When talking about social entrepreneurship in Europe, one may bring up Finland, the UK, or Belgium.
After all, the 2011 GEM Report on Social Entrepreneurship estimated the share of the population involved in social entrepreneurship to be 7.5 percent in Finland, 5.7 percent in the UK, and 4.1 percent in Belgium. Across the EU, 1 out of 4 businesses set up are social enterprises. In Finland, France, and Belgium, that number is 1 out of 3.
With the economic crisis looming over its head, the EU set out the agenda for the Europe 2020 growth strategy, aiming to generate smart, sustainable, and inclusive growth in the EU.
One aspect of this strategy comes from realizing that because social enterprises generate significant social, environment, and community impact, they are an integral part for achieving the objectives in the 2020 strategy.
In turn, the Social Business Initiative was set up by the European Commission to foster social businesses – another name used interchangeably with social enterprise, although “social business” was first coined by Muhammad Yunus to define more specifically a non-loss, non-dividend, socially-oriented company and can therefore be thought of as a subset of social enterprise too.
For one European country, the economy seems to have bounced back. After registering the highest unemployment levels in the EU at 23 percent and an annual growth rate of -18 percent in 2009, the Latvian economy grew 5.5 percent in 2011 and 4.5 percent in 2012, according to the CIA World Factbook.
Austerity measures had been implemented and people were either out of a job or took a cut from their
Growth is also expected for 2013 but unemployment remains high. According to the International Monetary Fund, unemployment in Latvia is largely structural rather than cyclical as was the case during the recession, so lowering unemployment will require difficult-to-implement reforms.
Social entrepreneurship gains interest
Given the recent Social Business Initiative and the desire to address some of Latvia’s stubborn issues such as unemployment, income inequality, and poverty, the Ministry of Welfare has made a commitment to develop social businesses in the country. But this wasn’t always the case.
“Two years ago, there was a social entrepreneurship forum in Latvia that discussed what social entrepreneurship is and what it could do for society,” said Agnese Lesinska, a researcher on social entrepreneurship at Providus, a non-governmental, non-partisan think tank established in 2002. “Our
politicians didn’t participate in the forum.”
The Ministry of Welfare had only picked up interest when Providus began doing research on social entrepreneurship and when the European Commission came up with the Social Business Initiative.
“Because of the crisis, we still have a lot of unemployed people. We have to find the best ways to solve
this,” said Lesinska.
A newborn concept
Providus did research on social entrepreneurship which studied the experiences and legal frameworks
of 11 countries, and drew a vision for Latvia.
From the research they noticed that some may view social businesses as a tool for integrating disadvantaged people through work, while others view them as a tool to solve any social problem.
Because social entrepreneurship is a fairly new concept in Latvia, Lesinska believes the country is at an opportunistic point where they may figure out what they want to build and what they might want to put
“We are at the beginning of building the concept of social entrepreneurship. We don’t have any legislation or funds regarding social entrepreneurship,” said Lesinska. “In spite of that, we have several organizations that are social businesses if we look at the definitions made by Muhammad Yunus or the European Commission.”
Lesinska estimates that there are roughly 10 to 20 visibly noticeable social businesses in the country, and there may be many others that are uncounted for or do not know that they are social businesses.
Many of these businesses that can be identified are work integration social enterprises. For example, MAMMU is a fashion company founded based on the seven principles of social business developed by Muhammad Yunus and Hans Reitz. MAMMU employs young mothers who are unable to enter the job market.
In Latvia, many young mothers cannot enter the job market because they don’t have the option to work flexible hours in order to take care of their child. Moreover, kindergarten spaces are limited and they cannot afford to pay for childcare. At the same time, they do not receive enough social benefits and have to survive on income below a minimum subsistence level.
MAMMU provides young mothers with training and flexible working hours. Using the newly acquired skills, the women can set up their own businesses making fashion products.
Can doing good and doing well really co-exist?
Despite showing lack of interest at the beginning, the Ministry of Welfare became a big supporter for developing social entrepreneurship.
Amid austerity measures, critics are concerned that social enterprises are becoming an excuse for governments to cut spending or shirk responsibility in regards to the well-being of society, or that social enterprises are simply bad businesses in disguise because there is no such thing as doing good and doing well.
“The Ministry of Welfare is really willing to promote this idea and make it happen,” said Lesinska in regards to Latvia. “They see it as an additional tool. It’s not like they want to cut the possibilities for charity. They see it as a part of the whole sector. I think this is a very positive signal and I hope we will get some good ideas for how the government can help support social entrepreneurs.”
When asked about the public’s perception, Lesinska recounts her interactions at forums and with the local media.
“The society can’t understand why somebody would want to make a business not to earn money for themselves, but to solve a social problem. They just don’t believe it’s possible,” said Lesinska.
“I had to explain that this is a way to solve social problems, not to earn money and buy a big car.”
“We will have to work with that.”
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