A short analysis of the amendment introduced by the council in the recommendation on social economy
On the 13th of June, the Commission published its proposal of recommendation on social economy, in application of the action plan of 2021.
?On the 27th of November, the Council approved, with some amendments, the recommendation on social economy proposed by the commission on developing Social Economy framework conditions:
?The texts are very similar.?
For a global analysis of the recommendation, see the previous post:
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but it is interesting to inquire into the differences between the two versions since it highlights the difference in approach of these two organs of the EU.
To sum up, it will not be possible to quote in extenso the provisions that differ. The focus will be put only on the paragraphs that constitute the core of the recommendation, and only the significant changes will be considered.
Paragraph 5. Only an additional precision: when the commission simply named the social economy entities, the council precise: social economy entities, which include enterprises and other forms of organizations. This is in line with the international instruments.
Paragraph 6. A new paragraph has been introduced to relate to the resolution adopted by the General Assembly of the UNO.
About that resolution, see the previous post: Consécration de l’économie sociale et solidaire par l’assemblée générale des nations-Unies
?Paragraph 9 (previously paragraph 8). The ??new social business?? has become ??new enterprises in the social economy??. That is a good idea to contribute to having a more consistent terminology; the social business cannot be, as it was in the 2011 action plan, assimilated with the social economy. The same can be said about the third sector: it remains utilized in a recent report on the European cross-border association instead of the social economy; it can be feared that the nationality of the experts is not effectless.?
In the same paragraph, about the business transfer to employees, whereas the Commission dealt with workers’ cooperatives only, the Council added ??other relevant worker-owned social economy models??. The complement shows the will to open the possibilities, with the condition of being part of the social economy.
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Paragraph 11 (previously 10), the Council added one sentence:?Member States can also explore possibilities to facilitate the participation of social economy employers in social dialogue. This may be interpreted as a sign in favour of a better acknowledgement of the social economy employers, to break the quasi monopole of the capitalist employers to voice the enterprises into the social dialogue.
Paragraph 13 (previously 12). About the role of social economy in job training, the Council adds a new role that can play social economy in that field: ??Social economy entities can also contribute to closing the current digital gender gap by providing targeted support that strengthens the digital skills of women.?? The complement is very conjectural and not significant.
Paragraph 14 (previously 13). transition and demographic change. ??The social economy can also contribute to Europe's strategic autonomy by creating businesses in strategic sectors that serve the interests and needs of the local communities.?? With that sentence, the council stresses again the contribution of the social economy to local development.
Paragraph 15 (previously 14). Apart from modifications in the wording, it is noteworthy that, about the contribution of the social economy to the twin transition to a green and digital economy, the Council adds a reference to the ??citizen-led production and distribution of renewable energy,?through renewable energy cooperatives and other energy communities??.
Paragraph 16?(previously 15). Among the domains in which social economy may bring support, the council added, before ??sustainable economic development??, ??economic democracy, climate neutrality??. The second aspect is not surprising, social economy is often mentioned among the answers to the challenge of climatic change. The first one is less common, and the attention paid to economic democracy deserves full approval.
In the next sentence, the Council precises that social economy ??may be present in all economic sectors??. That point is already mentioned in many international instruments.
Below, more interestingly, the Council nuances the specificity of social economy concerning efficiency gains and profits, by contrast with the creation of positive societal outcomes. Whereas the Commission wrote that it didn’t seek the former but the latter, the Council prefers to say that social economy does not seek them ??first and foremost??, the creation of positive societal outcomes being primary. This amendment softens the opposition of the two goals and, therefore, may be the opposition between the social economy and capitalist enterprises. This may rely on the definition of the SSE by the ILO, which assesses the primacy of the person over capital, meaning that a social economy entity may pursue an economic goal, if it comes after the pursuit of its main objective based on the person. This may also refer to the ideas of a limited lucrative defended by the mutuals. However, it may not be forgotten that it is also a bridge established between the social economy and capitalist enterprises, including the possibility of getting the mission companies closer to the social economy. This would be very confusing and detrimental to the identity of the social economy entities.
?Paragraph 21 (previously 20). About the state aid and the flexibility that the public authorities would not utilize enough, the Council added a last sentence: ??Public authorities must examine first whether a measure qualifies as State aid within the meaning of Article 107 (1) of the Treaty on the Functioning of the European Union.?? I am a specialist in European law nor tax law, so my interpretation requires to be confirmed. But that focus put on Article 107 and the core of the definition of state aid can be understood as a call to reexamine that definition itself. For instance, would not it be possible to consider that a public subside that establishes an advantage in favour of a certain way to run a business does not infringe the prohibition to discriminate against some enterprises or some productions??
?Paragraph 22?(previously 21). A first modification appears in the 2nd sentence, nearly funny: whereas the Commission considered that only ??few member states?? had established suitable tax legislation, the Council claims more optimistically that ??some?? did. The malicious persons can wonder if the change is somehow connected with the fact that the council is composed of the member states themselves.
But the most important change concerns the tax on donations; it seems there that the council remains reluctant to go too far in that question, usually reserved to the national jurisdictions. For instance, the idea to standardize forms of the recipient entity established in another Member State for the donation it had received has been simply removed. Instead, the council introduced a reference to the possibility of establishing VAT reduction for certain goods and services, often supplied by social economy entities.?
?Paragraph 23 (previously 22). About the social impact measurement, the Council adds another justification, with the pretext to facilitate the elaboration of the matrix: "Linking social impact measurement and management methodologies to the United Nations Sustainable Development Goals can provide a helpful framework for demonstrating impact.?"
But that relationship with sustainable development goals is not only instrumental. The Council added paragraph 26, whose purpose is only to claim that the social economy contributes to the achievement of the SDG.?
?To conclude, the modifications made by the Council to the recommendation proposal have rather improved it. The only step back concerns taxation for which the intervention of the EU remains very sensitive. Another concern is about the place of the efficiency gains and profits. The amendment made here by the Council is probably inspired by the wish to be in line with the international instruments; however, unwillingly, it sowed the seeds for new confusion, whereas the Council is rightly attached to improve the consistency of terminology the Commission had blurred.
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