This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future.
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The COVID-19 crisis has made us reconsider what we had taken for granted, focusing our attention on fundamental values such as community, solidarity, co-operation and responsibility. People are calling for a more sustainable and inclusive society. The social economy offers lessons to help us get there.
Have you heard of the social economy?
You may not have heard the term “social economy” before, but you likely have heard of Goodwill Industries. It not only operates 2,800 thrift stores across North America but also provides job placement services and training programmes for people struggling to enter or re-enter the job market. Or maybe you know iCOOP Korea, which is the second largest consumer co-operative group in Korea. Mondragon Corporation in Spain has over 280 entities and over 80,000 jobs around the world in sectors such as such as finance, industry, knowledge and retail. Grameen Bank in Bangladesh, the world-famous microfinance institution, is another example. But these well-known names are just the tip of the iceberg.
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The social economy holds at its core concerns about the well-being of a community over maximisation of profits, and it addresses societal needs using an entrepreneurial approach. The social economy sees opportunities that government programmes cannot – and traditional business often will not – because they appear to carry too much risk or don’t promise sufficient profits. And in some cases, it includes firms who have just seen where doing good is simply good business. The unique social economy perspective builds on local roots and the practice of working co-operatively with users, consumers, the private sector, governments, and beyond.
Social economy organisations come in lots of shapes and sizes across many sectors of the economy, which is why it is hard to count them. However, more data and studies are sorely needed. One study in the EU alone found there are 2.8 million entities accounting for 6.3% of employment (and in Belgium, Italy, Luxembourg, France and the Netherlands it is even higher, reaching between 9-10%). So they really matter, not just in terms of economic weight, but also in terms of social impact. We need to better count them to show how they count for us.
Stepping up in times of crisis
The reason why they are so important during and immediately after a crisis is for their “repairing” and “transforming” roles. In terms of repairing, social economy organisations frequently address social needs not often covered by the market economy. For example, in Quebec, La Cantine pour Tous shifted from providing healthy school meals to feeding vulnerable groups during lockdown. In Sweden, social economy organisations are helping at-risk groups with grocery shopping and collecting medicines to ensure the provision of essential services continues in all 290 Swedish municipalities. And in Spain, La Bolsa Social (Social Stock Exchange), an equity crowdfunding platform, created a collective and participatory investment vehicle, in partnership with the other investors, to support start-ups working on solutions to the challenges posed by the COVID-19 crisis. Again, these are just a few examples but they have proliferated in the pandemic response.
We hear lots of people talking about “building back better” or a “green and inclusive future.” The social economy provides us with a credible mechanism to drive socially and environmentally responsible practices across the board.
In reality, the social economy also has a second role of transforming – designing, experimenting and implementing innovative ways to organise economic activity in an inclusive and sustainable way. For example, in Belgium social economy organisations have historically been pioneers in developing the textile recycling sector. Since the 1960s, they have been developing the green credentials of this sector by selling the best pieces and using the worst pieces for insulation, while also running a work integration programme that creates employment for vulnerable groups. These efforts have been so successful that new players have been entering this field, strengthening the sector and intensifying competition.
So while the social economy’s repairing role has been critical to alleviating the COVID crisis and complementing government efforts, the transforming role could have a lasting effect on our communities and societies. We hear lots of people talking about “building back better” or a “green and inclusive future.” The social economy provides us with a credible mechanism to drive socially and environmentally responsible practices across the board, and rebalance the objectives of efficiency and resilience.
Lessons for today and tomorrow
The OECD’s latest policy response note provides further details on the social economy’s role during the COVID-19 crisis as a critical partner in mitigating the effects of the pandemic. It offers recommendations for how governments can help the social economy survive and thrive in the short, medium and long term, building on over 20 years of OECD work on the sector.
This crisis provides an opportunity to take bold and courageous decisions to build a more sustainable and inclusive future. The OECD is accompanying governments and beyond to provide the relevant legal frameworks and other conditions to help the social economy achieve even greater impact. The sector also offers inspiring examples for how all firms, including the small businesses that are the backbone of our economies, can incorporate social purpose into their way of doing business to further maximise impact. And as governments are adding more conditionalities to their post-COVID support packages, they could consider social and environmental impacts to help build that new future.
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