Social Economy Bill

Social Economy Bill
PREAMBLE
I
The historical framework of the modern concept of the Social Economy emerges with the first
experiences of cooperatives, associations and mutual societies at the end of the 18th century and is
developed throughout the 19th century in a number of European countries (England, Italy, France
and Spain). This traditional 19th-century concept formed the basis of declarations made in the
1970s and 1980s in Europe that defined the features of the social economy through a series of key
principles. In France, Charle de l’économie sociale defined the term social economy as “the set of
entities that do not belong to the public sector, that operate and are managed democratically with
equal rights and duties for the partners, and that put into practice a special regime of property and
distribution of earnings, using the surplus for the growth of the entity and improvement of services
to the community.” The Conseil Wallon de l’Economie sociale” did the same in Belgium.
In 1992 the European Economic and Social Committee submitted three proposals for Council
Regulations: on the Statute for a European Association; on a Statute for a European Cooperative
Society; and a Statute for a European Mutual. Of these three initiatives, the Regulation approving
the Statute for the European Cooperative Society was finally enshrined in law as Regulation EC
1435/2003 of the Council, of 22 July 2003 and the Directive supplementing the Statute for a
European Cooperative Society with regard to the involvement of workers (Directive 2003/72/EC
of the Council, 22 July). The Regulation characterizes cooperatives as groups of persons with
particular operating principles that are different from those of other economic agents. These
principles include notably the primacy of the individual. This primacy of the individual is reflected
in specific provisions relating to the rules of membership, resignation and expulsion; in a rule of
“one man, one vote” and the impossibility of its members exercising rights over the assets of the
cooperative.
The 2002 Social Economy Charter of the European Standing Conference of Cooperatives, Mutual
Societies, Associations and Foundations (CEP-CMAF), which is now Social Economy Europe,
introduced a set of principles into the acquis communitaire that create the framework for the new
reality in which enterprises in the social economy now operate. These include the following:
primacy of the individual and the social object over capital; voluntary and open membership;
democratic control by members, the conjunction of the interests of the users and the general
interest; the defence and application of the principles of solidarity and responsibility; autonomy of
management and independence with respect to the public authorities; and the assignment of
surpluses from the execution of objectives in favour of sustainable development, services for its
members and the social interest. This palpable and detailed reality later took shape in the
Community sphere in the European Parliament, through Report 2008/2250 (INI) of 26 January
2009, and in the European Economic and Social Committee, through a number of Opinions, such
as the “Social Economy and the single market” in 2000, or more recently the Opinion on
“Different types of companies” in 2009. In the light of this background, comparative law
illustrates the trend of countries to establish a legal framework that recognises and supports the
social economy as a separate and special economic activity requiring substantive actions of public
support and promotion.

II
In Spain, it is worth highlighting the legal foundations on which the enterprises in the social
economy are based, which are of the highest rank as they are derived from the articles of the
Spanish Constitution itself. A number of articles refer, either in a generic or specific, way to some
of the entities in the social economy, as is the case with Article 1.1, Article 129.2 and the social
equality clause itself in Article 9.2; while Articles 40, 41 and 47 express the strong roots of these
entities in the text of the Constitution.
Starting in 1990, the social economy in Spain began to be expressly recognised by the public
institutions with the creation of the National Institute for the Promotion of the Social Economy
(INFES) by Law 31/1990, of 27 December. This institute replaced the former Directorate General
for Cooperatives and Worker-Owned Enterprises of the Ministry of Labour and Social Security.
Its goals included the promotion of entities in the social economy, and this was the reason behind
the creation of the Council for the Promotion of the Social Economy. When the Institute ceased
operating in 1997, its functions were assumed by the Directorate General for Promotion of the
Social Economy and the European Social Fund. Law 27/1999 of 16 July, on cooperatives,
incorporates the new Council for the Promotion of the Social Economy as an advisory and
consultative body for activities related to the social economy. It was developed by Royal Decree
219/2001 of 2 March on the organization and operation of the Council. This Council is thus the
institution that gives voice to the full range of enterprises in the social economy.
What is more, due to the decentralisation of competences that is a feature of the territorial system,
there are various substantive laws covering various entities in the social economy which are
regulated at the level of autonomous community. This gives rise to similar institutions within the
Autonomous Communities that reinforce the institutional visibility of the enterprises that are an
essential part of this sector.
Many enterprises share the guiding principles of the social economy: cooperative societies in their
various forms, among them those organised on the basis of pooled work, consumption, housing,
agriculture, services, maritime work, credit, education, health and transport insurance; labour
societies; associations; foundations; mutual societies; special employment agencies; special
employment centres; agricultural production societies; and fishermen’s associations. All these
entities are reflected directly or indirectly in the articles of the Spanish Constitution referred to
above. Their principles give them a specific character that sets them apart from other companies
and enterprises in the business world. There is also a thriving crucible of enterprises in the social
economy from which new and different special entities emerge to participate in the same
principles as the ones mentioned above.
This rich heritage is complemented with a catalogue of potential entities that can join the social
economy, but only provided that they fulfil the principles that determine the unique nature of these
values and that their specific configuration is perfectly defined.
Various notable initiatives have agreed on the need to approve a Law on Social Economy. First,
the proposal by the Spanish Business Confederation for the Social Economy (CEPES), with a
proposed text; and second, the work carried out by the Parliamentary Sub-Committee of the
Congress of Deputies, which operated from March 2007 until the end of 2007. Its objective was to
study the situation of the social economy in Spain, and propose actions to promote it.
The need to enact a Law on the Social Economy connects directly with the principles that inspire
the objectives pursued by the Law on the Sustainable Economy, to the extent that the social
economy is in some ways a precursor that is committed to the economic model of sustainable

development in its three aspects: economic, social and environmental.
The Spanish Government, through the Council for the Promotion for the Social Economy and with
the agreement of CEPES, designed an independent Committee of experts, which in 2009
completed work on a Law on Social Economy. A joint text was prepared based on the report from
the Committee and the CEPES proposal, with the backing of a significant part of the sector. In
addition, the Autonomous Communities have been informed in the process of preparing the
project through the Sectoral Conference on Employment and Labour Affairs on 29 April 2010 and
the Council for the Promotion of the Social Economy, which in its plenary meting on 29 April
2010 manifested its majority agreement with the text.
III
The basic purpose of the Law is to create a legal framework that does not aim to replace the
current law for each of the different entities in the sector, but recognises and gives greater
visibility to the social economy by giving it a greater legal security through actions to define the
social economy, and establishes the principles that should be adhered to by the different entities
that are part of it. Based on these principles, it includes all the different entities and enterprises
that make up the social economy. It also recognises that the work of promotion, encouragement
and development of the enterprises in the social economy and their representative organisations is
a task of general interest. In addition, it includes the importance of dialogue between government
and the organisations that represent the enterprises in the social economy, which have distinct
legal natures and activities. It highlights the role to be taken by the inter-sectoral confederations of
national scope that represent the sector and provides the best possible legal form for the Council
for the Promotion of the Social Economy as an advisory and consultative body linked to the
Ministry of Labour and Immigration. This Law binds it closely to this sector, as previously it was
included in national legislation covering cooperative societies.
The Bill consists of 9 articles, two additional provisions, a temporary provision and three final
provisions.
Article 1 explains the purpose of the Law: the establishment of a joint legal framework for all the
companies making up the sector of the social economy and the measures for promoting it; Article
2 covers the concept and definition of the social economy. Article 3 determines that the scope of
the law is enterprises in the social economy that act within the country, without prejudice to any
competences that may have been assumed by the Autonomous Communities.
Article 4 presents the four guiding principles that are common to all the entities in the social
economy. These are those included in Article 5, either through their direct naming in the terms of
section one, or through the procedure included in section two. Article 6 regulates the Catalogue of
entities in the social economy. It will be drawn up and updated by the Ministry of Labour and
Immigration following a report by the Council for the Promotion of the Social Economy, and in
no case is it constituent in nature.
Article 7 includes the principles of representation of the entities in the social economy, and the
criteria for representation of the national inter-sectoral confederations. Article 8 deals with
another of the purposes of the Law: the recognition of the promotion and dissemination of the
social economy.

Finally, Article 9 creates and regulates the Council for the Promotion of the Social Economy, the
advisory and consultative body in these matters, and establishes its functions.
The First Additional Provision regulates the statistical information on the entities in the social
economy and the Second Additional Provision refers to the financing of actions planned at
national level.
The Sole Temporary Provision maintains in force the Second Additional Provision of Law
27/1999 of 16 July on cooperatives, in that it does not implement Article 9.5 of Law 27/1999 as
regulations.
The First Final Provision determines the jurisdiction of this Bill, which constitutes basic
legislation under Article 149.1.13 of the Constitution. This attributes to the State the “bases and
coordination of the general planning of economic activity,” except for the provisions of Articles
8.3 and 9, which correspond to the competence of the self-organisation of the State, as well as the
provisions of the First Additional Provision, which is based on the exclusive competence
attributed to the State through Article 149.1.31 of the Constitution, in the matter of “statistics for
State purposes”.
The Second Final Provision gives the government the powers to dictate the necessary provisions
for application and development of the Law.
Finally, the Third Final Provision stipulates a “vacatio legis” period of a month, which is
considered appropriate for its entry into force.
Article 1: Purpose
The purpose of this Law is to establish a common legal framework for all the entities that make up
the social economy, while fully respecting the specific laws applicable to each of them; and to
determine the measures that can be undertaken to promote these entities in terms of their own
aims and principles.
Article 2: Concept and definition
“Social economy” is the term given to the set of economic and business activities that are carried
out in the private sphere by entities whose aims, in accordance with the principles set out in
Article 4, are either the collective interest of their members, or the general economic or social
interest, or both.
Article 3: Scope
Without prejudice to any competences that may correspond to the Autonomous Communities, the
scope of this Law extends to all the enterprises in the social economy that operate within Spain.
Article 4: Guiding Principles
The activity of enterprises in the social economy is based on the following guiding principles:
a) The primacy of individuals and social purpose over capital. This is made clear in the
autonomous, transparent, democratic and participative form of management, which prioritises
a decision-making process based more on individuals and the contribution they make with

their work and services to the enterprise, than in terms of their contributions to the share
capital.
b) Distribution of the results obtained from the economic activity, mainly in accordance with
the work contributed and service or activity carried out by members and, if applicable, the
social purpose that is the object of the enterprise.
c) Promotion of solidarity within the entity and with society that favours commitment to local
development, equal opportunities, social cohesion, the insertion of excluded groups,
generation of stable and quality employment and sustainability.
d) Independence with respect to the public authorities.
Article 5: Entities in the social economy
1. The following form part of the social economy: cooperatives, mutual societies, foundations and
associations that carry out economic activity, labour companies, special employment agencies,
special employment centres, fishermen’s associations, agricultural production societies and
special entities created by specific laws that are governed by principles established in the
previous article.
2. Those enterprises that carry out an economic and business activity and whose operational rules
respond to the principles specified in the previous Article, and that are included in the catalogue
of entities established in Article 6 of this Law, may also form part of the social economy.
3. In any event, the entities in the social economy shall be governed by their specific substantial
regulations.
Article 6: Catalogue of entities in the social economy
The Minister of Labour and Immigration, following a report by the Council for the Promotion of
the Social Economy, will prepare and maintain updated a Catalogue of the different types of
entities making up the social economy, taking into account the principles established in this Law.
Article 7: Organisation and representation
1. The entities in the social economy may set up associations to represent and defend their
interests, and these may be grouped together, in accordance with the provisions of their
specific regulations, or Law 1/2002, of 22 March, regulating the right of association, as
applicable.
2. The representative inter-sectoral confederations that are national in scope shall group together
most of the types of entities included in Article 5 of this Law, provided they have, at least,
twenty-five per cent of the total number of entities or enterprises directly associated or though
intermediary organisations or confederations of the social economy that come together for the
purpose of representation; and at the same time, they must represent at least fifteen per cent of
the entities or enterprises that are associated to the different organisations for each type of
entity in which the corresponding confederation is active.