In May the European Commission unveiled a proposal for a €750bn post-Covid-19 recovery plan, which was agreed by the European Council on 21 July. There are several differences between the Commission’s original deal and that approved by the Council, such as cuts to funding envisioned in the initial Commission proposal, including to InvestEU, Horizon 2020, NDICI, or Just Transition Fund.
However, Social Economy Europe, an apex whose members include co-ops, associations and social enterprises, argues the deal is of historical importance.
“We are changing the way in which Europe works,” says Víctor Meseguer, director of Social Economy Europe and member of the European Commission Expert Group on Social Economy and social enterprises. He explained how while challenges faced have increased and diversified, the EU resources allocated to cope with them had not.
“The European Union cannot rely only on national contributions from member states, it needs its own resources,” he said.
Under the recovery package, the Commission will be able to borrow €750bn from financial markets to finance its spending. The package also includes various taxation instruments that the Commission will explore and implement in the coming years.
“That is revolutionary,” says Mr Meseguer. “We are in the middle of a terrible crisis. Most businesses are closed, enterprises are suffering from the lockdown, the limited mobility of people, and their ability to consume. The European Union has the responsibility to react together,” he says. He believes that how the union responds will also determine whether it can position itself as a promoter of internationalism, multilateralism and development and a leader in tackling global challenges such as climate change.
“We’re losing the train of ecological transition and we are losing the train of digitalisation so investments are what’s needed to rebuild our economies to overcome this crisis and to build for a better future.”
“Right now, everyone is focusing on the digital and the green transition. This is good because the social economy and the co-operative movement have added value in both, but there is one third element which is fundamental and that is resilience.”
The recovery package and the EU’s budget for 2021-2027 still require the approval of the European Parliament.
Around €312bn of the €750bn total will be allocated to member states in the form of grants. To access their allocated share of this funding, member states will have to put forward reform and recovering plans explaining how they aim to invest the new funds. Another €77.5bn grants will be allocated to various EU budgetary programmes.
“The reality is that an important part of this money will be spent not directly from Brussels, but from the capitals, or even in highly decentralised countries from the regions. To do that, the countries need to present national reform and recovery plans.
“It is fundamental to include the social economy within those national reform and recovery programmes that the different member states will elaborate. And it is fundamental to demonstrate our added value to achieving the political objectives of European institutions,” he says.
In a webinar organised by Social Economy Europe on 7 July Ulla Engelmann, head of Unit for Social Economy at the European Commission, DG Grow said the EU’s recovery should be green, digital and resilient. And Mr Meseguer thinks the social economy can contribute to achieving this.
“When it comes to the Green Deal, we have an added value through the renewable energy movement. Renewable energy, citizen-led co-ops have the potential to be replicated but it is very dependent on the legal frameworks in the different national in different member states. It is obvious that citizens are asking for a greener energy that they are able to produce themselves through co-operative structures. This will be an important part of the energy transition that Europe needs.”
He believes social economy enterprises are also leading when it comes to the circular economy by creating decent work for disadvantaged persons. Meanwhile, the digital transition can enable platform co-ops to showcase an alternative model.
“The digital transition is a must, but it should be a fair digital transition and here again, co-ops, associations and other social economy legal forms have a lot to say to ensure that we have a digital transition that is not generating less quality jobs.”
A third important part of the recovery, is building resilience. Here, too, the social economy can make important contributions. Crises tend to lead to more people being self-employed, be that individual or collective self-employment. Co-ops and the social economy can offer resilient business models using human capital, says Mr Meseguer. From worker buy-outs to co-operative start-ups led by graduates, the social economy can help Europe build resilience, he adds.
“The social economy is a natural partner of public authorities to build strong universal welfare systems and to cover the failures of the state, where the state fails to provide services needed, the civil society and active citizens organise themselves to provide those services.”
Social Economy Europe will be working with its national and international apex members, individual enterprises and the social economy community at large to help them influence the agendas of national governments. At the same time, the apex will seek to lobby the European Union.
“Our job over the next couple of months will be to ensure that the social economy in included in national reform programmes. We will also be offering capacity building to our actors, our enterprises, and support centers, to ensure that we are capable to absorb any possible investment,” says Mr Meseguer.
He thinks that while the package represents an unprecedented joint European investment effort, the EU budget is overall insufficient.
“The European budget is 1.1% of the European GDP. We agree that we need more ambition, in terms of a stronger EU budget. We believe that this project is not sufficient to achieve our common objectives. We cannot invest in the green transition, in being a strong global actor or promoting peace and mutual development with this budget. At the same time, it is what we have,” he added.
The European Commission is currently looking to develop an Action Plan for the Social Economy, a proposal that came from Social Economy Europe in 2018. The act will aim to showcase best practices and provide a legal and policy framework model for the social economy that member states could refer to, should they choose to do so.
“We have seen some unsuccessful examples of policymakers reinventing the wheel on their own, not taking into consideration what already exists and what works in other countries.” The act could also address issues around EU state aid rules and promote the social economy as a driver of sustainable development in the world.
With so many EU legislative proposals underway, what will the future look like for the social economy sector?
“I am convinced that tomorrow’s economy is an economy that is more similar to the social economy, and that the citizens, as it happened in the last crisis are more sensitive than ever to an economy that is different, with different values, that puts people first, that is more democratic, an economy that is not only focused on paying shareholders, but also responding to the real needs of local communities. So I am positive about the role that the social economy can have in the economic reconstruction of Europe and the rest of the world.
“Being positive it’s not enough. We know that during crisis there are always promises about reforming the economy and changing the economy but then these are quickly forgotten. So we have a huge responsibility all of us as a sector to do an important advocacy campaign among policymakers, but also amongst citizens, and the future is people starting a business together. Of course, we need policymakers to implement appropriate legal and policy frameworks, but, above all, we need to convince citizens about starting businesses in a different way. Public support is needed. This campaign in our hands and convincing policymakers and citizens in our heads.”