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Mapping and Measuring the Impact of the Social Economy on Social and Territorial Cohesion in Spain: a multi-stakeholder initiative

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What

In Spain, a unique multi-stakeholder initiative compiled a comprehenvise overview of the social economy, detailing the number of companies and employees, as well as its monetary benefits in terms of social and territorial cohesion. Published in 2019, the Analysis of the Socio-economic Impact of the Values and Principles of the Social Economy in Spain1  was a joint effort of the Ministry of Labour, Migration and Social Security, the Spanish Business Confederation of the Social Economy (CEPES), two prominent cooperatives, Grupo Cooperativo CAJAMAR and Corporación Mondragón, and Fundació Espriu.

Using a counterfactual approach (see below), the study was able to determine the specific value added of social economy enterprises that would be lost if they behaved like profit-oriented firms. For 2017, the study found that the social economy contributed:

  • Employment opportunities: more than 172 000 additional jobs compared to profit-oriented firms for people with barriers to employment, of which more than 54 000 are located in rural areas, small or medium size cities. Moreover, it creates stable employment relationships for almost 125 000 extra individuals.
  • Monetary benefits to society: an additional EUR 6.2 billion of annual net benefits to society, thereof EUR 3.9 billion in salary income to groups that otherwise would not have been employed, EUR 1.7 billion of direct and indirect benefits (cost savings) for the public administration. Other benefits include those accruing to the companies themselves, including labor cost subsidies associated to these type of workers and lower cost in terms of selection and adaptation to the job position due to lower turnover of workers.

The study was also able to determine the effects of the social economy on social and territorial cohesion in Spain, in the form of inclusive growth and reduction of inequalities. Key findings were:

  • Entrepreneurship: a higher number of social economy enterprises are situated in rural areas, small or medium size cities, compared to conventional enterprises.
  • Private offer of goods and services: expansion of the private offer of social and care services, education and agri-food products in which the social economy specialises.
  • Creation of activity and employment: the social economy fosters rural and inclusive jobs, by integrating groups of workers that have difficulty accessing the labour market and thereby reducing rural-urban migration.
  • Job stability: Higher level of stable employment contracts compared to other business models.
  • Equality: Salary levels are much more equal in the social economy, across income groups and gender.
  • Diversity: There is higher diversity in management, with greater incorporation of women and people with disabilities and better work-life balance.

1 Análisis del Impacto Socioeconómico de los Valores y Principios de la Economía Social en España

Why

After adopting a law on the social economy in 2011, the Spanish government saw the need to gather data beyond what was publicly available. The aim of the study was to identify and quantify the distinct contributions of the social economy to the whole society, through better social and territorial cohesion.

The report demonstrates the commitment of the Spanish government to map the activities of the social economy and to understand their added value to society through a joint effort with other relevant stakeholders in the social economy field. Co-financed by the European Social Fund, this initiative falls under the Spanish government's Social Economy Strategy, which aims to raise the visibility of the social economy, by promoting specialised studies on issues such as social impact measurement and social value monetisation.

Key Activities

The study was structured in three phases:

  • Phase 1: Identification and description of the effects of social economy entitites upon territorial and social cohesion on different actors: employees, immediate environment (family and friends), employers, public sector and society as a whole.
  • Phase 2: Assessment of the different behavioural aspects that distinguish social economy entities from profit-oriented firms through the identification of appropriate variables in national statistics.
  • Phase 3: Quantification of effects in terms of quantity and quality of employment and their monetary equivalent, using a quasi-experimental approach.

The delimitation of the social economy in Spain is based on the definition enshrined in Law 5/2011, that includes: cooperatives, mutual benefit societies, employee-owned companies, sheltered work centres, agricultural processing companies, fishermen’s associations, associations and foundations and singular entities. Therein, the study focuses on social market economy, as opposed to non-market entities like associations and foundations, to allow for a more faithful comparison with traditional profit-oriented firms. Microdata from the Continuous Sample of Working Histories (CSWH), published every year by the Spanish Ministry of Labour and Social Economy, includes information on the type of firm, sector of activity, type of contract and wages, and workforce characteristics. Entities from the social market economy were identified directly (for cooperatives and employee-owned companies) or through indirect methods, by combining different variables (such as the sector of activity, specific characteristics of the labour contracts or the percentage of workers with disability). For 2017, the report identified 9 125 social economy entities (thereof 4 452 in the market economy) representing 28 042 employees (13 688 thereof in the market economy). The counterfactual analysis relies on a control group of profit-oriented firms to test the added value of the principles adopted by social market economy entities, in terms of hiring practices, working conditions or geographical location. To ensure comparability, the two samples are statistically equivalent in terms of the key variables influencing firm behaviour (size and sector of activity).

Impact

As of 2020, the study has been picked up in Spanish research on equality and equal access to labour markets and the social economy. CEPES was able to use the data and findings from this study to mobilise national and international thought leaders. The report was presented to the Spanish governement, the Parliament, Senate and to national political parties. The data and the conclusions of the study underpin CEPES’ proposals and positions to the government and also to the European Institutions on the different legislative initiatives that affect social economy enterprises.

The study has also attracted international attention: it has been presented to high representatives of the European institutions and bodies (Commission, Parliament and European Economic and Social Committee) and at the 2019 International Conference of the United Nations’ Task Force on the Social and Solidarity Economy (UNTFSSE).

The report offers a detailed outline of the methodology, which could be replicated in other European countries, where information about firms and workers is available in the same granularity and allows for the identification of social economy entities.  The study was implemented using microdata, and large sample of entities analysed; this allowed to develop precise control groups, apply counterfactual analysis and ensure representativeness as well as the robustness of the analysis as explained above.

References