After a 13-year campaign, the Republic of Korea has passed a framework law drawing co-operatives, social enterprises and other solidarity-economy bodies under a single national umbrella — linking policies once split across ministries and creating both a presidential development committee and the country’s first legal basis for “social solidarity finance”.
South Korea has over 31,500 registered co-ops – many created following the passage of the 2012 Framework Act on Co-operatives. This includes thousands of general co-ops, nearly 7,000 social co-ops, and hundreds of worker co-ops.
The movement has deep roots that long pre-date the 2012 law: sector-specific co-operative movements (agriculture, fisheries, credit and consumer co-ops) were established under their own separate statutes going back to the mid-20th century, each answering to a different ministry (the National Agricultural Cooperative Federation, for example, dates to 1961 and today spans 1,106 member co-operatives serving roughly 2.04 million farmer members). But it wasn’t until the Framework Act on Co-operatives in 2012 that Korea created a general-purpose legal form allowing citizens to set up a co-operative in any sector (split into general co-operatives and social co-operatives) under the Ministry of Economy and Finance.
This law triggered a wave of new registrations, but although the move broadened who could form a co-operative, it left the wider social economy fragmented: co-operatives, social enterprises, village enterprises and social ventures each remained governed by their own separate law and ministry.
But now the country has a legal foundation to support its social and solidarity economy (SSE) under a single national framework, not by replacing the 2012 Act or any of the older sector laws, but by drawing them together under a single coordinating structure, a presidential development committee, and the country’s first legal basis for social solidarity finance.
After first being tabled in the National Assembly in 2014 and lapsing three times over the following years, the Framework Act on the Social and Solidarity Economy has finally been enacted.
The National Assembly passed the bill in a floor vote on 20 August, with 145 of the 181 members present voting in favour (the Assembly has 300 seats in total). Speaking in the debate immediately before the vote, Yong Hye-in— a lawmaker for the small progressive Basic Income Party — said it was meaningful to bring the bill to a conclusion at last, even if it was belated. She framed the enactment as South Korea responding to an international movement in which the International Labour Organization (ILO), the Organization for Economic Cooperation and Development (OECD) and the United Nations have all urged governments to give the social and solidarity economy an institutional footing.
Yun Ho-jung, Ministry of the Interior and Safety (image; KOGL Type 1)
The new act consolidates, into a single statute, the legal basis for supporting SSE organisations that until now had been scattered across separate laws. Different types of organisations — social enterprises under the Social Enterprise Promotion Act, co-operatives under the Framework Act on Co-operatives, and so on — have each answered to a different ministry and a different governing law, and critics have long argued that this fragmentation made joined-up, efficient support difficult. The framework act does not replace those individuals’ laws.
In Korean legislative practice, a “framework act” sets out principles and direction rather than superseding existing statutes; here it functions as an umbrella, drawing scattered policies together and coordinating them through a national master plan and a dedicated coordinating body. The act defines the social and solidarity economy as “all economic activity carried out, on the basis of reciprocal co-operation and solidarity, to realise the shared interests of community members and social value” (Article 2), and covers social enterprises, co-operatives, village enterprises, self-sufficiency (work-integration) enterprises and social ventures. It also establishes, for the first time, a legal basis for “social solidarity finance” — the supply of capital to SSE organisations through investment, lending and guarantees.
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Under the act, the government will draw up a five-year master plan centred on a Social and Solidarity Economy Development Committee attached to the Office of the President and will link and coordinate the policies of individual ministries. A Social and Solidarity Economy Policy Centre will lead policy development, alongside support centres in each city and province. The law also sets out measures to strengthen the self-reliance of SSE enterprises, including expanded priority public procurement, special provisions for the use and lease of state and public property, and support for education, training and growth.
Yun Ho-jung, Ministry of the Interior and Safety — the ministry with lead responsibility for SSE policy — called the passage of the act a historic milestone that goes beyond mere legislation to build a sustainable economic ecosystem in which economic performance and social value advance together. He said the ministry would actively help the many SSE organisations on the ground to become self-sustaining and would concentrate its efforts on establishing the social and solidarity economy as a new engine of growth for South Korea.
For the SSE sector, the act is the realisation of a goal pursued for 13 years. First tabled in the 19th National Assembly in 2014, it repeatedly died as successive Assemblies reached the end of their terms — under Korean rules, bills that are not passed lapse automatically when the four-year legislative term expires. After the 22nd Assembly was convened, the bill cleared the Public Administration and Security Committee in March this year, and the Legislation and Judiciary Committee in April, but opposition from the conservative People Power Party delayed its referral to the floor. SSE bodies and campaigners pressed for swift passage through press conferences and public statements, and the bill finally crossed the floor four months after clearing the judiciary committee.
Challenges remain, however, before the law makes a difference on the ground. As a framework act, it is largely declaratory in character, and its effect may be limited unless it is backed by budget and subordinate legislation. Substantive support — such as the scale of the expanded priority procurement or of the social solidarity finance account — will be set out in the enforcement decree. The act will now be transmitted to the executive, promulgated after approval by the Cabinet (State Council), and will take effect six months after promulgation.
