for matters relating to the Social Economy and a name that includes the designation (brand name) of this social sector, as in the following exemples: Secretary of State for Sustainable Development and the Social Economy in Belgium, Directorate-General for the Social Economy, the self-employed and the European social fund, one in the Ministry of Labour and Social Affairs and one in the Ministry of Agriculture of Spain (these bodies are repeated in most of the regional governments), Interministerial delegation for innovation, social experimentation and the Social Economy of the Ministry of employment, social cohesion and housing of France (also in regional councils and at municipal or district level), Social Economy Unit of the Irish Government, Agency for Socially Responsible Non-Profit Organizations and Directorate general for co-operative entities, Ministry of economic development of Italy, Instituto António Sérgio do Sector Cooperativo (INSCOOP) of Portugal and Social Enterprise Unit, previously within the DTI, now within the Cabinet Office, and Charity and Third Sector Finance Unit within HM Treasury of the UK.

Countries in which the concept of the Social Economy enjoys a medium level of acceptance: these are Cyprus, Denmark, Finland, Greece, Luxembourg, Latvia, Malta, Poland and the UK. In these countries the concept of the Social Economy coexists alongside other concepts such as the Non-profit sector, the Voluntary sector and Social Enterprises or Social Firms. In the UK, the low level of awareness of the Social Economy contrasts with the Government's policy of support for social enterprises. In Poland it is quite a new concept but has become popular in these spheres, fostered particularly by the structuring effect of the European Union.

Countries with scant or no recognition of the concept of the Social Economy: the concept of the Social Economy is little known, incipient or unknown in a group of countries composed of Austria, the Czech Republic, Estonia, Germany, Hungary, Lithuania, the Netherlands and Slovenia, a group which mainly comprises Germanic countries and those which joined the European Union in the latest enlargement. The related terms Non-Profit Sector, Voluntary Sector and Non-Governmental Organizations sector enjoy a greater level of relative recognition.

In addition to the concepts of the Social Economy, Non-profit Sector, Social Enterprises and Third Sector, other widely accepted notions coexist in several countries of the Union. In countries such as the UK, Denmark, Malta and Slovenia, the concepts of Voluntary Sector and Non-Governmental Organizations, more closely related to the idea of Non-profit Organizations, would appear to enjoy wide scientific, social and political recognition. Confined to the French-speaking European countries (France, the Walloon Region of Belgium, and Luxembourg) the concepts Solidarity economy and Social and Solidarity economy are also recognized, while the notion of Gemeinwirtschaft (General Interest Economy) is known in Germanic countries such as Germany and Austria.

It is important to point out that in several countries certain components of the term Social Economy are not recognized as being integral parts of the Social Economy in the wide sense; on the contrary, they are said to be idiosyncratic and isolated cases. This is the case of cooperatives in countries such as Germany, UK, Latvia and partly in Portugal.

It is not easy to find countries where the wide sense of the Social Economy is clearly rooted. The norm, wherever the term is accepted, is to find it biased either towards the market-enterprises of the Social Economy (which is the case in Spain) or towards the non-market organizations of the Social Economy (the idea of Non-Profit Sector – Voluntary Sector)

5 The national components of the Social Economy

The next undertaking is to identify the institutional forms that make up the field of the Social Economy or the related term which each country deems most recognized. The result of the study, having consulted the national expert correspondents, is shown in Table 3.

Table 3 –.  The components of the ‘Social Economy’
CountryCooperativeMutualAssociationFoundationOthers
  1. Note: Questionnaire question: Which of the following institutional forms do you consider to belong to the field of the ‘Social Economy’ in your country or, if applicable, to a related concept that you consider more widely accepted?

  2. X1: Comités d'entreprises (work councils); Organizations paritaires sans adhésion obligatoire (non compulsory organizations with worker's participation); Entreprises d'insertion

  3. X2: Social enterprises

  4. X3: Volunteering Organizations; Community Foundations; Non-Governmental Organizations; IPAB: Istituzioni di Pubblica Assistenza e Beneficenza

  5. X4: Misericordias; IPSS (Instituições Particulares de Solidariedade Social);

  6. X5: Sociedades Laborales, Empresas de Inserción, Centros Especiales de Empleo, specific groups such as ONCE, Sociedades Agrarias de Transformación

  7. X6: Quangos; Social enterprises

  8. X7: Hybrid forms between the conventional CMAF and private firms or public or professional organizations or local authorities (e.g. Development Agencies, ‘popular companies’)

  9. X8: Association of Common Benefits;

  10. X9: Non profit companies

  11. X10: Credit Unions / Social Enterprises

  12. X11: Centres for Social Integration

  13. X12: Public and Private institutions;

BelgiumXXXn/a 
FranceXXXXX1
IrelandXn/an/an/aX2
ItalyXXXXX3
PortugalXXXXX4
SpainXXXXX5
SwedenXXXX 
AustriaXXXXX2
DenmarkXXXXX2
FinlandXn/an/an/aX2
GermanyXXXXX6
GreeceXXXXX7
LuxembourgXXXX 
NetherlandsXXXX 
United KingdomXXXX 
New member states
CyprusXn/an/an/a 
Czech RepublicX- -n/an/aX8
EstoniaXn/aXX 
HungaryX- -n/aXX9
LatviaXn/aXX 
LithuaniaX- -n/an/aX10
MaltaXn/aXX 
PolandXn/aXXX11
SloveniaXXXXX12

Three main conclusions may be drawn by way of a summary. The first and basic one is that the components vary significantly from one country to another and there are genuine national forms which the experts consider integral to the Social Economy in their countries (see X1, X2, etc.). In some countries, such as Italy and Spain, there are divergent concepts of the scope of the Social Economy: a business concept of the Social Economy that sees it as consisting mainly of the co-operatives coexists with a non-market concept that sees it as largely comprising associations, social co-operatives and other non-profit organizations.

A second conclusion to be drawn is that the well-known notion of the Social Economy, the one that brings together Cooperatives, Mutuals, Associations and Foundations, is most widespread in precisely the group of countries where the concept of the Social Economy is most accepted, with the exception of Ireland.

A third conclusion is the general consensus that cooperatives are components of the Social Economy. This fact corroborates the fairly widespread belief that considers cooperatives and mutuals to be the prototype enterprises of the Social Economy. Associations, Foundations and Social Enterprises are also considered components. The explanation for the exclusion of Friendly Societies (mutuals) from the sphere of the Social Economy in the new Member States of the European Union may be found in the low level of recognition of the very concept of the Social Economy itself, together with the absence of a legal status establishing mutuals in these countries.

6 The economic dimension of the European Social Economy

A major purpose of this work is to give quantitative data for the Social Economy in the European Union, differentiating three major groups of organizations: co-operatives and similar accepted forms, mutual societies and similar forms and, finally, associations, foundations and other related non-profit forms.

The statistical information provided in this study has been drawn up from secondary data supplied by correspondents in each country. The reference period is 2002–2003. However, for reasons of availability and of the quality of statistical reporting, the information for some countries is more recent (2004–2005) while for others it goes back to 1995–1997, particularly in the case of associations, foundations and similar organizations.12 The figures sought were the number of persons employed and, where possible, the full-time equivalent, number of members, number of volunteers and number of organizations or companies. For purposes of comparability with the data of the previous study by CIRIEC (2000) on the situation of the Social Economy in the European Union, particular attention has been paid to the ‘employment’ variable.

From a macroeconomic perspective, the Social Economy in Europe is very important in both human and economic terms. It employs over 11 million people, equivalent to 6.7% of the wage-earning population of the EU. These aggregates underline the fact that this is a reality which cannot and should not be ignored by society and its institutions.

The family of associations, foundations and similar organizations (3rd column of figures), taken as a whole, is the majority component of the European Social Economy.

In view of these data, three main models can be identified.

First, a Northern European pattern, with high rates of employment in the Social Economy in relation to the wage-earning population in countries such as the Netherlands (10.7%), Ireland (10.6%), France (8.7%) and the UK (7.0%), where the main component of the third sector is largely the family of associations, foundations and similar organizations, due to particular models of welfare states.

Second, a Latin-Scandinavian European pattern, with medium rates of employment in the Social Economy in relation to the wage earning population in countries such as Italy (7.5%), Spain (5.9%), Sweden (5.0%) and Finland (8.5%), where because of the strong worker, consumer and agriculture cooperatives and active public policies towards cooperatives in these countries, the majority family is that of co-operatives and similar enterprises.

The third pattern is that of the new Eastern European members, where employment in the Social Economy accounts for 4.2% of the wage-earning population. Their cooperative branch is still relatively strong, having developed further in recent years, between their economic collapse and renewal. The other branch, composed of mutual societies, associations and foundations, is still an emerging sector, growing hand-in-hand with the development of civil society and social movements in these countries.

7 Conclusions

The main and most important trend that can be observed in the recent evolution of the Social Economy is its consolidation in European society as a pole of social utility, between the capitalist sector and the public sector, made up of a great plurality of actors: co-operatives, mutual societies, associations, foundations and other similar companies and organizations.

The citizens' associative movement is experiencing considerable growth through promoting solidarity business initiatives directed towards producing and distributing merit or social goods. Steadily greater collaboration between the associative and cooperative movements is discernable in the development of many of their projects and activities, as in the case of social enterprises. The capacity of these initiatives to solve the new social needs that have appeared in recent decades has revitalized the importance of the Social Economy.

A challenge that the Social Economy needs to address without delay is that of ending its institutional invisibility. This invisibility is explained not only by the emerging nature of the Social Economy as a new sector in the economic system but also by the lack of a conceptual identification, i.e. a clear, rigorous definition of the features that the different types of companies and organizations that make up the Social Economy share and the specific traits that enable them to be distinguished from the rest.

On this point, a gradual process of conceptual identification of the Social Economy has been discernible in recent years, drawing in both the players themselves, through their representative organizations, and scientific and political bodies. This article presents a concept of the Social Economy developed from the criteria set out in the European Commission Manual for drawing up Satellite Accounts of Companies in the Social Economy, which, in turn, concurs with the definitions formulated in the recent economics literature and by the Social Economy organizations themselves.

Conceptual identification of the Social Economy will make it possible to tackle the challenge of its identification in the legal systems of the EU and the EU member states. Although some European countries and the EU itself recognize the Social Economy as such in a number of legal texts, together with some of its constituents, progress needs to be made on statutory definition of the extent of the Social Economy and the requisites that its components must fulfil in order to prevent dilution of its identifying features and the loss of its social utility.

This study has also shown the increasing size of the Social Economy, which directly provides over 11 million jobs, accounting for 6% of total EU employment.

Current national accounting rules, drawn up at the height of mixed economy systems, do not acknowledge the Social Economy as a differentiated institutional sector, making it difficult to draw up regular, accurate and reliable economic statistics on the agents of which it is composed. Internationally, the heterogeneous criteria employed in drawing up statistics prevent comparative analyses and detract from the authority of approaches which draw attention to the evident contribution that the Social Economy makes to achieving major economic policy objectives.

The recent preparation of the European Commission's Manual for drawing up the Satellite Accounts of Companies in the Social Economy is an important step towards institutional recognition of one part of the Social Economy in the national accounts systems. The Manual explains the methodology by which reliable, harmonized statistics can be drawn up throughout the EU, within the National Accounts framework (the 1995 ESA), for five major groups of SE companies: a) co-operatives, b) mutual societies, c) SE business groups, d) other similar companies in the Social Economy and e) non-profit institutions serving SE companies.

Footnotes

  • 1

    The zenith of its institutional recognition may be considered the Paris Exhibition of 1900, which included a Social Economy pavilion. In 1903 Charles Gide wrote a report on this pavilion in which he underlined the institutional importance of the Social Economy for social progress.

  • 2

    CNLAMCA was set up on 11 June 1970. On 30 Octuber 2001 it became the present-day CEGES (Conseil des entreprises, employeurs et groupements de l'économie sociale or Council of Social Economy Companies and Institutions) (Davant 2003).

  • 3

    The first time after World War II that the expression ‘the Social Economy’ was used in a similar sense to its present meaning was in 1974, when the journal Annales de l'économie collective changed its name to Annales de l'Économie Sociale et Cooperative, as did the organization to which it belongs (CIRIEC: the International Centre of Research and Information on the Public, Social and Cooperative Economy). Justifying the change of name, Paul Lambert, the President of CIRIEC in 1974, pointed to ‘… important activities, with considerable economic repercussions, which are neither public nor cooperative: certain social security institutions, mutual societies, trades unions …’ (Annales 1974). In 1977 Henri Desroche presented a Rapport de synthèse ou quelques hypothèses pour une entreprise d'économie sociale to the CNLAMCA (Jeantet 2006).

  • 4

    Conseil Wallon de l'Économie Sociale (1990): Rapport à l'Exécutif Régional Wallon sur le secteur de l'Économie Sociale, Liège.

  • 5

    Déclaration finale commune des organizations européennes de l'Économie Sociale, CEP-CMAF, 20 juin 2002.

  • 6

    Now the Craft, Small Businesses, Co-operatives and Mutuals Unit in the Enterprise and Industry Directorate General.

  • 7

    The proposed European Constitution of some years ago also mentioned the market Social Economy, which takes its inspiration from the German Soziale Marktwirtschaft (Social Market Economy) concept coined by Franz Oppenheimer and popularised in the 1960s by Ludwig Erhard. The Soziale Marktwirtschaft lay behind the development of the German Welfare State. It proposes a balance between free market rules and social protection for individuals, as workers and citizens (Jeantet 2006). The Soziale Marktwirtschaft should not be confused with the concept of the Social Economy expounded in this article or with the market sector of the Social Economy, which is made up of co-operatives, mutual societies and other similar companies whose output is mainly intended for sale on the market.

  • 8

    Report on a European Social Model for the future (2005/2248 (INI)).

  • 9

    In 2003, the United Nations published a Handbook for drawing up consistent statistics on the Non-Profit sector, in accordance with the conceptual delimitation criteria established by the Non-Profit Organization (NPO) approach. This sector includes an important group of Social Economy entities, largely made up of associations and foundations.

  • 10

    This definition is based on the criteria established by the European Commission's Manual for drawing up the Satellite Accounts of Companies in the Social Economy and by Barea (1990), Barea and Monzón (1995) and Chaves and Monzón (2000). It concurs both with the delimiting criteria established by the Social Economy organizations themselves (CNLAMCA charter, 1980; Conseil Wallon de l'Economie Sociale, 1990; CCCMAF and ESC-CMAF, 2000 and with the definitions formulated in the economics literature, including Desroche (1983), Defourny and Monzón (1992), Vienney (1994) and Demoustier (2001, 2006).

  • 11

    The expression ‘company’ is used exclusively to designate those microeconomic organizations that have the market as their main source of resources (most co-operatives, mutual societies and other companies). ‘Company’ is not used to refer to other microeconomic organizations in the Social Economy that mainly derive their monetary resources from non-market sources such as donations, membership dues, property income or subsidies (most associations and foundations).

  • 12

    In the course of this work, serious statistical gaps have appeared in various countries, particularly but not exclusively in the new EU members. The gaps have been remedied, where possible, on the basis of the information available from other studies, mainly that of CIRIEC-International (2000), the Johns Hopkins international project (several years), the Cooperatives Europe organization's study (2006) and studies by other sector organizations. Given the method employed, particularly as regards the difficulties of comparing certain variables internationally, the questionable reliability of the data for certain countries, the risks of double accounting among ‘families’ within a single country and the different years to which they refer, linked in the latter case to the availability or otherwise of data, this statistical information should be treated with caution.

L' Economie sociale européenne : concept et dimensions du Tiers Secteur

Au cours des dernières années, un nouveau contexte a émergé qui se caractérise par une Europe beaucoup plus grande, la création d'une nouvelle plateforme pour l'économie sociale au nom de Social Economy Europe et par de nouveaux développements dans la recherche, l'articulation de réseaux et des initiatives dans le domaine de l'Economie sociale supportées par certaines institutions européennes comme le Comitééconomique et social européen. Cet article traite de problèmes récurrents mais nécessitant une réponse scientifique tels que les questions de définition, de la reconnaissance du concept au plan national et les dimensions de ce tiers secteur européen. Il propose pour commencer une délimitation conceptuelle de l'économie sociale et des diverses formes d'entreprises et organizations qui la composent. Il identifie ensuite les différents agents qui indépendemment de leur forme juridique, font partie de l'économie sociale dans chacun des Etats membres. Enfin l'article offre des données chiffrées sur l'économie sociale européenne.

Die europäische Sozialwirtschaft: Konzept und Dimensionen des Dritten Sektors

In den letzten Jahren hat sich in Europa ein neuer Kontext herausgebildet, der charakterisiert wird durch das starke Anwachsen Europas, die Schaffung einer neuen europäischen Plattform für Sozialwirtschaft mit der Bezeichnung, Social Economy Europe“ sowie eine Verbesserung der diesbezüglichen Forschungen, Netzwerke und Initiativen bestimmter europäischer Institutionen wie des Europäischen Wirtschafts- und Sozialausschusses.

Der Beitrag fokussiert auf immer wiederkehrende, aber gleichwohl der Klärung bedürftige Themen wie die Frage der Definitionen, der nationalen Anerkennung des Konzepts der Sozialwirtschaft und der Dimensionen dieses europäischen Dritten Sektors. Er beginnt mit einem Vorschlag für die begriffliche Abgrenzung der Sozialwirtschaft und der verschiedenen Gesellschafts- und Organisationsformen, die zu ihr gehören. Zweitens werden die verschiedenen Agenten identifiziert, die, unabhängig von ihrer Rechtsform, Teil der Sozialwirtschaft in jedem der Mitgliedstaaten der Europäischen Union sind, und es werden die verschiedenen nationalen Definitionen verglichen, die sich auf das Sozialwirtschaftskonzept beziehen. Schließlich werden quantitative Daten über die europäische Sozialwirtschaft bereitgestellt.

La Economía Social europea : concepto y dimensiones del Tercer Sector

En los últimos años ha emergido un nuevo contexto caracterizado por una Europa mucho más grande, la creación de una nueva plataforma europea para la economía social denominada Social Economy Europe y por nuevos desarrollos en la investigación, la articulación de redes y de iniciativas en materia de economía social auspiciadas por ciertas instituciones europeas como el comité social y económico europeo.

El presente artículo aborda problemas recurrentes, pero necesitados de respuesta científica, como son la cuestión de la definición, del reconocimiento nacional del concepto de la economía social y las dimensiones de este tercer sector europeo. Inicia proponiendo una delimitación conceptual de la economía social basada en el consenso científico y social. En segundo lugar identifica los diversos agentes que, independientes de su forma legal, son componentes de la economía social en cada uno de los Estados miembros. Finalmente, proporciona datos cuantitativos de la economía social europea.

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