Romanian Parliament amends government emergency order on the social economy law

Legislators rejected a move to increase the share of profit that can be redistributed to members from 10% to 30% after lobbying from sector bodies

The Romanian Parliament safeguarded the social dimension of social enterprises by amending some provisions introduced by a government emergency order in March.

The government’s directive would have increased the share of profit that can be redistributed to members from 10% to 30%, a move criticised by the country’s social economy organisations, including the Romanian Network of Social Enterprises (RISE Romania) and ADV Romania – a social enterprise accelerator cluster. The organisations – both members of the European Network of Social Integration Enterprises – said the increase would affect the social dimension of social enterprises and make them more similar to for-profit businesses.

In response to this lobbying, parliament rejected the directive’s proposal, keeping the share of profit that can be redistributed to members at 10%. The remaining 90% of the profit/surplus must be used to meet the social purpose of the enterprise or added to its statutory reserves.

Wiring for ADV Romania’s website, Ancuța Vameșu, president of RISE, said: “The parliament saved the social character of the social enterprise. The changes proposed by the government would have raised the share of profit that can be distributed to shareholders from 10% to 30%. By reducing the percentage, the social purpose for which social enterprises are established would have been distorted.”

Other measures to protect the sector include a qualifying rule for social enterprises, which says they must have 30% of staff or co-operative members belonging to vulnerable groups of society. The working time contributed by vulnerable employees/members will have to represent at least 30% of the total working time of all employees.

Another requirement is a maximum pay differential ratio of one to eight, ensuring levels of fair remuneration between employees and managers and protecting the principle of social equity.

The amended law also clarifies that primary and secondary co-operatives, including those in the agricultural sector, can qualify as social enterprises.

And there are several support measures for social enterprises, such as facilitating their access to relevant business fairs through tax exemption and assigning spaces and/or lands located in the public domain of administrative-territorial units/subdivisions.