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What is Social Economy?

Social Economy in Spain is configured by the passing of Law 5/2011 of 29 March on Social Economy, an unprecedented point of inflection in the acknowledgement, visibility and development of the Sector both at national level and in the European Union. More recently, Law 31/2015 of 9 September amends and updates regulations in matters of self-employment and adopts measures to foster and promote self-employment and the Social Economy, completing the legal framework by establishing measures to develop and foster Spanish social economy.

The Law defines Social Economy as a set of business and economic activities that are carried out, within the private sphere, by institutions that seek a general economic or social interest (or both) in accordance with the following principles.

The principles that guide Social Economy in Spain are:

- Persons and the social objective take precedence over capital. This is reflected in an autonomous and transparent, democratic and participatory business management, where decision-making prioritizes people and their contribution to the work and services offered by the institution or the social objective over their contribution to equity capital.

- Profits obtained from economic activity are mainly distributed based on the work contributed or the service or activity carried out by the partners or members in regard to the social objective of the institution.

- Fostering internal and social solidarity, promoting a commitment with local development, equal opportunities for men and women, social cohesion, the integration of persons at risk of exclusion, generating stable and quality employment, work-life balance and sustainability.

- Independence from the public authorities.

The following institutions form part of this diverse set of enterprises that is Social Economy, as defined by the Law:

Co-operatives: Co-operatives are a form of business organisation based on a democratic structure and functioning. Their activity follows co-operative principles which are accepted and regulated at regional, national and international level: open and voluntary membership, democratic management, economic participation of its members, education, training and information and an interest for the community.

Employee-owned Companies: Employee-owned companies have proven to have great potential in generating undertakings. In this type of company, equity capital belongs, for the most part, to the workers. The fact that the workers are partners fosters self-motivation when approaching each project. The minimum number of people required is three and the procedures to establish an employee-owned company are similar to any other public limited company.

Mutual Societies: These are non-profit enterprises of people with democratic structure and management carrying out voluntary insurance activities that are complementary to the Social Security provision system.

Special Employment Centres: These are enterprises in which economic feasibility and participation in the market coexist with a social commitment to collectives with fewer opportunities in the job market. Their staff comprises the largest possible number of persons with a disability (in a proportion that cannot be below 70% of the total staff.) Their production and competitive ability allows them to introduce their products in the market.

Social Integration Enterprises: These are defined as “learning company structures that aim to enable access to employment for disadvantaged collectives by carrying out a productive activity. To this end, an integration process is designed, during which a conventional employment relationship is established.” A percentage of their staff must be workers in integration (the proportion oscillates between 30% and 60% depending on the region.) 80% of turnover is reinvested in the company.

Fishermen’s Guilds: these are public law sectoral non-profit enterprises representing the economic interests of the shipowners of fishing vessels and the workers in the extractive industry. They act as consultative and collaboration bodies for the administrations with competences in sea fisheries and the regulation of the fisheries industry, and aim to satisfy the needs and interests of their members with a commitment to contributing to local development, social cohesion and sustainability.

Associations linked to the disability movement and the integration of persons at risk of exclusion. The main characteristic of this associative movement is that it provides services where the offer of the for-profit sector fails. They are usually linked to industries covering fundamental rights, especially in regard to accessing vulnerable collectives, such as persons with a disability. Another characteristic is their capacity for innovation to satisfy the problems that arise in society and the defence of social, legal, administrative or other changes, in defence of the rights and freedoms of persons with a disability, based on a respect to diversity, plurality and tolerance.

Foundations: these are non-profit organisations whose assets are conditioned to carrying out an objective goal of general interest, by the will of their creators. Social Economy foundations must comply completely with the abovementioned principles of Social Economy, as collected in Law 5/2011.

In short, a Social Economy enterprise is a clear example of how rationality and social progress are compatible, of how business efficiency can coexist with social responsibility. Of how another way of doing business is possible.

 

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