Making Social Economy Visible in Romania (MSEVR)

1. Making Social Economy Visible in Romania (MSEVR) Olivia Rusandu Public Manager Romanian Ministry of Labour, Family, Social Protection and Elderly www.mmuncii.ro

2. Social economy in RomaniaShort history 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.

3. MAKING SOCIAL ECONOMY VISIBLE IN ROMANIA Project’s leader: Civil Society Development Foundation Partners in the project: Financed by Call: DG Enterprises and Industry • Social enterprises’ economic impact

4. Project’sPurposes Creating Satellite Accounts for Social Economy Producing the Atlas of Social Economy 2014 Piloting the creation of a Statistical Register of Companies in the Social Economy Context: Draft Law on social economy

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

6. 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 2014-2015 • Weaknesses: • 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

7. Project’sActivities Definingentities- part of Romanian social economy, acc.to CIRIEC Satellite AccountsManual Applying EU methodologyto calculate social economyentities’ satellite accounts’ indicators, part of national accounts system Producing the Social Economy Atlas, 2013 edition, (report to include the results of the abovereasearch) Produce a StatisticalRegistry of Romanian Social EconomyEnterprises. (associations&foundations, cooperatives, mutualsetc)

8. MINISTRY OF LABOUR, FAMILY, SOCIAL PROTECTION AND ELDERLY - ROMANIA • - 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. NationalAuthority 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.

9. 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 (MoLFSPEand subordinate bodies, Romanian National Bank, Joustice Ministry, National Commerce Register Authority)

10. 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 EconomyEntitiesRegisterelaborated by CNPS • Organizing 3 regional seminars on SEtopics, agendas being drafted according to national context, Ministry’s policies in the area and needs identyfies • Diseminating info on MoLFSPE’sw.site: www.mmuncii.ro

11. Definingentities- part of Romanian social economy, acc.to CIRIEC Satellite AccountsManual 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 coops Mutual Aid Houses (for pensioners, employees, army personnel) National Union of Mutual Aid Houses Non-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

12. 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 estimatedindicators in measuring social economy: (computed per eachsector) • Production • Intermediate consumption • Gross Added Value • Employees payments/ salaries • Gross operating surplus • Allocation of primaryincomeaccount • Gross formation offixed capital • net lending (+) / net borrowing (-)

13. Problems identified/ Recommendations in this area 1.Identifying entities belonging to social economy sector CIRIEC Manualis well structured, but the project showed that an improvement of the chapter in selecting social economy entities will be beneficial 2.Entities for which there aren’t any statistical data Entities 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/calculation The 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

14. Applying EU methodologyto calculate social economyentities’ satellite accounts’ indicators, part of national accounts system Results and Lessons Learnt from national research based on CIRIEC Methodology 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: co-operatives, mutual societies – No insurance mutual – credit unions (which are somehow cooperatives, and social credit unions) social economy business groups – only those registered – with a legal status other companies in the social economy – in Romania there are yet no other legal business forms for social companies non-profit institutions serving social economy entities.

15. 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.

16. 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 Statistics For 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.

17. 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

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

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

20. 3. Accounts of the SE by institutional sector Non-profit institutional sector

21. 3. Accounts of the SE financial sector by industry

22. 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 sources Details such as structure of personnel by category M/F, type of workers – Farmers, Manual workers, Administration, sales and services, Management are available in surveys Issues: • 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

23. 4. Analysis of data At 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 mutualSocieties • 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

24. 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

25. Main data findings – FY 2012

26. Lessons learnt Being 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

27. Producing the Social Economy Atlas, 2013 edition, (report to include the results of the abovereasearch) • 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

28. Social economy in Romania - main sectors No. of organisations(registering balance sheets 2012)

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

30. Social economy in Romania - main sectors Paid employment insocial economy organisationsby type 2000 - 2012

31. 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 58.000 Membership in comsumer coops 1989 - 2009

32. Atlas of Social Economy- Main sectors findings incl. • 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

33. 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.

34. Social Economy agenda for Romania 2014-2020 • Continue to develop the associative sector by removing barriers to registration and operation of economic activities that currently exist • Social policy shift – from passive to active labor market inclusion and design of a welfare mix market for social services • Re-launching the coop sector in particular agriculture coops and worker coops • Relaunch the credit union system of employees - develop micro-credit systems within the credit union movement • Consolidate the credit unions of the elderly

35. Thank you for your time and attention !Благодаря !Olivia RusanduPublic ManagerRO’s MLFSPE- Social Services Directorateolivia.rusandu@mmuncii.rowww.mmuncii.ro