The social economy is missing in strategies to create more inclusive growth

23 October 2017

Andrea Westall - Strategy and Policy Consultant, Senior Visiting Fellow, Open University

As more places around the UK focus on inclusive growth it is essential that the social economy is no longer left out

Many discussions about inclusive growth tend to focus on the policy implications for government, and the implications for, mostly, large business. Despite some interesting discussions around corporate governance reform, there has been little attention paid to the internal structure, incentives, or mission of organisations and businesses, and how this does or does not contribute to the creation of inclusive economies.

We therefore need to also look at how we structure economic activity, whether to improve access to and create ‘decent jobs’, or to ensure that people share more fairly in the proceeds of ‘growth’.

It was for this reason that the Joseph Rowntree Foundation (JRF) funded a piece of work that I was involved with on Cities, the Social Economy, and Inclusive Growth.

The ‘social economy’ includes activities, whether by organisations, businesses, individuals or groups, (some of which are paid, and some unpaid) which do not aim primarily to profit maximise, and generally operate with a strong focus on people coming together to meet their needs in a more participatory way.

The idea, wider than social enterprise, includes the ‘solidarity economy’ arising out of social movements, as well as informal and cashless activity such as food sharing. It also merges into more recognised business models, through ‘responsible’ or ‘mission-led’ business, or radical alternative governance models such as River Simple.

Whilst this piece of work focused on cities, the implications are just as relevant for coastal, rural and market towns.

We built on international work, for example, the OECD’s 2007 comprehensive publication: The social economy: building inclusive economies; the work of the UN’s Inter-Agency Task Force on Social and Solidarity Economy; and The Global Social Economy Forum’s 2016 conference which brought local governments and the social economy together. Post-financial crisis, the European Parliament and academics also looked at how co-operatives provided relatively greater pay, reduced pay differentials and job stability. Commentators such as Joe Stiglitz have argued that social economy organisations enable diverse responses to economic opportunity, and can reduce the impact of shocks.

It was recognised at the launch event for our new report in June that there are two ways of thinking about inclusive growth: connecting people to jobs, or changing the economy. The former position is the most prominent. Considering the social economy contributes to both.

In addition to potential roles in creating more plural and hence resilient economies, other contributions can include: employability support and direct job creation for the most disadvantaged; providing affordable childcare, housing or transport; stimulating entrepreneurship, productivity increases and innovation; brokering economic opportunities between local places and the private and public sectors; circulating local money and underpinning thriving communities; and influencing wider business behaviour to be more responsible and inclusive by illustrating ways of incentivising and behaving (e.g. lower pay differentials).

It is therefore important to move away from a simplistic ‘market failure’ view of the ‘third sector’. Rather, we should see the social economy both as part of a plural and inclusive economy, as well as having radical and transformatory potential to enable new possibilities, and ways of thinking about society, democracy and economics.

But the sector is diverse with many challenges. For example, for those operating in disadvantaged areas, it is hard to be economically viable whilst offering decent wages and conditions. Additionally, the size of the UK social economy is below the European average, with a relatively large voluntary and community sector, growing numbers of social enterprises, but seemingly fewer alternative governance model businesses, such as co-operatives or employee-owned businesses.

At the launch of our report findings,  a representative from JRF concluded that the social economy should be much bigger than it is, and that we could learn from inspirational examples and cities around the world, such as Barcelona, Quebec or Mondragon. We surveyed ten international cities with thriving social economies for hints about their success. We found that, rather than just focusing on one-on-one support (often the case in the UK) there seems to be more focus on collaborations and partnerships, within and across sectors, as well as strong leadership and championing by local government. There are also interesting policy approaches such as clever use of procurement contracts to seed social economy organisations (being picked up in the UK, for example by Sandwell and West Birmingham NHS Hospitals Trust and Sandwell Council), ‘distributed’ virtual incubators, and collaborations around knowledge sharing and innovation.

The UK has many relevant examples which, if better recognised and increased, could help realise more inclusive (and sustainable) economies. However, there seems to be a lack of understanding of this potential at local and city authority level, and a failure to include social economy organisations within ‘mainstream’ economic strategies, or procurement opportunities, for example, those arising from city growth strategies. In a series of roundtables around the country, one city official said that he did not realise that “the social economy cut across all parts of the economy and has a wider contribution” than he thought.

Scotland and Glasgow seem to have gone furthest along this path recognising the role of the non-profits, social enterprise, co-operatives and responsible business within their economic strategies. The development of Social Enterprise Places by SEUK is shifting focus away from the national level to a more place-based approach.

There were also suggestions to increase relevant activity through for example, supporting exit strategies for companies to employee ownership, or more networking and knowledge sharing between peers and cities.

In our roundtables, a challenge was thrown to the social economy, particularly by city officials, to better articulate and evidence what they do, and speak with a more coherent voice.

It was also noticeable that many participants had not previously met each other. The simple act of bringing together social economy, business, city authorities and academia led directly in several hours, to practical initiatives, new collaborations and even suggestions of policy change. That in itself was enough indication of the importance and relevance of continuing this kind of work.

As more places around the UK develop their own inclusive growth strategies it is essential that the social economy is no longer left out.

You can find further details about Andrea and her work here 

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