Making Social Economy Visible in Romania (MSEVR)

Olivia RusanduPublic Manager

Romanian Ministry of Labour, Family, Social Protection and Elderlywww.mmuncii.ro

Romanian King Ferdinand attends the Congress of Cooperatives in 1925

The cooperative system in Romania goes back 120 years. The first Romanian association of cooperatives was in fact one of the founders of the International Cooperative Alliance in 1895.

Social economy in RomaniaShort history

Project’s leader: Civil Society Development Foundation

Partners in the project:

Financed by

Call:

DG Enterprises and Industry

Social enterprises’ economic impact

MAKING SOCIAL ECONOMY VISIBLE IN ROMANIA

Project’s Purposes

1. Creating Satellite Accounts for Social Economy2. Producing the Atlas of Social Economy 20143. Piloting the creation of a Statistical Register of

Companies in the Social Economy

Context: Draft Law on social economy

Context of the Social Economy in Romania (at the time the project proposal was drafted):

Risk?Regulating Social economy – A Missed opportunity

Inadequate attempts of regulation

Insufficient adequate social /civil dialogue mechanisms,

No common Social Economy platform at national level for social enterprising NGOs, credit unions, coops etc

Insufficiently recognised

Insufficient data and analysis needed for proper policy makingInsufficient awareness on the sector Insufficient education/ confusion CSR – ES.

Insufficiently known

9%Social economy supported

by ESF in Romania 2007-2013

Key intervention area 6.1Social economy development

Results – achievements:• Experimenting various approaches by various stakeholders – NGOs,

local governments, even central government for particular target groups – disabled, roma, women, ex-convicts, addicted, homeless

• Increased visibility, research and training• Start up of 144 social entreprises before 2014, additional hundreds in

2014-2015Weaknesses:• limited to work integration and to extremely vulnerable groups and not

long term unemployed, inactive etc.• did not foresee actions in favor of traditional social economy - worker

coops, micro-credit, social services, solidarity, etc

Defining entities- part of Romanian social economy, acc.toCIRIEC Satellite Accounts Manual

Applying EU methodology to calculate social economy entities’ satellite accounts’ indicators, part of national accounts system

Producing the Social Economy Atlas, 2013 edition,(report to include the results of the above reasearch)

Produce a Statistical Registry of Romanian Social Economy Enterprises. (associations&foundations, cooperatives, mutuals etc)

• - is a specialized public institution within the central public administration, subordinated to the Government

• - coordinates the application of the strategy and policies of the Government of Romania in the fields of labour, family, social protection and elderly, according to the applicable legislation.

• - Institutions operating under the supervision or under the authority of MoLFSPE: – A. Under the supervision of MoLFSPE:

• 1. Labour Inspection;• 2. National Agency for Payments and Social Inspection; • 3. National Authority for Child Protection and Adoption;• 4. National Authority for People with Disabilities;• 5. Department for Equal Opportunities between Men and Women;

– B. Under the authority of MoLFSPE:• 1. National House of Public Pensions;• 2. National Agency for Employment.

MINISTRY OF LABOUR, FAMILY, SOCIAL PROTECTION AND ELDERLY - ROMANIA

Ministry of Labour, Family Social Protection and Elderly (MoLFSPE)’s Responsibilities (1):

• Active participation at working group reunions (reuniting representatives of main social economy entities (mutuals, coops, associations and foundations) and of central public authorities with responsibilities in the area) for the project’s implementation.

• Providing support for meeting project’s objectives

• Facilitating the organisation by the project leader of interviews with institutions regulating the area (MoLFSPE and subordinate bodies, Romanian National Bank, Joustice Ministry, National Commerce Register Authority)

Ministry of Labour, Family Social Protection and Elderly (MoLFSPE)’s Responsibilities (1):

• Active participation at working group reunions (reuniting representatives of main social economy entities (mutuals, coops, associations and foundations) and of central public authorities with responsibilities in the area) for the project’s implementation.

• Providing support for meeting project’s objectives

• Facilitating the organisation by the project leader of interviews with institutions regulating the area (MoLFSPE and subordinate bodies, Romanian National Bank, Joustice Ministry, National Commerce Register Authority)

Ministry of Labour, Family Social Protection and Elderly (MoLFSPE)’s Responsibilities (2):

• Providing feedback on Altas of Social Economy 2013, drafted by the project leader

• Receiving and using the Romanian Social Economy Entities Register elaborated by CNPS

• Organizing 3 regional seminars on SE topics, agendas being drafted according to national context, Ministry’s policies in the area and needs identyfies

• Diseminating info on MoLFSPE’s w.site: www.mmuncii.ro

Ministry of Labour, Family Social Protection and Elderly (MoLFSPE)’s Responsibilities (2):

• Providing feedback on Altas of Social Economy 2013, drafted by the project leader

• Receiving and using the Romanian Social Economy Entities Register elaborated by CNPS

• Organizing 3 regional seminars on SE topics, agendas being drafted according to national context, Ministry’s policies in the area and needs identyfies

• Diseminating info on MoLFSPE’s w.site: www.mmuncii.ro

Defining entities- part of Romanian social economy, acc.toCIRIEC Satellite Accounts Manual

Non-financial Sector of Social Economy area: - Coop societies; -Non-profit institutions; -Trade / commercial societies owned/ controlled by associations, foundations, coop. societies;-Non-profit institutions serving non-financial societies

Financial Sector of Social Economy area: Credit coopsMutual Aid Houses (for pensioners, employees, army personnel)National Union of Mutual Aid HousesNon-profit institutions- recognised as providing financial intermediation services Non-profit Sector of Social Economy area:Non-profit Associations, foundations and certain institutions providing services for enterprises

Share of gross value added of social economy in gross added value of national economy, per sectors:

-Non-financial entities sector: 2011: 0.5% in 2012: 1.2%-Financial societies sector: 2011: 3.4%, in 2012: 4.0%-Non-profit institutions sector: 2011: 45.1%, in 2012: 37,8%Total gross value added of social economy in national economy: in 2011: 1.3%, in 2012: 1.9%

Main estimated indicators in measuring social economy: (computed per each sector)

•Production• Intermediate consumption• Gross Added Value•Employees payments/ salaries•Gross operating surplus•Allocation of primary income account •Gross formation of fixed capital•net lending (+) / net borrowing (-)

Problems identified/ Recommendations in this area

1.Identifying entities belonging to social economy sectorCIRIEC Manual is well structured, but the project showed that an improvement of the chapter in selecting social economy entities will be beneficial2.Entities for which there aren’t any statistical dataEntities for which data couldn’t be identified: lodging owner’s associations as they don’t report balance sheets to fiscal authorities and we think they should. 3.Financial accounts computing/calculationThe calculation of financial accounts supposes the existence of detailed info on financial social economy societies such as: mutual aid houses and credit coops.4. Errors in balance sheets (too high values for employees for organizations with large no. of members)It would be necessary for balance sheets to have an own registrations’ validation system before submitting them to fiscal authorities

Results and Lessons Learnt from national research based on CIRIEC Methodology

1.Identification of the population to be included in the satellite accounts of SE. Starting from CIRIEC Manual - A Statistical Register of Companies in the Social Economy - five major groups of SE companies: a)co-operatives, b)mutual societies – No insurance mutual – credit unions (which are somehow cooperatives, and social credit unions) c)social economy business groups – only those registered – with a legal status d)other companies in the social economy – in Romania there are yet no other legal business forms for social companies e)non-profit institutions serving social economy entities.

Applying EU methodology to calculate social economy entities’ satellite accounts’ indicators, part of national accounts system

1. Identification of the population to be included in the satellite accounts of SE.

Based on existing identification criteria for organisations of the National Institute of Statistics such as ownership (public/private), legal structure, etc. and previous experience, entities which belong to the sector were selected. Issues Included also the non-market sector - NPOs without economic activities and reported them total and market/non-market. Among NPOs were also found other entities such as credit unions or agricultural societies which are a legal form with combined features from both associations and cooperatives . In order to identify companies controlled by SE entities based on information on shareholders there were cooperation with the Register of Companies – shareholders organisations from SE sector.

• Missing entities – e.g. housing owners’ associations - they do not file balance sheets with the national tax authorities, they use single-entry bookkeeping and file the situation of assets and liabilities balance only with the local councils.

2. Sources of data - data from the Balance Sheets and the Profit and Loss Accounts for fiscal years 2011 and 2012 Number of institutional units of SE identified in the records of the National Institute of StatisticsFor credit unions affiliated to the National Union of Credit Unions of Employees who has around 2000 affiliates - used the sector consolidated balance sheet produced by the Union. (missing from the National Institute of Statistics records) and the balance sheet forms change from one year to the next.

3. Drawing up the accounts of the SE included in the Statistical Record by institutional sector – not by industry *• The following aggregates have been calculated :- output of goods and services, - gross value added- compensation of employees (from NPOs available in the balance

sheets only for those with market/economic activity)- net lending (+) / net borrowing (-)and balancing items, such as:• The financial accounts were not calculated – in Romania the

National Bank calculates these accounts

* NACE for NPOs poses problems – there is a Code – other non-profit activities

3. Accounts of the SE by institutional sectorNon financial corporations sector – cooperatives other than credit, SE groups -companies

Macroeconomic aggregates – non financial corporation sector of the SE (thou. lei) 2011 2012*Output of goods and services 1,378,634 3,712,410Gross value added 1,342,364 3,434,913Compensation of employees 406,651 847,660Gross operating surplus 935,713 2,912,015Gross fixed capital formation 133,120 351,177Net lending (+) / net borrowing (-) 801,670 2,195,498

Ratios specific to national accounts % Value added rate 97.4 92.5Investment ratio 69.7 84.8Gross operating surplus rate 9.9 10.2

* Includes SE groups

3. Accounts of the SE by institutional sectorFinancial corporations sector – credit cooperatives and credit unions (CU were previously reported under the Non-profit sector).

Macroeconomic aggregates of financial sector of the SE (credit unions and coops) (thou. lei) 2011 2012*Output of goods and services

522.274 641.617Gross value added

472.013 579.821Compensation of employees

244.294 362.641Gross operating surplus

227.719 217.180Gross fixed capital formation

2.660 3.192Net lending (+) / net borrowing (-)

299.097 373.666

Ratios specific to national accounts %Value added rate

90.4 90.4Investment ratio

48.2 37.5Gross operating surplus rate

0.6 0.6

3. Accounts of the SE by institutional sectorNon-profit institutional sector

Macroeconomic aggregates of The Non-profit institutional sector (thou. lei) 2011 2012Output of goods and services

3.906.873 4.226.006Gross value added

2.009.030 2.140.819Compensation of employees

1.937.230 2.085.187Gross operating surplus

71.800 55.632Gross fixed capital formation

153.236 126.346Net lending (+) / net borrowing (-)

-2.722.697 -3.898.267

Ratios specific to national accounts %Value added rate

51.4 50.7Investment ratio

3.6 2.6Gross operating surplus rate

7.6 5.9

3. Accounts of the SE financial sector by industry

NACE CodeOutput of goods and services,

Gross value added

Compensation of employees

Gross operating surplus

Gross fixed capital formation

Net lending (+) / net borrowing (-)

P1 P2 3=1-2 D1 B2 P51

6492

Other financial service activities, except insurance and pension funding 391.209 28.703 362.506 180.883 181.623 1.826

6419 Other monetary intermediation 131.065 21.558 109.507 63.411 46.096 834

Total 522.274 50.261 472.013 244.294 227.719 2.660

4. EMPLOYMENT - Indicators of the nonmonetary activity - (social accounting matrix)•Labour market data – total no. of employees only from balance sheets – No data were available for these types of companies from other statistical sourcesDetails such as structure of personnel by category M/F, type of workers – Farmers, Manual workers, Administration, sales and services, Management are available in surveysIssues: •No data on real working time of employees, •Using employment data from balance sheets only poses problems in some cases – e.g. Many small credit unions registered members as employees. •Business data e.g. No. of members - No. of companies association - available only in the Credit Unions consolidates balance sheets

4. Analysis of dataAt national level there is limited capacity to analyze data.

Methodological issues:• UN Handbook on Non-profit Institutions in the System of

National Accounts• CIRIEC Manual for drawing up the satellite Accounts of

companies in the social Economy: co-operatives and mutual Societies

• Wish to produce data for the whole SE sector – market and non-market. Used the CIRIEC Manual and added also NPOs as they correspond to the CIRIEC working definition of SE entities

Issues - recommendations• Lack of awareness on the UN Handbook on NPI• Develop a single Guide for all social economy companies

Results• First time when official aggregate data where published

on the SE sector in Romania and the institutional sectors that are part of it

• Increased awareness on sectors social and economic contribution

• Improved understanding among experts in the National Statistical Institute

Main data findings – FY 2012

•1,9% in 2012• 1,3% in 2011

Gross Value Added Weight of social

economy in national economy

(National Centre for Statistics)

•1,9% in 2012•1,75% in 2011•1,7 % in 2010

Employment – no. of jobs

Weight of social economy employment in

total no. of employees

•4,18% in 2012•3,04% in 2011

Weight of social economy sector

in total paid taxes and social contributions of

legal entities and employers

Lessons learntBeing the first time when such research was undertaken by the National Institute of Statistics - most efforts were on identifying the institutional

units to be included - would not have been possible for NSI without

cooperation with people from the SE sector- Difficult to continue if there is no unitary legal

framework – definitions and administrative procedures and enforcement

- Need for exchange of experience – peer review of findings – analysis

•Mapping and Statistics of the SE sector•Includes: Associations and foundations; Cooperatives; Credit unions - mutuals•First published-2011 – with retrospective data from 2000, 2005, 2007, 2008, 2009 and following ed. 2012; 2013, 2014•Elaborated and published by the Civil Society Development Foundation•Partners: MoLFSPE, University of Bucharest, Institute for Research on Quality of Life and National Institute of Statistics (NIS)Main economic indicators: assets, turnover, profit/loss+ Employment in the sector+ Sectors of activity+ Territorial distribution – rural/urban, region

Producing the Social Economy Atlas, 2013 edition,(report to include the results of the above reasearch)

Social economy in Romania - main sectors No. of organisations

(registering balance sheets 2012)

2000 2005 2007 2009 2010 20120

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Asociations and foundations

Cooperatives

Credit Unions

Year

Asociations and foundations88%

Coopera-tives5%

Credit Unions 7%

Social economy in Romania - main sectors Revenues RON 2000-2012

Associations and foundations

77%

Cooperatives17%

Credit Unions 6%

2000 2005 2007 2009 2010 20120

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

Revenues of social economy 2000-2012

Associations and foundations

Cooperatives

Credit Unions

Reve

nues

(tho

u RO

N)

Social economy in Romania - main sectors Paid employment in social economy organisations

by type 2000 - 2012

2000 2005 2007 2009 2010 20120

20,000

40,000

60,000

80,000

100,000

120,000No. of employees in social economy organisations in Romania

by type 2000-2012

Associations and foundations

Cooperatives

Credit Unions

Total economia sociala

No. o

f em

ploy

ees

Associa-tions and

foundations68%

Cooperatives28%

Credit Unions 5%

Membership in consumer coops decreased 30 times - from 655.000 in 1989 to less than 28.000

Membership in worker coops decreased from 430.000 to 58.0001992 1995 2000 2005 2007 2008 2009

0

50000

100000

150000

200000

250000

300000

350000

Employment in coops in Romania 1992-2009

65500006500000

2734416

1354269

35029 33196 30883 29642 278230

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1989 1991 1996 2000 2005 2006 2007 2008 2009

Numar membrii

Membership in comsumer coops 1989 - 2009

• SE is dominated by associations and foundations • Cooperatives declining – although inheriting huge assets from before

1989• Credit unions stable / stagnating Social service providers – 50% of the registered providers (the rest

public), Numerous protected workshops/units Employment services and training providers Education – kindergartens, after schools, higher education Agriculture associations – numerous, poor organizational capacities Forrest owners – numerous, significant assets – traditional properties

of forests - but poor organizational capacities• Types of organizations missing:– mutuals – although Romania quoted as one of the most “mutual markets” - agriculture coops – more recently several startups

Atlas of Social Economy- Main sectors findings incl.

• Romania - the fourth ‘most mutual’ market

Like fellow Eastern EU markets Slovakia and Hungary, the Romanian market has a mutual sector that is composed of commercial subsidiaries of large mutual groups from Austria, Germany and the Netherlands. These multinational groups have stimulated growth of the mutual sector across Eastern EU as well as many emerging economies in Latin America.

Social Economy agenda for Romania 2014-2020

1. Continue to develop the associative sector by removing barriers to registration and operation of economic activities that currently exist

2. Social policy shift – from passive to active labor market inclusion and design of a welfare mix market for social services

3. Re-launching the coop sector in particular agriculture coops and worker coops

4. Relaunch the credit union system of employees - develop micro-credit systems within the credit union movement

5. Consolidate the credit unions of the elderly

Thank you for your time and attention !

Благодаря !

Olivia RusanduPublic Manager

RO’s MLFSPE- Social Services Directorateolivia.rusandu@mmuncii.ro

www.mmuncii.ro