[8th ILO SSE Academy]: Legal framework for SSE and socially responsible public procurement - case of Korea

Local Government
SSE Organisation
Social Finance / Impact Measurement
Governance / Eco-system
Public Policy / Legal Framework

Presented at: 8th ILO SSE Academy

Organisation: Seoul Social Economy Network

Date: June 28, 2017

Presenter: Mr. Youngsik Kim, Director of Seoul Social Economy Network

Contacts: youngkim@ssen.or.kr


The following presentation overlooks Korea's SSE history and addresses the various SSE legal framework status, public support, and socially responsible public procurement examplars in Korea. The presentation analyzes eight special laws reserved for Korea's traditional cooperatives. The presentation also focuses particularly on Korea's SSE laws in the 2000s and after, and closely analyzes te effect that these acts have had in SSE in Korea, such as the growth of SSE organisations, and strong governmental support, at both the national and local levels. 

Presentation details:

Young Kim explained the development of the social economy and the process of legal framework shifts in Korea. He explained in details about the efforts and characteristics of the Seoul Metropolitan Government on social economy and public procurement initiatives in a historical context.

The social and solidarity economy tends to be defined by a set of different types of ‘social economy organizations’ in Korea. These organizations include social enterprises, cooperative, and community businesses. Korea’s social and solidarity economy history can be traced back from the military government era of the 1960s, and there have been three important periods in history related to the SSE legal framework. The first was the 1996 “self-sufficiency policy program”, which laid the foundations for SSE history. The second was in 2007, “Social Enterprise Promotion Act”, and the last was in 2012, “Framework Act on Cooperatives” (The historical background of these changes is a social movement for democracy. In the early 2000s, the government institutionalized many of the civil movements.)

In Korea, most of the laws relating to the social and solidarity economy were enacted in the 1960s and 1970s. At this time, 'special law' was established for eight types of traditional cooperatives, and the law appeared in the 'self-help policy program'. This law permitted the creation of companies for self-sufficiency, which later developed into social enterprises. However, this type of program was considered social welfare initiatives rather than social solidarity economic policies.

Significant changes have been made after the enactment of the 'Social Enterprise Promotion Act' in 2007. This law was the first institutionalization of social enterprises and promoted many policy initiatives for the social and solidarity economy. Since the implementation of the ‘“Framework Act on Cooperatives’ in 2012, the adoption of the social enterprise policy has accelerated, and the first ‘social cooperatives’ was defined in Korea. Also, the requirements to be recognized as cooperatives establishment was lowered.

The characteristics of the development of social and solidarity economy in Korea are summarized as follows. Strong government (central and local) plays leading roles to a faster social economy in Korea. However, this development has been unevenly done in each local municipality. By the end of 2016, there were 1,685 Social Enterprise and 10,602 Cooperatives.

By the central government, the Seoul Metropolitan Government has made efforts to create more social enterprises and create more social and solidarity economy friendly environments. In this context, after the enactment of the Act on the Promotion of Social Enterprise in 2007, the Seoul Metropolitan Government enacted the ‘Seoul Ordinance on the Promotion of Social Enterprises’ in 2009. Also, they had changed the support system from ‘direct support’ (such as wage support) to ‘indirect support’ (ecosystem creation). Therefore, the main principles of the central government and the social economy of Seoul are 1) civil/private sector leads, 2) then government follows 3) co-construction of policy.

Since the Town Hall Meeting for Seoul SE Development in 2011, Seoul has been continually discussing with stakeholders such as major NGOs and social economy associations. As a result, the “Seoul Social Economy Network” and the “Seoul Social Economy Policy Planning Group’ were established in 2012. Also the “Seoul Social Economy Center” was established in the following year to take a leading role in implementing and establishing the policy program.

‘Seoul Social Economy Policy Council’ and the SMG (Seoul Metropolitan Government) are the main actors for the social economy in Seoul. The ‘Seoul Social Economy Policy Council’ includes major units and organizations in the social economy sector and has been planning and monitoring social economy policies through ongoing meetings. 

The “Social Responsibility Procurement Purchase (SRPP)” of the city of Seoul is 5.3 billion USD per annum, which accounts for 27.3% of the total budget. SMG, together with the initiatives related to SRPP, will create a more accessible public market for the social economy and promote value-driven public purchasing. For this, SMG and ‘Seoul Social Economy Policy Council’ have played a leading role and established "Seoul Socially Responsible Procurement Network" to foster SRPP.

Lastly, since 2013, there are three laws are in the legislative process in the National Assembly of Korea (Framework Act on Social Economy, Framework Act on Realization of Social Value in Public Organizations, Special Act on Promoting Purchasing and Market support for Social Economy Enterprises). Once these laws are in place, a better ecosystem for social solidarity will be established.

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