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THE SOCIAL ECONOMY IN ITALY
Tokyo, January 28th 2007 Giovanna Maranzana

Ever since the 1980’s, following difficulties by local authorities to directly ensure welfare services whilst the request for services were increasing, social policies were modified to delegate the management to external bodies, mainly non-profit organizations, leaving the local authority (L.A.) only with financial aspect. The task of this policy has been that of reducing the cost of the social protection system.

The choice of non-profit organisations was coherent with this philosophy, because it guaranteed low management costs, in particular where there has been input from volunteers or a free generous contribution from the private sector and a less binding and cheaper body of legislation regarding labour.

So today, while the social economy seems to to be the only answer to the need for services and at the same time represents a great working opportunity for thousands of people in a country with a low working offer, it appears as an essential auxiliary to the public in terms of resources and market.

For long time The organisations involved by the public administration in the welfare state crisis have opertaed simply as suppliers within a protected market.

Following the increasing reduction of public resources, markets are always less protected.

More and more of the administrations give up private negotiations with social cooperatives and are forced to compete on a fall in prices, particularly regarding type B cooperatives (job creation for disadvantaged people)

Therefore in this context it become necessary to deal with a competitive market, that is increasingly demanding.

LEGAL FORMS

In Italy, as in other parts of Europe, all enterprises running a commercial business for market purposes in order to achieve social objectives are normally considered a social enterprise. They bring people together for economic development and social purposes.

Social enterprises have not-for-proft goals.

In the wider concept of social economy we consider as the So-called “third sector” all associations, foundations, NGO’s and all not-for-profit groups that carry out social activities. Actually the legal form of social enterprise is the Social cooperative.

Social cooperatives in Italy

A specific law (381/91) defines exactly what social cooperatives are and divides this kind of social enterprise into two types: type A and type B

This law defines social cooperatives as:“Subjects of juridical nature with entrepreneurial skills without profit goals whose surpluses are reinvested for social and Community purposes”

Art.1 of the Law 381/91

This article declares that:“Social cooperatives aims are to follow the community interests towards human promotion and social inclusion, in offering social and health services (Type A cooperatives) and job creation for disadvantaged people “(Type B cooperatives)

Type A social coops

  • Type A social cooperatives carry out activities in sectors such as healthcare, schools, professional training, childcare and care of elderly and disabled people, leisure and culture,tourism....

Type B social coops

  • Type B social cooperatives carry out activities in various and different sectors, in order to create jobs for disadvantaged people who are unable to find employment without help

Definition of disadvantage by the law

Italian law defines disadvantaged people precisely. One article recognise disadvantaged people as those who have some of the problems below:

  • Physical and/or mental disabilities
  • Drugs problems
  • Alcohol problems
  • Development disorders
  • Problems with the law

This definition was very important when the law was approved, because for teh first time disadvantaged people were recognised as real subjects with specific needs.

This fact allowed social enterprises to focus on this group of people, to realise a project for them and to be accepted even in a juridical way.

In the meantime, disadvantage changed and matured , but the definition in Law 381/91 did not change further.

Other disadvantages such as race relations, sexual discrimination, economic disease....is not recognised and protected by law.

BENEFITS

The law defines that in a type B social cooperative at least 30% of employees must be disadvantaged people.

For each disadvantaged person the Cooperative doesn’t pay the national insurance taxes,that are on charge of National Ministry of Labour.Other costs are exactly the same as other employees.

There is not any difference between the salary of disadvantaged people and other employees.

Other laws featuring social enterprises are:

  • L.68/99 rules the employment of people with disabilities
  • L.327/00 refers to evaluation of the labour costs and health and safety in working places in public procurement
  • L.328/00 defines the basic skills social must have to operate in health care, social services and other community services
  • Artt. 13-14 L. 30/2003 and D. Lgs 276/03 Defines experimental measures for promoting work inclusion of disadvantaged people and creates incentives for enterprises which externalize part of work to social cooperatives in which disabled people are employed.

Size

By the end of 2005 it was estimated that there were in Italy 6000 social cooperatives (55% of type A and 45% of type B) 200,000 people work in these coops 15,000 of them were disadvantaged people 4 billion Euros per year as entire turnover

Liguria Region

In 2005

  • 200 social cooperatives
  • 6000 employees
  • 100 million Euros turnover

TYPE OF JOB CONTRACT

Type of job contract used in social enterprises are the same as used in all other kinds of enterprises.

Employees can be taken on a fixed contract (time limited) or permanent arrangement.

The main one used is the long-term contract, but sometimes time-limited contract are used as a probationary period, beyond the legal probationary duration of 30 days.

Social cooperatives have their own national contract of work, recognised by the Ministry and Trade Union.

Social enterprise is a good and secure place to be employed; in other private enterprises it is very common to work without legal contract or with a short term one.

That is why social enterprises are often a good starting point towards overall inclusion in the labour market for young adults or disadvantaged people.

Field and type of Activity

  • Social and humanitarian services
  • Education
  • Healthcare
  • Culture, leisure, recreation, interest association
  • Tourism activities
  • Educational and professional training
  • Catering and food production
  • Cleaning
  • Global services for industry and public administration
  • Parks and ground maintenance
  • Removal services
  • ………………………

Relationship between L.A. and Social Cooperatives

  • Since the beginning social cooperatives and L.A have collaborated in a strong way, to respond to the Community needs.
  • In many cases social cooperatives were founded to solve some Local Community problems in accordance with L.A.
  • Flexibility, knowledge of the Community needs and capability to promote quality and innovative services, made became the social cooperation a point of reference for the L.A.
  • L.A. are still now looking at social cooperatives as quality enterprises and they still work together with confidence

PUBLIC PROCUREMENT

Currently public authorities are obliged to adhere to formally agreed and transparent procedures when spending money, conforming to the EU’s Public Procurement directives.

Somerime public procurement is based on a cust cutting logic that is very dangerous for social enterprises

DIRECT TRUST

The law 381/91 provides a direct trust of social services or other kinds of outsourcing just to social cooperatives and their Consortiums. Through this law, local authorities are able to avoid a formalised public procurement process to outsource a service, deciding themselves which is more satisafctory subject to negotiate with.

The law provides that:

  1. Local authorities can, even making an exception to the L.A. regulations, enter into a contract with social cooperatives carrying out social services or other activities finalised to Job creation for disadvantaged people
  2. To enter into this kind of contract with local Authorities, social cooperatives must be included in the Regional Register of social cooperatives.

In order to apply this law, local authorities approved some standard contracts in which there are indicated specific contract clauses and quality indicators.

In 1993 Liguria Region approved the contract scheme with an all trust standard for contracts with Social cooperatives and consortiums.

In this scheme, there are indicated guidelines for direct agreement between local authorities and social cooperatives and how the partners must be evaluated.

For social cooperatives type B, the most important clause is too include in the activity object of the contract at least 30% of disadvantaged people (percentage defined by law).

Every year social cooperatives must report to local authorities how many disadvantaged people are employed in that service and the results of the inclusion project. If the social cooperative does not respect this clause, the local authority can cancel the contract.

Regulation of Genoa Municipality

Municipality of Genoa approved in 2001 a specific regulation for direct trust to social cooperatives and their consortiums.

As Liguria Region had already done, the Municipality of Genoa also defines standard and guidelines to enter into a contract by tender to social cooperatives.

In relation to social cooperatives type B the Regulation defines:

“The Municipality of Genoa could draw up a Contract with social cooperatives type B for all those kinds of activities finalised to job creation and social inclusion of disadvantaged people, as defined by L.381/91.

The economical amount cannot be higher than those defined by EU directives about public procurement.

In drawing up contracts with social cooperatives, these points have to be considered:

  • The contract must be finalized to job creation for disadvantaged people
  • The contract must indicate how many disadvantaged people have to be employed