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Overview on Social Firms in Europe

Social Firms and social co-operatives are unique business models that address the problem of unemployment for people with disabilities and other disadvantages in the labour market. The first social co-operatives were established in Italy in the late 1970ies by mental health professionals and former psychiatric patients during the time when the Italian psychiatric system was fundamentally reformed. The concept of creating employment as an alternative to traditional sheltered work on the one hand, and very low real work opportunities in the private sector on the other hand proved to be successful. As a result, the number of Social Firms in Italy and later across other countries in Europe increased constantly.

Social Firms and social co-operatives were developed from the bottom up as an attempt to find an answer to the problem of unemployment and discrimination in the labour market, poor standards in publicly subsidized employment (mainly in sheltered workshop) and dissatisfaction with the low level of the few available work opportunities for the most disadvantaged groups. The general idea was to create completely new ways of meaningful production and working whereby generation of profit is important as a means for creation of income. The main purpose was to create an entirely new way of working with an empowering environment focussing on own ideas and ambitions and the true potential of people rather than on disadvantage and disability.

Today in Italy alone there are over 2,600 type B social co-operatives, Germany has over 700 Social Firms, the UK around 180, and Social Firms and social co-operatives exist in many other countries in Europe. In terms of employment, estimates alone show a total of over 96,000 employees including around 43.000 jobs for disabled and severely disadvantaged people.

Over the last 20 years, national governments in Europe have recognised the importance and value of Social Firms and social co-operatives and established legal frameworks to support the model. Today, Italy, Greece, Poland and other countries have well developed legal frameworks that support and regulate social co-operatives. Germany and Finland have specific laws that define Social Firms and regulate government support. At the same time, Social Firms and cooperatives have established their own regional and national support structures that fulfil important roles in lobbying and representing their members towards national and regional partners. They also provide specific support, i.e. business support, training and networking and exchange to individual Social Firms and cooperatives.

There is currently a large variety of Social Firm models across Europe – with a different approach and focus to generation of income on the market, to integration and vocational training of the disadvantaged workforce, different models of ownership, decision making and management, and to utilizing public support and government funding. The emergence of social enterprise as a mainstream topic and the emergence and academic discussion and analysis of WISEs (work integration social enterprises) have brought Social Firms and social co-operatives in a much wider and better known context. However, these developments also contributed to lower attention and recognition of the specific market oriented Social Firms and co-operatives since they tend to disappear in the sometimes perceived as confusing broad concepts of social enterprise that is now widely discussed.

Even though Social Firms seemed to be very successful in creating large numbers of employment, and governments across Europe have recognized the importance of the model, there is not much systematic information available on their numbers, impact and relevance on a European and wider international level. There are a number of national surveys, mainly in Italy and Germany, and a few international reports and surveys on specific aspects of the model, i.e. legal systems or support frameworks. Furthermore, there seems to be a large variety of lessons learned from individual Social Firms and social cooperatives which can provide useful guidance and support to emerging Social Firm initiatives not only in Europe but also for other countries.

This paper aims to provide an updated overview on the situation of Social Firms in Europe. It summarizes existing Social Firm mappings, explores the main characteristics of successful Social Firms and summarizes the role of legal frameworks and supporting systems. The main focus of the discussion is on market oriented Social Firms with a strong entrepreneurial approach as well as on generation of meaningful and sustainable employment for disadvantaged people. The discussion paper is produced with a view to provide stakeholders in Europe with updated information, and also to inform an audience outside of Europe on the relevance and potential of Social Firms.