The main public policy changes promoted by RISE
Cross-cutting policies dedicated to the social economy as an institutional sector emerged in Europe in the 1980s in countries with a tradition in the field such as France, Italy or Spain and have spread to other European countries over the last decade. Social economy enterprises are also directly affected by enterprise policies, especially small and medium-sized enterprises and employment policies. For the good functioning of the social economy and of the social insertion enterprises in Romania, it is necessary:
- A general framework favorable to the development of social economy organizations (cooperatives, associations and foundations) in the normative acts that regulate the establishment and functioning of each of these legal forms and, possibly, a defined legal framework of the social economy as a sector
- Measures that favor the optimal integration of social economy enterprises in the economic and welfare system such as in the regulatory framework governing the activity of enterprises in general (e.g. the Framework Law on Small and Medium Enterprises, taxation, markets and public procurement, aid for government programs for small and medium-sized enterprises, etc.) and public and private markets for various goods and services, the regulation of which can create barriers to entry for social economy enterprises.
- Special measures dedicated to the social economy or to certain types of social enterprises: insertion enterprises or fields of activity in which they are found, mainly social economy enterprises such as social services (procedures for outsourcing / subcontracting social services and general interest) and employment – the employment of people with disabilities or, more generally, disadvantaged groups. Some of these also regulate the role of these enterprises in the respective public policy areas as service providers and as employers or actors for the reintegration into the labor market of disadvantaged categories.
The main public policy changes promoted by RISE are:
- Introduction in the Law 76/2002 on employment stimulation of concrete measures for social insertion enterprises – the main instrument for implementing the socio-professional insertion policies of inactive people on the labor market
- Inclusion of social enterprises among small and medium-sized enterprises (SMEs) and in all support programs for them
- Effective support for social inclusion enterprises – amending and implementing the provisions of the Law on the Social Economy
- Financing the development of social enterprises, their scaling – efficient and highly sustainable strategy in addition to supporting start-ups – Radical change in funding through national programs with European funds dedicated to social enterprises
- Encourage social public procurement including contracts reserved for UPA and social insertion enterprises
1. Introduction the in Law 76/2002 on employment stimulation of concrete measures for social insertion enterprises – the main instrument for implementing the socio-professional insertion policies of inactive people on the labor market
Thus, Art. 85, par. (1) to be completed as follows: Employers that are social insertion enterprises who employ, for a fixed period, disadvantaged workers according to the European Regulation – unemployed over 45 years of age, unemployed who are single parents supporting single-parent families, unemployed long-term or young NEETs – receive monthly, for a period of 12 months, for each person employed in these categories, an amount equal to the minimum wage per economy.
2. Inclusion of social enterprises among small and medium-sized enterprises (SMEs) and in all support programs for them
Amendment of the Framework Law for SMEs, Law 346/2004 on stimulating the establishment and development of small and medium enterprises to include among the legal forms that enterprises may have, also the non-profit organizations, associations and foundations operating under Government Ordinance 26/2000. Currently only legal forms of companies, cooperatives, independently engaged individuals and family associations are considered as enterprises. This is contrary to the European Commission’s definition of SMEs in Recommendation 2003/361 / EC.
EC Recommendation no. 361/2003 on the definition of micro, small and medium-sized enterprises states: ‘… in accordance with Articles 48, 81 and 82 of the Treaty, as interpreted by the Court of Justice of the European Communities, it is necessary to consider undertaking any entity, whatever its legal form, which carries on an economic activity, including, in particular, entities carrying on a craft activity and other activities in an individual or family capacity, partnerships or associations which regularly carry on an economic activity.”
3. Effective support for social inclusion enterprises – amending and implementing the provisions of the Law on the Social Economy
Received as a welcome measure by social service providers and social sector NGOs meant to align Romanian employment policies with European ones in the field, legislation / recognition of social enterprise insertion by the Social Economy Law initiated by the Ministry of Labor through a POSDRU project, this authorization regime has proved ineffective in practice and therefore social sector NGOs have not opted for an authorization that brings only other administrative burdens and no public support measures.
In this context, RISE initiated a set of proposals / amendments to Law 219/2015 on the social economy and its implementing rules.
- At Art. 7. The central and local public administration authorities support the social economy activities
To be added:
e) Participation in the establishment and financing of social enterprises.
g) Granting exemptions or reductions to the building and land tax due for the buildings and land used by them.
h) Annually, at least 5% of the total budget related to the procurement plan of each contracting authority will be reserved for procurement from social enterprises and social insertion enterprises. This percentage will increase by 2.5% annually until a minimum threshold of 10% is reached by 2022.
k) Financing the employment services of disadvantaged persons in insertion within the social enterprises for insertion from the unemployment fund according to the Unemployment Law 76/2002.
l) Financing of the social services of accompaniment of the disadvantaged persons in insertion within the social enterprises of insertion by Law 34/1998.
- At Art. 11, after alin (3) to be added alin. 4, with the following content:
(4) The persons from the vulnerable, hard and very hard to occupy group benefit with the consent of the employer (social insertion enterprise), from the measure provided in art. 58, ali. (1) lit. e) of Law no. 76/2002 on the unemployment insurance system and employment stimulation.
- RISE also called for the implementation of provisions that have never been implemented. The mere application of these provisions of the existing legislative framework would be a big step forward for a beginning of a public policy consistent with the needs on the ground.
- The establishment of the National Commission for Social Economy, a body for collaboration, coordination and monitoring in the field of social economy, which has the role of promoting and supporting the social economy, the only body for dialogue with social economy actors – cooperatives, credit unions, associations and foundations, mutual aid houses of employees (grouping about 1 million members) and pensioners (grouping about 1.5 million elderly members, mostly poor pensioners), agricultural societies (including small farmers), social inclusion enterprises (Law Art 26)
- The establishment of the program for stimulating the establishment and development of micro-enterprises in the field of social economy in accordance with the provisions of art. 25 ^ 1 lit. d) of Law no. 346/2004 on stimulating the establishment and development of small and medium enterprises, with subsequent amendments and completions, regarding the National Programs for financing small and medium enterprises that are carried out by the central public authority with attributions in the field of small and medium enterprises. (Law Art 21)
- Elaboration, by consultation with the social insertion enterprises – not only of the authorized ones, of the county-level socio-professional insertion plans. (Law Art 24)
4. Financing the development of social enterprises, their scaling – efficient and highly sustainable strategy in addition to supporting start-ups – Radical change in funding through national programs with European funds dedicated to social enterprises
The latest calls for funding dedicated to the social economy, e.g. POSDRU 2014 and POCU 2018, focused on financing start-ups which, for the 2014 call whose results can be evaluated at this date, proved largely unsustainable. It is unfortunate that MFE and AMPOCU have opted for the resumption of this type of financing line in the 2014-2020 programming period.
We propose that for the period 2021-2027 things change radically. In programming the resources allocated to this sector, we recommend focusing on supporting those companies with proven employment results for disadvantaged people who can scale these results through funding from the European Social Fund for socio-professional support and employment and FEDER for investments needed in the production process.
The 2019 Country Report on Romania – The European Commission’s 2019 European Semester, Annex D: Investment Guidelines on Cohesion Policy Financing 2021-2027 explicitly states that the social economy must be a priority for Romania.
Thus, Policy Objective 4: A more social Europe – Implementing the European Pillar of Social Rights provides that unfavorable demographic developments, high levels of labor migration and lack of relevant skills lead to a tightening of the labor market. Therefore, high-priority investment needs have been identified to improve access to the labor market through active labor market policies, anticipating skills needs and supporting labor market transitions and mobility, and in particular to strengthen and support social entrepreneurship and the social economy.
5. Encourage social public procurement including contracts reserved for UPA and social insertion enterprises
Social public procurements were explicitly introduced in art. 56, para. (1) of Law 98/2016, respectively art. 69, para. (1) of Law 99/2016: “The contracting authority / entity may reserve the right to participate in the award procedure only to protected units authorized according to Law no. 448/2006 on the protection and promotion of the rights of persons with disabilities, republished, with subsequent amendments and completions, and social insertion enterprises provided by Law no. 219/2015 on the social economy. ”
Unfortunately, the data of ANAP and ONAC show that the contracting authorities do not resort to the possibilities offered by law. That is why we propose the issuance of a joint order of ministers, through which 10% of the annual procurement budget for investments, to be used by local and central public authorities to carry out procurement procedures reserved for social insertion enterprises and authorized protected units.