Reasons for Proposal
The Organization for Economic Cooperation and Development (OECD) defines the social economy as “a pursuit of both social and economic factors that are embedded in an organization that exists between a state and the market.” However, despite the fact that Korea already has various types of social enterprises, no laws have been established to serve as the basis to cover them all, the definition and scope of the social economy remain ambiguous.
On the other hand, as social issues such as serious inequality continue to accumulate in Korea, a number of alternatives are in urgent need to address them. Social economy is one of them. The social economy is an economic field operated under the principles of co-prosperity, reciprocity and solidarity to realize social values and strengthen public nature. The spread of the social economy is expected to combat the issues that our society is faced with, including the reduction of inequality.
Therefore, the Act aims to enact the framework act on social economy so as to establish the legal grounds for the social economy and institutionalize the basic principles and directions of related policies, acknowledge the role that the social economy has played in the improvement of the employment and welfare, creation of a healthy community, and balanced development of national economy, and assist in the creation of an ecosystem for sustainable development of the social economy, thereby contributing to the balanced development of the national economy.
Details
A. The Act aims create a legal foundation for the social economy and assist in building a sustainable ecosystem for the social economy to contribute to creating jobs, building a healthy community, and facilitating a balanced development of the national economy (Article 1).
B. All economic activities carried out by social economic organizations to pursue social values based on mutual benefit and solidarity among members of society are defined as the “social economy” (Article 2 subparagraph 1).
C. Social finance is defined as encompassing social economic organizations and the financial activities for achieving social values (Article 2 subparagraph 4).
D. Require the Chairperson of the Social Economy Committee to establish a “Master Plan for the Development of Social Economy” every five years in consultation with the heads of related central administrative agencies (Article 6).
E. In order to review and adjust matters on key policies and master plans in relation to the development of the social economy and the their implementation and oversee the harmonious policy implementation between related central administrative agencies and local governments, organize the “Social Economy Committee” under the control of the President and allow each region to set up a “Regional Social Economy Committee” (Articles 9 and 9-2).
F. Require the Ministry of Strategy and Finance to establish the "Korea Institute of Social Economy" to promote the implementation tasks for the revitalization and development of the social economy in an integrated and effective manner (Article 12).
G. Require that the Mayor of a special city and metropolitan city and the governor of a Do accept applications of non-profit corporations, organizations, etc., and designate a Metropolitan Social Economy Support Center to effectively promote the implementation tasks for the revitalization and development of the social economy (Article 13).
H. Require the government to establish and operate the "Social Economy Development Fund" to ensure the smooth implementation of policies to revitalize the social economy and secure financial resources necessary to support social economy companies in a stable manner (Article 14).
I. Require the State and local governments to make efforts in building a social finance system that ensures the smooth financing of social economy organizations and revitalizes investment for achieving social values (Article 17).
J. Require the State and local governments to formulate support and policies required for promoting purchases and expanding sales channels in relation to goods and services produced by social economy organizations, and the public institutions to purchase the products of social economy organizations within 5% of the total amount of purchase for goods and services (Article 18).
K. Allow the State and local governments to provide tax, financial, banking, and educational and training support needed by social economy organizations (Articles 20 through 22).
Note
Since this bill is premised upon the resolution of the “partial amendment to the National Finance Act (bill No. 4991), which was submitted by the chief sponsor, Rep. Jang Hye-young, if the said bill is not passed or is passed with modification, this bill will also require adjustment accordingly.
