ISEDE-NET. Innovative Social Enterprise Development Network

Transcription

1 ISEDE-NET Innovative Social Enterprise Development Network ISEDE NET Project Innovative Social Enterprise Development Network in Serbia European Movement in Serbia

2 Belgrade, May 2010

3 Content Part I: Key Features of the Social Enterprise Sector 1. General information 2. Quantitative characteristics of the social enterprises in Serbia 3. Organizational and management characteristics Part II: Driving forces and Barriers Obstructing the Development of Social Entrepreneurship: A. Reporting template 4. Current framework, conditions and future perspectives Part III: Measures/Policies Promoting Social Enterprises: B. Reporting template 5. Overview of the relevant regional, national or local policies/measures Part IV: Bibliography 33

4 Part I: Key Features of the Social Enterprise Sector 1. General information The concept of social entrepreneurship in Serbia 1 received initial recognition among third sector representatives, trade unions leaders, professionals, academics and the government officials at the beginning of 2000, fostered by international initiatives on social enterprises (SE), which provided a much-needed analysis of the complex issues related to these alternative forms of economy. 2 The wide spectrum of socio-economic institutions, other than investor-owned organizations (the for-profit sector) and public agencies (the state), has been described in a specific national context to fit a set of criteria based on work carried out by the EMES European Research Network. The concept consists of a range of social and economic criteria of social enterprises, known collectively as the EMES criteria (Borzaga and Defourny, 2001). Starting from the EMES definition of social enterprise, researchers have been provided with a working definition adapted to target countries. According to the economic criteria, SEs are producing goods and selling services, which means that these third sector entities are not engaged in advocacy or the redistribution of financial flows as their major goal. They are involved in the production of goods or the 1 Following the dissolution of Yugoslavia, Serbia had a population of about 7.5 million people with around 2 million living in the capital Belgrade. 2 At the beginning of 2000 the OECD LEED Centre for Local Development in Trento organized several international gatherings and created a scientific advisory group on social economy and social innovation. Trento University conducted the first comparative research on social economy from an international perspective and the results were published in the book Borzaga, C., and Spear, R., (eds.) (2004), Trends and Challenges for Co-operatives and Social Enterprises in Developed and Transition Countries, Edizioni 31, Trento. Beside, EMES European Research Network and the United Nations Development Program Bratislava Regional Centre (UNDP-BRC) have conducted comparative research on social enterprise, organized several international gatherings, regional workshops and related publications on the topic of promoting SE in Eastern and Central Europe - UNDP-BRC (2006) Study on Promoting the Role of Social Enterprises in CEE and the CIS Initial Overview Study. Serbia has been also included in a 12 country mapping of heterogeneous organizations corresponding to social enterprise - Social Enterprise: A New Model for Poverty Reduction and Employment Generation (UNDP-EMES, 2008). 44

5 provision of services to people on a continuous basis. SE is normally voluntarily created by a group of people and is governed within the framework of an autonomous project. Accordingly, these may depend on public subsidies, but are normally not managed, whether directly or indirectly, by public authorities or other organizations (federations, private firms, etc.) and they have both the right of voice and exit (i.e. the right to express their own positions and to terminate their activity). Those who establish a social enterprise assume the risk of the initiative, either totally or partially. Unlike most public institutions, their financial viability depends on the efforts to secure adequate resources undertaken by their membership and workers. Human capital and non-monetary resources represent an additional risk. The activity carried out does not necessarily require the involvement of paid workers, nevertheless the option to eventually engage paid staff ought to prevail. Organizations sharing most of the characteristics specified, albeit relying on voluntary work, are indeed considered as SEs in their initial stage of development. One of the main goals of social enterprises is to serve the community or a specific group of people, also by taking care of the specific needs of fragile segments of the population. Voting on the governing body, which has the ultimate decision-making power, is not distributed according to capital shares. Decisions are shared and a high degree of stakeholder participation is favoured. The representation and participation of customers, stakeholder orientation and a democratic management style are important characteristics of social enterprises. Social enterprises include not only organizations that are characterized by a total non-distribution constraint, but also organizations which may distribute profits to a certain extent. Organizations which can remunerate certain stakeholders such as sponsors - can also be included, provided they do not aim to maximize their profits. In other words, the key criterion is the exclusion of organizations with a profit-maximising goal. Although there is no still authentic definition of SE in Serbia, it is accepted that the model of social enterprise consists of new, emerging organizations that have developed between the market and the state to pursue social and economic goals. Briefly, social enterprises are defined as private and autonomous organizations providing goods or services with an explicit aim to benefit the community, owned or managed by a group of citizens and in which the material interest of capital investors is subject to limits. These efforts have provided a better understanding of contemporary trends of socially oriented economy, 55

6 assisted the government in mobilizing resources for alternative economy related programs and, as such, contributed to the process of social policy reconstruction in Serbia. 2. Quantitative characteristics of the social enterprises in Serbia Size and fields of activities There is no statistical information on the economic size, number of enterprises, employment turnover, production, percentages of GNP growth rates or other specific evidence regarding social actors, which correspond to social enterprise in Serbia. Social enterprises do not exist as a statistical category, therefore it is almost impossible to obtain concise statistical information and provide a reliable picture. In the absence of reliable statistics on social enterprises recent research reports and studies (Kolin, 2004; UNDP BRC, 2006; UNDP EMES, 2008; Kolin and Petrusic, 2008) recognize cooperative networks, different types of citizen associations (self-help groups in particular), enterprises for persons with disabilities (PWDs), spin-off enterprises in the form of limited and joint stock companies, business incubators and agencies for the development of small and mediumsized enterprises as entities which correspond to SE in Serbia. A detailed breakdown is presented in the Table 1: Table 1: Mapping of social enterprises in Serbia Type of organization Number of identified SEs Percentage of the SE sector in Serbia Citizen Associations Cooperatives ,6 Enterprises for PWDs Spin-off enterprises Agencies for SME development

7 Business incubators 6 0,5 Other SEs 2 0,2 Total 1, Source: UNDP EMES, 2008 It can be estimated, on the most recent research, that 1,160 entities in Serbia correspond to innovative social enterprises, with total of 12,059 employees. The same research accepted that cooperatives represent the largest part of these networks (79 percent), followed by citizen associations (14 percent) and enterprises for persons with disabilities (3 percent). (UNDP EMES, 2008). Although the Serbian public is not sufficiently informed about the significance of social enterprises, their importance for the economy of developed countries is significant. Though Serbia has not adopted a proper legal framework for social economy to flourish, different social actors corresponding to social enterprises have been recognized on the socioeconomic scene. Despite their differences, organizations identified as social enterprises share the following social functions: potential of generating new jobs and the economic integration of disadvantaged groups, through the employment, and social integration of marginalized social groups, carried out either through economic integration or purely social integration (day centres for persons with disability, the inclusion of refugees in organizations with resident membership, etc.). Dealing with different target groups, these organizations are capable of accepting innovation in new ways of employment and services provision, in particular in the social protection of vulnerable groups. An overview of the main activities, undertaken by innovative social enterprises, shows that most of these organizations deal with training and social care services, while their production activities are sporadic. The listed forms of organization differ in their degree of similarity to social enterprise. Some of them meet the listed criteria almost completely (e.g. social cooperatives), while others, by virtue of certain features, stray from the ideal type (such as: profit orientation in agricultural cooperatives, low tendency of paid work and production / service-providing activities in voluntary organization, law degree of autonomy in agencies for the 77

8 development of small and medium enterprises and the like). Besides, even if the organizational forms listed are perceived from the point of view of their development, it can be noticed that some of them have the potential to grow into real social enterprises, while the others will stray further, should legal / social conditions change. Assessment of specific types Cooperatives In Serbia, there are over 2,800 cooperatives registered at the Agency for Business Registers. These include credit, consumer, youth and trade cooperatives, but farmers cooperatives are the most widespread. Some of these entities only belong to the cooperative category formally, but do not base their functioning on actual cooperative principles (for example, youth and students' cooperatives represent specific labour markets for the engagement of young people in part-time employment, housing cooperatives have ceased to exist, etc.). According to data provided by the Cooperative Union, Serbia has approximately 1,200 agriculture cooperatives on record with approximately 120,000 members. The majority of these cooperatives, however, have frozen their businesses during the past for political reasons and other difficulties and according to the source above, only around 800 are still functioning and able to perform non-traditional functions. Beside these cooperatives, which are mostly inherited from the past, there are around 50 to 100 newly created cooperatives that have begun to develop an entrepreneurial dynamic focused on social goals, such as services for the elderly or integrative programs designed for people with disabilities. The following forms of cooperatives, which represent innovative social enterprises organized in a cooperative form of organization, are currently present in Serbia: 1. Agricultural cooperatives, created by associations of small agricultural producers in an effort to strengthen their position on the market and pool the resources required to develop agricultural production; 2. Women's cooperatives exploring ways of providing jobs and reducing poverty and unemployment among vulnerable groups of women including those who were laid off 88

9 during the transition period, less qualified and elderly persons and long-term unemployed; 3. Ecological cooperatives that promote healthy food, organic, environmentally safe agriculture and local tourism development; 4. Social cooperatives, created to integrate extremely marginalized disabled groups, (economically and socially), people with limited capacities, or who completely lack the ability to work. Compared to agricultural and women's cooperatives, which have profit directed activities, social cooperatives are focused primarily on social objectives. Citizen associations: Self-help groups Official statistics identify about 24,000 social and citizen organizations the majority of which are sport clubs, cultural and artistic organizations, humanitarian and charity associations and professional organizations. However, according to evidence provided by the Centre for Non-Profit Sector Development (CRNPS) 3, a think tank in Serbia, more than 3,000 autonomous non-governmental organizations (NGOs) are registered under the 1989 Law on Associations (Directory 2002). More recent data provided by Civil Initiatives, (the Citizens' Association for Democracy and Civic Education) has counted 900 active NGOs in Serbia in More in-depth research undertaken to explain and promote the concept of SE among relevant stakeholders (UNDP EMES, 2008), pointed out that 162 citizen associations are active in Serbia (i.e. self-help groups specializing in welfare and social protection for the most vulnerable groups). The main sub-categories of third sector social enterprise are refugee groups and self-help groups for women and people with disabilities. The latter are a well-organized, traditional segment of voluntary organizations focused on programs for the handicapped population (blind, deaf, developmentally delayed, paraplegics, and disabled veterans). Self-help groups for women stimulate business activities and job creation and promote the social inclusion of vulnerable women. Some minority groups, which strengthen the social inclusion of their members by means of production, also fit the definition of social enterprise; their activities 3 The Center for the Development of Non-Profit Sector (CRNPS) is a think tank established in 1996 by the Soros Foundation to support the building of autonomous civil organizations within Serbia. 99

10 often include sewing, weaving or pottery-making and sometimes involve marginal minority groups, such as the Roma people. Religious groups are another kind of association, although these organizations are established under a different legal framework. Programs are tailored to support these vulnerable groups through different services and protective measures organized on a local level. After democratic changes in autumn 2000, religious groups started to provide social services, in particular to vulnerable and marginalized groups. The elderly population is the main beneficiary group of these religious organizations; the assistance they receive ranges from nursing and medical treatment to nutrition, food provision and home assistance. Chronically ill people, who lack adequate family support, also benefit from the assistance of religious groups as many suffered extreme marginalization under the transition process. Caritas is the largest religious network operating in Serbia; it is supported by the international welfare organizations of the Catholic Church. Philanthropy, the humanitarian organization of the Serbian Orthodox Church, is one of the most influential religious groups involved in providing services for the sick and elderly. Enterprises for vocational training and the employment of persons with disabilities Social enterprises for persons with disabilities or enterprises for vocational training and the employment of persons with disabilities are the organizations that come closest to the concept of social enterprise. Under socialism, a well-organized segment of self-help groups, focused on the integration of disabled people, was established during the 1970s in Serbia. Their activities promote social integration through the creation of jobs, micro-projects, selfemployment and other types of activities that foster an enterprising spirit and support people with disabilities. Sheltered workshops are enterprises that offer vocational training and alternative employment for persons with disabilities; they can be established by associations of persons with disabilities and may obtain relative autonomy from their founders. In addition, these organizations can be established by profit-driven enterprises, when such companies employ people with disabilities, primarily those suffering from disabilities due to work-related incidents. According to data provided by the Ministry of Labour and Social Policy (MLSP), 55 enterprises for vocational training and the employment of people with disabilities, primarily work-related disabilities, had been organized by According to one report 10 0

11 issued by UNDP EMES in 2008, these companies employ a total of 2,926 persons with disabilities, 60 percent of which are persons whose disabilities are work-related, 21 percent are persons with mental disorders, and 12 percent are persons with hearing disorders. Spin-off enterprises Enterprises that are formed as voluntary organization spin-offs are frequently formed as limited liability enterprises, rarely joint stock companies. Nevertheless, regardless of their legal form, these enterprises are characterized by a close association with their founder (voluntary organizations or for-profit enterprises). In this sense, these enterprises have relatively limited autonomy. There are 24 spin-off entities which correspond to innovative social enterprise in Serbia. Agencies for the development of small and medium sized enterprises Agencies that foster employment through the development of small and medium sized enterprises (SMEs) have been receiving support under a European Union program since 2001, when the Law on the Agency for the Development of Small and Medium-Sized Enterprises was passed. The mission and functioning of such entities correspond to the definition of social enterprises. According to the law, the establishment of these entities must promote partnerships among the public, private and non-governmental sectors, although these entities are founded as limited liability companies (Ltd). This legal form was chosen since there no other form existed, which could result in a non-profit organization, on one side, and legal persons as founders, on the other. Currently, there are 13 agencies making up a network for SEs. Business incubators A business incubator is an economic development tool designed to accelerate the growth and success of entrepreneurial enterprises through an array of business supports and services. These entities are an efficient instrument towards the support the development of small and medium sized enterprises. On the one hand, they offer the resources required to increase the chances of survival or for upgrading the activities of these enterprises/beneficiaries. These resources may include: premises, training, accounting, equipment, marketing approach, computer networking, as well as business consulting. The 11 1

12 most widespread goals of incubation programs are the creation of employment in a community, enhancing the community s entrepreneurial climate, retaining businesses within a community, building or accelerating growth in local industry and diversifying local economies. Size structure, regional distribution and target groups Beside a small number of well-developed, large social enterprises (20-30), operating in Belgrade or regional centres (Nis, Uzice, Novi Sad), other entities which correspond to the social enterprise sector are small-size operations with a low and very unstable annual budget. Although small, somewhere between informal groups and real institutions, these organizations are made up of educated and motivated professionals, though often with no strong formal structure or permanent employment. The internal structure of these organizations is under-researched, however, according to data from the beginning of 2000, the third sector showed poor employment potential as 77.3 percent of these organizations did not have a single employee, 17 percent employed 1-5 people and only 2.3 percent had 11 or more employees (NGO Policy Group, 2001). Regarding the regional perspective, most social enterprises are found in Serbia s northern province of Vojvodina (45.3 percent) followed by Central Serbia (42.3 percent) and the city of Belgrade (12.3 percent). When agricultural cooperatives are excluded however, a different regional distribution can be observed as the other types of social enterprises are concentrated more in Central Serbia (UNDP EMES, 2008). The type of SE described above, which integrates a combination of entrepreneurial strategy with social purpose, generally operates to answer unmet needs. The target groups of the SE network is very heterogeneous, unemployed group of young people and vulnerable groups of women among including those laid off during transition and the long-term unemployed, less qualified persons, highly marginalized group of persons with disabilities and people with a limited capacities to work. Their specific fields of activity are the training and reintegration of persons excluded from the labour market. On the other hand, various personal social services are aimed mainly at the disabled, sick and elderly, vulnerable refugee and minority groups, such as the Roma community. The local development of disadvantaged areas and activities aimed at developing the local economy, in which SEs 12 2

13 accelerate the growth of a local community or provide increased employment for various social groups in underdeveloped regions, have recently started to provide support to relevant stakeholders (UNDP, 2009). 3. Organizational and management characteristics Legal framework The existing legal framework in Serbia does not recognize organizations that might be strictly defined as social enterprises. However, organizations that correspond to the EMES concept of social enterprises almost entirely are established in Serbia under the Cooperative Law 1989, The Law on Social Organizations and Associations of Citizens, 1982 (amended 1989), the new Law on Associations of Citizens, 2009, the Law on Enterprises for Vocational Training and Employment of Persons with Disabilities, 1996, the Company Law, 2004 and the Law on Churches and Religious Communities, The Cooperative Law 1989 regulates different types of cooperatives including newly formed social cooperatives. According to this law, the following cooperatives may be founded: agricultural, housing, consumer, artisan, health care, savings and loans, youth, students', and pupils', as well as other types of cooperatives for the production and turnover of goods and services. The existing legal framework for cooperative development is essentially outdated, which results in a series of difficulties for the development of modern cooperatives. The tax regime under which these entities operate is currently similar to that applied to for-profit enterprises, while efforts to amend and replace law in force are in progress at the Ministry of the Economy of the Republic of Serbia. The trend is focused on further improvement of cooperative legislation, tax policy deductions and favourable loans 4 The Law on Enterprises for Vocational Training and Employment of Persons with Disabilities, Official Gazette of the Republic of Serbia, 1996, The Company Law, Official Gazette of the Republic of Serbia, No. 125/2004, The Law on Preventing Discrimination of Persons with Disabilities, Official Gazette of the Republic of Serbia, No.33/06, The Law on Cooperatives, Official Gazette of the Republic of Serbia, No.57/89, 46/95, The Law on Social Organizations and Associations of Citizens of the Republic of Serbia, Official Gazette of the Republic of Serbia, No.24/82, 39/83, 17/84, 50/84, 45/85, 12/89 and 53/93, 67/93, 48/94 and 101/2005,The Law on Associations of Citizens, Social Organizations and Political Organizations in the Socialist Federal Republic of Yugoslavia, Official Gazette of the Social Federal Republic of Yugoslavia, No. 42/90 and Official Gazette of the Federal Republic of Yugoslavia, No. 24/94, 28/96, 73/2000, The Law on Associations of Citizens in the Republic of Serbia, Republic of Serbian Official Gazette, No. 51/2009, The Law on Churches and Religious Communities, Official Gazette of the Republic of Serbia, No. 36/06, Statute of the Agency for the Development of Small and Medium Sized Enterprises 13 3

14 for cooperative support programs. These new initiatives are based on a new legal framework that would define cooperative property accurately, protect the interests of cooperative members, and facilitate the sustainable development of cooperatives and other activities through policy improvement measures. Non-profit organizations, including self-help groups and voluntary organizations, are regulated by the old Law on Social organizations and Citizen Associations (1982, amended in 1989). This legal framework fails to consider the social commitments and the degree of disadvantage taken on by social enterprises and restricts their potential to engage in economic activities. However, the recently adopted Law on Associations (2009) is closer to international standards and regional best practices. The new law has improved administrative practice, including the introduction of a low-threshold registration process, opened doors for economic performance and tax deductions aimed at fostering corporate donation and economic activity. Associations can acquire property form membership fees, voluntary donations, as well as other donation and gifts, financial subventions, interest rates on investments, rents, dividends and other envisaged by law. This legal solution makes it possible for associations to be self-sustainable and able to pursue their goals and missions through economic activities. The enterprises for vocational training and the employment of persons with disabilities (and their profit orientation) are regulated under the Law on Enterprises for Vocational Training and Employment of Persons with Disabilities, The Law on the Prevention of Discrimination of Persons with Disabilities 2006 and the Strategy for the Improvement of the position of Persons with Disabilities also stimulate active labour market measures and the employability of persons with disabilities. These organizations enjoy tax benefits under finances regulations: exemption from the payment of contributions for the first 24 months for new employees engaged via the National Agency for Employment, a VAT reduction from 18 percent to 8 percent, exemption from profit tax, lower customs tariffs on imports of machines and equipment not manufactured in the country. These enterprises may also enjoy other advantages regulated under documents of local self-government (for example, for communal services and electricity). In addition, they have priority rights when bidding for certain contracts, provided they fulfil the other criteria (regular payment of contributions for employees, quality of products and services). 14 4

15 According to the Law on Churches and Religious Communities from 2006, voluntary organizations with religious affiliation can establish certain institutions and organizations, within the framework of social and charitable activities, undertaking production and/or service activities. The law also stipulates that in performing the activities and providing income, churches and religious communities can be fully or partially exempt from taxes and other obligations, in accordance with the laws regulating certain public revenues. On the other hand, SME companies and spin-of enterprises are established under the Company Law (2004), which regulates these and other profit organizations. Organizational and management structure The Innovative social enterprise network is still under-developed regarding internal structure, capacity to provide employability, training for employment and a wide range of services. One serious problem is a lack of skilled social entrepreneurs, alongside the chronic financial problems facing most social enterprises: frequent operating losses, inability to secure adequate presentation on the market, inability to collect debts, the burden of debt from previous years, surplus workforce coupled with impossibility to transfer the surplus to the National Agency for Employment (due to unpaid obligations). It has been pointed out that a number of enterprises pay only contributions, not salaries, and, furthermore, in most enterprises salaries are in arrears by over one year (UNDP EMES, 2008). Beside the new network of social enterprises, the traditional segment consists of a number of pre transitional organizations which, like in other Central-East European countries, are mainly self-organized groups of disabled people with a substantial voluntary participation. The vast majority of these organizations were established in the seventies, their main task being to provide supplementary services (e.g. recreation or sport). During social transition in Serbia some of these groups have attempted to evolve, carrying out reforms and building their capacity by providing social services and self-employment programs, designed to strengthen entrepreneurship and activities aimed at integrating vulnerable people into active life. An important trend can now be identified among such organizations in Serbia: the creation of networks among organizations that share the same mission in various regions of the 15 5

16 country. These networks usually have a central organization that acts as a central focus point and coordinates the work of the whole network. One example of such an organization is the Association for Women's Initiative, AWIN, which networks a large number of women s organizations and initiatives all over Serbia, through a variety of programs on the education, empowerment and employment of women. There is also the Ethno-network, bringing together cooperatives of cottage industry, rural tourism and less formally organized groups of women engaged in these activities in rural areas; the Agro-network, a network of farmers' clubs, cooperative managers and rural women s clubs; and the network of telecottages, linking telecottages together as information centres in rural communities. Financing There is no systematic evidence available, but it can be estimated that almost the entire innovative social enterprise network has been encouraged, and financially supported through international organizations, global civil society networks, and many foreign governments (UNDP, USAID, EU/EAR, SIDA, OXFAM, Handicap International). In other words, many foreign donors have decided to support the national poverty eradication strategy by providing programs for the training and re-integration into employment of persons excluded from the labour market, various personal services (e.g. childcare services, aid for disadvantaged people, services for elderly people, home care services) and the local development of disadvantaged areas. This support also consists of the financial means required for business incubators to conduct consultancy services. Access to funds from local and European programs is still limited for the social enterprise sector. Nevertheless, the various programs and instruments, through which the EU supports the activities of civil organizations in Serbia, represent the largest single source of funding to activities definable as SE (CARDS, IPA, Civil Society Facility and other forms of EU funding). These projects are often aimed at supporting partnerships on a local level, economic progress and poverty reduction through the employment of vulnerable groups. Some ministries such as the Ministry of Economy and Regional Development have elaborated financial tools involving alternative credit and start up loans to encourage new business and foster employability through SMEs. This support ranges from the engagement of business incubators to consultancy services and financial issues. Overall business support services (providing business advice, market research, marketing and communication, etc.) and various training 16 6

17 projects for (future) social entrepreneurs or managers in the social enterprise sector and services providing information and knowledge have also been established. Though it has scaled down its funding, USAID, traditionally the largest foreign supporter of civil sector in Serbia, is currently funding income generating projects and support to agricultural cooperatives in the Vojvodina region. The World Bank and other donors, such as the Swiss Agency for Development and Cooperation, are running small grants programs and likewise many embassies of countries that support Serbia on the path towards European integration. The financial support for SEs derived from domestic donors and the business sector remains small, but the trend is upward with an increasing number of businesses supporting third sector organizations in Serbia (foreign banks are among the most active). If it exists at all, socially responsible business in Serbia is only at the embryonic phase. A significant number of social services provided to local communities by third sector entities have been organized and financed through the Social Innovation Fund (SIF), a mixed resource base (i.e. funded both by public authorities and international donor s programs). Certain cities in Serbia, such as Belgrade, Niš, Novi Sad, and Zrenjanin, have also set up funds for the promotion of third sector development, but these are still at their early stages. Nevertheless, local government in small and underdeveloped regions are financially incapable of supporting civil society. Groups of people with needs either not recognized by public authorities or excluded from public benefits are being catered to by a substantial number of social enterprises set up to provide new services. Many of these activities were initiated independently by groups of citizens, with little or no public support. Nonetheless, since the services provided were acknowledged to be of public interest, after some years, the state or the local authorities often decided to finance several such social enterprises, according to the level of disadvantage with which they were dealing. In some other cases, development was prompted by public policies. Indeed, there are many social enterprises with mixed resource bases funded both by public authorities and by fees directly paid by the users, or a combination of public funds and resources from donors and volunteers. Moreover, a growing number of social enterprises secure public resources to provide a service by 17 7

18 bidding, thus competing with other social enterprises, third sector organizations and forprofit enterprises. Gender and equality The Serbian labour market is characterized by a downward trend and a higher unemployment rate for women. In 2006 only 54.6 percent of the total female population of working age (age group 15-64) was active on the labour market. This is very low, when we compare it to the corresponding figure, 72.7 percent of the male population of working age. Furthermore, there are significant gender disparities in entrepreneurship and selfemployment; according to data from the Serbian Business Registers Agency, only 20 percent of company owners are women. Gender disparity can be correlated to a lack of property ownership (only 30 percent of real estate titles are held by women), high taxes and levies, the risks of doing business in Serbia, a lack of support for women in the home and difficulties in maintaining a balance between employment and the traditional role in private life. According to data from the National Employment Service, unemployment is significantly higher among women than among men (25.5 percent compared to 18.6 percent). Women's disadvantaged position on the labour market is compounded by fewer opportunities to contract full time employment, lower and irregular payment of unemployment benefit, less opportunities for pre-qualification or professional retraining and higher probability of being engaged in unpaid work at home or jobs in the grey economy (always significant source of income for unemployed women). Although younger women are generally more likely to be unemployed, particularly vulnerable groups are: single mothers (especially with pre-school or disabled children), housewives, elderly women, ill or disabled women, women from rural areas, refugees, Roma women, uneducated women and victims of violence. Starting from the premise that women suffer the most significant disadvantage in periods of transition, cooperatives and other forms of social enterprises have been recognized as models of economic empowerment for women. The contemporary feminist movement therefore is focused on the social economy and alternative forms of the production and provision of services through the establishment of new forms of employment. The most frequent drivers of employment in the social economy are non-governmental organizations, 18 8

19 promoting the employment of vulnerable and underprivileged categories and (mainly experimental) projects offering programs that reinforce social cohesion and integration. This new approach includes programs within the framework of new forms of employment in sectors were traditional investor driven companies cannot provide a socially acceptable response to unemployment. One of the first initiatives in this area has been Female Cooperatives Challenge and Opportunity, a program from the Association for Female Initiative promoting cooperatives and business or services organizations where members jointly own the company and control its activities, promoting solidarity, self-help and care of the community. Part II: Driving forces and barriers obstructing the development of social entrepreneurship 4. Current framework conditions and future perspectives: Historical development Serbia has a long tradition of cooperative movements, which is closely connected with traditional family patterns: mutuality and solidarity as one of the basic values and principles of the family way of life. The cooperative movements that began in the middle of the nineteenth century in most countries in the world, whereby people organized themselves around a common, usually economic goal, have had a great influence in Serbia. As Serbia was a mainly rural country, the history of the cooperative movement was made by agricultural collectives, farm and credit unions, which were started on the end of nineteenth century. The Association of Cooperative Farms of Serbia was established in 1895, as an independent interest and expert-business association of cooperative farms and other organizations. Through regional associations, the association's membership counts 995 cooperative farms dealing with the organization of production on farms belonging both to the members and other farmers, supplying tools and equipment, the processing of agricultural produce and their sale on home and foreign markets. In 1895, the Head Alliance of Serbian Cooperative Farms was established; the first Law on Agricultural and Handicrafts Collectives was passed in

20 During the Kingdom of Serbs, Croat and Slovenians, later the Kingdom of Yugoslavia ( ), considering the level of economic development in the country, the collective movement was well developed, collective farms prevailed making up 82.7 percent of the total number of collectives. The majority of agriculture cooperatives were organized as credit and purchase collectives. Specialized production collectives (specialized in grain, dairy products, vine, fruit, and agricultural produce) were also established during this period. They had an important role in the processing and marketing of produce as well as in the purchase of agricultural equipment and supplies, but also in approaching the social issues of the communities. After the Second World War, the evolution of the cooperatives fell under the considerable influence of communist ideals regarding the collectivization of the private sector in agriculture. The cooperatives became an integral part of the political system and planned economy when their ownership was transformed into so-called, "public" enterprises without compensation, so that significant property in agriculture came under government ownership. The post-1989 period is new phase in the development of agricultural cooperatives in Serbia. Instead of the former legal regulations, a new set of laws has been introduced, such as the Laws on Associations in Serbia (1989) and the Law on Cooperatives (1996). Under this new legal framework cooperatives are organizations by their members while their material assets are collective property. Their task is to strengthen farming households as economic subjects and to enable them to develop market relations. The program of economic restructuring, following the democratic changes in 2000, marked a renaissance of the cooperative as one of the important opportunities for the open labour market and the integration of disadvantaged workers. The Serbian public is not sufficiently informed about the significance of the cooperative movement and its importance in the contemporary economy of developed countries, and Serbia has not adopted a proper legal framework for cooperative to flourished, yet cooperatives have been recognized and are present on the Serbian socio-economic scene. The modern cooperatives movement is mainly concentrated on agriculture, ecological cooperatives and some women's initiatives, while we still need adequate promotion and an appropriate legal framework to regulate new forms of cooperative. The strong predominance of neo-liberal policies that has affected 20 0

21 the transition process has neglected alternative economy and failed to recognize the potential of associations and new cooperatives as producers of goods and services. The main barriers of social enterprise sector development Like other post-communist countries, social enterprises in Serbia are still a largely untapped resource and are generally overlooked as economic actors. An examination of the concept and practice of social enterprise, conducted in Serbia, concluded that the role played by social enterprise appears to be marginal, when compared to Western Europe. While the relevance of advocacy organizations in the building and strengthening of democracy has been generally acknowledged, the role of organizations other than investordriven entities, including social enterprises therefore, as economic and welfare actors has been overlooked (UNDP EMES, 2008:6). There are several difficulties that have to be faced when promoting social enterprises in Serbia, according to a recent study, which focused attention on emerging issues (Leś and Kolin, 2009). First, there is considerable difficulty in obtaining empirical information on the existence of social enterprises, the active sectors to which they contribute and the number of individuals they employ. The potential role of social enterprise in social policy and economy is still being overlooked, as these organizations are not recognized as long-term welfare and economic partners. They are rather considered as ad hoc short-term, gap-filling actors, a shunting yard for problems generated by social transformation. Taken as a whole, the general public is not well informed about the social enterprise sector, its nature and purpose, while government officials still see the third sector as a marginal, unreliable yet partially useful technical executor of small-scale projects. According to the same comparative research, this slight recognition often goes hand in hand with the opinion that social enterprises are financially vulnerable, economically unsustainable and therefore unable to produce goods, deliver services and generate employment on a long-term basis. The barriers that hamper the development of social enterprises in Serbia include lack of supporting environments and infrastructures, restricted access to resources, privileged administrative treatment for specific organizational forms, unsuitable institutional framework and an inconsistent legal environment. 21 1

22 As we have already pointed out in Part I, the existing legal framework in Serbia does not recognize organizations that can be defined as social enterprises in the strict sense. The absence of an adequate legal framework, which would support consistent and coherent policies towards social enterprises, is an obstacle to the promotion and institutionalization of social enterprises. The organizations that do correspond to social enterprise are established under a variety of legal acts, such as the Cooperative Law 1989, The Law on Social Organizations and Citizens' Associations, 1982 and the Law on Citizens' Associations, 2009, the Law on Enterprises for Vocational Training and Employment of Persons with Disabilities, 1996, the Company Law, 2004 and the Law on Churches and Religious Communities, Overall, the tax regulations of the non-profit sector are relatively limited and do not provide any real incentives for companies or individuals interested in supporting the development of third sector organizations. Accounting and bookkeeping rules for non-profit organizations are the same as for small and medium sized enterprises. Exceptions are envisaged in the case of equipment imported within humanitarian assistance programs and when it is intended for disabled people. In both cases, third sector organizations benefit from a preferential import tax. Under the law, enterprises for professional rehabilitation and the employment of persons with disabilities enjoy regular benefits and support programs from the MLSP. However, these enterprises face numerous practical problems, their premises are frequently not suitable to employees with disabilities, and there is no adequate safety in the work environment (occasionally not even conditions of basic hygiene). Enterprises frequently (in up to approximately 90 percent of cases) do not employ the qualified personnel prescribed by law. In addition, labour related documentation (regulations pertaining to persons with disabilities, applications for compulsory social insurance, and labour contracts), are not harmonized with existing legal regulations, and in some enterprises, employees with disabilities are not assigned to jobs in accordance with the guiding regulations for work under special conditions. Co-operation between third sector entities, including self-help groups, and the business sector is very poor. If it does exist, socially responsible business in Serbia is only in its 22 2

23 embryonic phase. There are only a few positive examples where profit-making enterprises have supported self-help group projects and this occurred chiefly during some public campaigns. A recent report concluded that the business sector is either weak or represented by individuals who have accumulated wealth in ways which make it difficult for NGOs to cooperate with them (Golubovic and Andjelkovic, 2008). Driving forces behind the development of social entrepreneurship The concept of social enterprise has recently started to gain attention as a viable solution for growing unemployment and raising demands for social services. Serbia has a persistently high unemployment rate of around 21 percent of the labour force, according to the Poverty Reduction Strategy Program (PRSP), Second Report (Government of Serbia, 2007). From a labour market perspective, structural reforms have resulted in new groups being threatened by unemployment including women over 45 years of age, poorly qualified young people and single mothers, the disabled and ethnic minorities as the Roma population. These groups have few opportunities to find employment on the traditional labour market, yet they also lack adequate public support and legal measures. In such situations social enterprises have a role to play in promoting new employment and could have a significant function on the labour market by activating employment, reintegrating low-skilled groups by providing jobs. Table 2: Structure of Unemployed Persons Unemployment rate Long-term unemployment (over 1 year) Share of young people (15-29) in total unemployment Unemployed female Unemployed male Source: Government of Serbia, 2007 One of the major causes of the substantial increase in unemployment rates were layoffs of surplus employees during the process of privatization and restructuring of state and socially-owned companies. The persistence of a large numbers of women excluded from the 23 3

24 workplace is a key challenge in the objective of social integration. Long-term unemployment is the term used to define the portion of the labour force that has been unemployed for 12 months or more, it represents an enormous problem and mostly affects middle-aged women and women with the lowest educational qualifications. The share of women among the long-term unemployed is high, 74 percent of the total number of unemployed are women, who have been waiting for a job for over one year, while 69 percent of unemployed men have been jobless for over one year, this clearly indicates that while long-term unemployment affects both sexes, it affects women more than men. Long-term unemployment is often linked to social exclusion that leaves specific groups isolated. The longer a period of unemployment lasts the more entrenched a person becomes in their social exclusion through their inability to afford material goods, services and housing, while their social contacts are often reduced (due to a lack of resources for socializing, or due to the stigma of being unemployed). Furthermore, long-term unemployment gives rise to a loss of motivation and skills, resulting in inactivity, a reduction of opportunities for employment and an increased burden on social funds. According to data from 2005, the average waiting period for employment is 44 months, while in the EU countries some 80 percent of all registered unemployed persons find employment within 6 months. According to the relevant source (Government of Serbia, 2007), unemployment is the key reason behind the feminization of poverty in Serbia. In 2006, 8.8 percent of the population in Serbia had incomes below the poverty line. The most vulnerable categories are large families in rural areas, families in the region of south Serbia, children up to the age of 18, the elderly (aged 65 and over), households with female heads and households in which the head only has a primary school education. The feminization of poverty is not characteristic only of households with an unemployed man, households with an employed woman may also be defined as low income households that deviate significantly from the average standards of living and are constantly incapable of maintaining an acceptable quality of life. Women with special needs, Roma women and women living in rural areas have additional problems on the labour market, and unemployment among marginalized women is far higher than that of the general population. For instance, data show that unemployment of Roma women in Serbia is twice as high as that of the rest of the population, coupled with poor social protection of this marginalized population i - this leads to high level of social 24 4