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1 Harmadik szint Peripherization in East Central Europe and the role of social and solidarity economy OTKA research project RSA 13th September

Institute of World and Regional Economics Formed in 2000 Harmadik szint Current staff: 14 + 1 persons Structure: Host

2 Institute of World and Regional Economics Formed in 2000 Harmadik szint Current staff: persons Structure: Host institute Department of Labor and Socio-ecomomics Department of Regional Economics Department of World Economics

3 Social and Második solidarity szint economy of post-socialist peripheries Duration: Harmadik szint Research questions: OTKA 1. SSE can play a significantly more important role in the development of peripheries than it has done recently in Hungary and its ways are outlined in international examples and analyses. 2. State socialist legacy plays a significant role in the fact that SSE sector is underdeveloped in Hungary, especially in its rural peripheries. As long as we manage to identify the elements of this legacy that have an effect on SSE, it would become possible to eliminate the obstacles that prevent the development of the sector and the emergence of beneficial effects. 3. The social utility of social enterprises, keystones of the SSE sector that is beyond their financial efficiency can be measured and its extent depends on the spatial characteristics

4 Social and Második solidarity szint economy of post-socialist peripheries Methods, inputs Harmadik & outcomes: szint OTKA Input1 - studying the Negyedik literature szint of developed countries; Input2 - interviews by» experts Ötödik and szint organisations; Outpu1 - country studies; Output2 - annotated bibliography and translation of studies Output3 - disseminations

5 Social and Második solidarity szint economy of post-socialist peripheries Goals: Harmadik szint OTKA to introduce the potential Negyedik role szint of SSE in the development of peripheries; to reveal the special characteristics of SSE sector in post socialist countries; to understand better the social utility of social enterprises and its measurement in Hungarian environment. Partners: Domestic companies, autorities, bodies (e.g. OFA, IFKA, SEs); Foreign supporters (universities, SEs)

6 MISKOLCI EGYETEM GAZDASÁGTUDOMÁNYI KAR OTKA Social and solidarity Második szinteconomy of post-socialist peripheries Harmadik szint Target areas: Involving 1+4 EU countries. >> Hu >> Cz >> Lv >> Pl >> Sl Lietuva Polska Ceska Republika Magyarorszag Slovenija 6 6

7 Százalék MISKOLCI EGYETEM GAZDASÁGTUDOMÁNYI KAR Mintaszöveg 50 szerkesztése Második 35 szint 30 Harmadik 25 szint 20 Negyedik 15 szint Év Csehország Litvánia Magyarország Lengyelország Szlovénia Share of population threatened with poverty and social exclusion, %,

8 Harmadik szint Peripheral and rural areas , Miskolc

9 Regional polarization Harmadik szint

Effects of post-socialist transformation Demographic transformation selective Harmadik out-migration szint ageing Negyedik population szint socio-economic marginalization Economic shrinkage lack of

10 Effects of post-socialist transformation Demographic transformation selective Harmadik out-migration szint ageing Negyedik population szint socio-economic marginalization Economic shrinkage lack of local employment long-term unemployment closing local units Shrinking public infrastructure GPs, schools, kindergartens+ Public transport, post offices etc. Centralization of political power Source: Melinda Mihály

11 1. The concept of social enterprise and entrepreneurship is relatively new and not particularly widespread Harmadik szint Source: CIRIEC 2012 Concepts in CEE countries 2. Other concepts have longer history and wider understanding in the region 3. Social enterprise in East-Central Europe has emerged from the concepts of the third sector, non-profit organizations and the social economy (Leś and Kolin 2009) Also, the concept of civil society is relevant. Source: Julianna Kiss

12 Concepts in CEE countries * Third sector and third sector organizations (TSOs) independence from other two sectors, third alternative between market and state. Második not profit szint oriented, institutionalized, performs public interest activities ignored by the other two sectors Harmadik szint In CEE and CIS countries, these organizations are also called non-governmental organizations (NGOs) to emphasize their independent nature (Borzaga 2008) * Social economy and social economy organizations (SEEs) Instead of insisting on the non-distribution of profits, it highlights the democratic character of the decision-making process, the priority of people and labour over capital, and the limited distribution of profits (Borzaga 2008) In CEE, social economy was introduced largely due to EU accession + less used but also important concepts: non-governmental sector, community economy, solidarity economy, CSR

13 Institutional development in CEE - after the change of regime Since 1989: new and favourable legislation, rise in citizen s activism, boom in the number of classical civil society organizations; except for Slovenia Harmadik szint Since the» mid Ötödik 1990s: szint growth of size, institutionalizaton, polarization, decrease in membership Since the mid 2000s: EU accession, promotion of social economy, new legal forms for social enterprises, Most recently: economic crisis, depening social problems, but new EU funding, emergence of social enterprises - lack of funding and more centralized distribution in the case of Hungary for CSOs

14 Institutional development in CEE common characteristics Characteristics of nonprofit sector in CEE: the sector started from a less institutionalized and independent Harmadik szint Weight of the sector (in GDP, employment) is not heavy compared to WE Role of the sector is connected to the decrease of the welfare state The legacy of state socialism : the field of sports, recreation, culture, professional interest representation is dominant except for Poland New roles important : democracy development, environment, advocacy, human rights Role in social provision, health, education is limited Potential role in production, economy development is not relevant, but growing Appearance of social enterprises: Lack of funding for nonprofits New entrepreneurial dynamics in older organizations and new organizations External strengthening through funding opportunities Source: Julianna Kiss

15 Theses of the research outcomes Before the regime change, there was no possibility or demand for the development of social economy due to the ideology that obstructed civic organization, but there were all kinds of attempts and initiatives pointing in the direction Harmadik of social economy. szint 2. The liberal economic shift following the transition, and the abandonment of obligatory social work and Soviet-style associations have Negyedik put business szint companies in the forefront and de-emphasized communal solutions in the economy. 3. After the change, growing civic activity reviving mostly in the more developed regions, focused on culture, leisure time activities, environmental protection and charity, areas which are rarely coupled with economic engagement, profit-seeking and employment. 4. Non-governmental organization are dependent on state subsidies, or in other form of subsidies from international tenders, thus from their intentions, and this dependence is stronger in rural peripheries. 5. Reduction of social spendings, diversification of consumer needs, failures of the labour market and the increase in the number of people in need raises and strengthens the need for social economy, but in rural peripheries creativity and the organizing power to act is lacking. 6. The former paternalism and democratic-deficit still hinders the civilians economic engagement, and social innovation generation

16 Theses of the research outcomes After a temporary retreat, the state is gaining ground again, and distrusts the civil sector, stop to hand over economic related tasks (services market) to civilians, and monopolizes, concentrates social innovation. 8. The corruption and Harmadik the lack of confidence szint hvae negative effects on the formation and development of sustainable socio-economic models which are based on the cooperation between business, public and civil spheres. 9. The real demand on social» economic Ötödik products szint and services is limited by the low income level of target groups. 10. The strongest, most effective socio-economic initiatives may not necessarily be found in the most disadvantaged groups and areas, the more advantegous conditions for the formation and adaptation of social innovation are stronger in developed regions. 11. The EU's social-economic model appears in government policies and development documents, but regulation tailored to national characteristics and development aimed for long-term has not implemented yet. 12. The Western European models of social economy are known, the sector is mainly expected to deal with employment and social service problems, however, the concept of solidarity economy is still not general accepted

17 What do the social enterprises Legal regulation variable Harmadik tax system szint as a for-profit companies need? Non-profit law does not concentrate only the state involvement The organisation do not have to lost their civil legal status New social vision such as policy-making Development based on community issues

18 Harmadik szint Share of SEs, dealing with poor and disadvantegous people, %,

19 Harmadik Thank szint you for your attention! Questions and comments? International OTKA Research International workshop "Social and solidarity economy in post-socialist peripheries" (Nr. K112928)

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