The value that the Korean government places on social enterprise can be monitored over the past few years. One significant step was establishing the Social Enterprise Promotion Act in 2007. The government holds the belief that social enterprises are a means to tame unemployment rates (which currently stands at 3.5% overall and 8.5% among youth – neither number between a typically healthy 4-6%) and strengthen society, particularly through job creation for the disadvantaged and providing social services. It remains one of the few countries to give social enterprise a common definition and continues to build a framework for support that is nonexistent in many nations.
Early efforts by government to foster social enterprises consist of providing financial support, management consulting, and tax cuts. One goal for the Social Enterprise Promotion Act was to allow more collaboration between corporations and NGOs to help establish social enterprises by providing certifications, corporate tax credits, and preferential procurement practices.
“I expect a more strengthened linkage between social contribution of company and social enterprise by developing diverse social enterprise models. The government will come up with various measures to nurture social enterprise,” said Minister of Labor Lee Young-hee in a symposium.
POSecohousing, an eco-friendly, steel house planning and construction company established in 2009, is one of the first social enterprise affiliates of a large company. A majority of its workforce are vulnerable people. In a sense, encouraging corporations to create stand-alone social enterprises allows them to take corporate social responsibility to a greater level. Instead of donating to charity, another approach is to allocate CSR funds to start a social enterprise.
In June 2011, the government announced a plan to promote social enterprises. The first step involves expanding funding channels for social enterprises to reduce their difficulty in securing loans from financial institutions. This is done by increasing the amount of microcredit loans and classifying social enterprises as SMEs so they can tap into government SME policy loans, as well as setting up a social enterprise investment fund.
Social enterprises will also be given preferential access to public institutions’ procurement contracts. When a government screens bidders offering to supply goods, social enterprises will be given an extra 0.5 points. They will also be allowed to participate in 35% of government-subsidized programs to build a stable profit-generating base and increase the efficiency of those programs.
The second step under the plan is to make social enterprises more transparent and accountable. There will be accounting and business management programs exclusive for social enterprises, and professional education courses developed by category and type of business. Instead of submitting business reports once a year, the Social Enterprise Promotion Act will be amended to require submission of business reports twice a year to strengthen monitoring of social service and financial performance.
The final step entails enabling all government agencies and sectors of society to play a role in finding and fostering social enterprises. To do this, July 1st is marked as Social Enterprise Day, a government-organized event is held to raise public awareness about social enterprises, and a “one-company one-social enterprise” campaign encourages companies to set up at least one social enterprise. Launched in February 2011 to support social enterprise activity, the Korea Social Enterprise Promotion Agency will be strengthened to provide systematic support for social enterprises.
“The measures aim to increase the sustainability of social enterprises by strengthening their social responsibility as well as support for them. They also focus on getting both private and public sectors to take a leading role in finding and fostering social enterprises,” said Employment and Labor Minister Lee Chae-pil in regards to the plan. ”On the basis of these measures, MOEL will strive to ensure that all sectors of society cooperate in discovering and promoting sustainable social enterprises.”
The Ministry of Employment and Labor and Its Major Policies 2012 states further commitment to create a social enterprise ecosystem: “The government will continue to spread the one-company one-social enterprise campaign. Private sector-led consultation bodies for social enterprises will be organized and operate at the central and local levels. An online mall and a joint marketplace for social enterprises will be newly established. The total volume of on-going and special guarantee and investment funds will be increased to 40 billion won.”
What Korea hopes is that the social enterprise sector will thrive by providing an ecosystem of support. While the framework and even the Social Enterprise Promotion Act undergo amendments, the government is willing to implement policies and develop supportive regulatory environments that allow for social enterprises’ success. It plays one of the largest roles among governments worldwide in terms of their direct and indirect support. While it can be argued that social enterprises are not the magic cure-all antidote, experts believe it is an approach to creating a stronger, healthier society and are urging policy makers and social enterprises to come together.
