Implications
1. Current Status for Social Welfare Services Delivered by SEs
First of all, we examined the present state of social enterprises offering social welfare services through Understanding Social Enterprise, which was published in collaboration between the MOEL and the Research Institute for Social Enterprises (RISE).
The rationale behind this was to complement the shortcomings from taking a qualitative approach underpinned by case studies as seen in this study, and bring in more general insight to size up the situation.
the number of certified SEs actively under operation reaches 501. According to the 9 business types defined by the MOEL, care/domestic help (59), social welfare (48), and child care (28) add up to 135, accounting for 27%. In this section, we've reviewed the details of all SEs discussed in the summary and re-selected SEs primarily involved in welfare services ranging from care services such as child care, care for patients/the elderly and long-term care to rehabilitation, counseling, education, hiring assistance, etc. that are designed to improve the quality of life for the disabled, senior citizens, children, and multi-cultural
families. We've also tried to conduct an analysis on the information available to identify the current status and characteristics of these companies.
By organizational type, incorporated associations ranked 1st with 25.2%, followed by non-profit private organizations (18.9%), corporations (17.1%), social welfare foundations (13.5%), and cooperative associations (9.0%). Of the total SEs, the companies governed by commercial code such as corporations accounted for the largest proportion with 41.7%, with cooperative associations taking up a mere 3.6%. Such a big difference is inevitable for SEs mainly handling social welfare services.
〈Table 3-1-1〉Social welfare-focused SEs distribution in terms of organization type
(Unit: Count, %) Ratio (%)
Incorporate associations 28 (25.2)
Nonprofit private organizations 21 (18.9)
Corporations 19 (17.1)
Social welfare foundations 15 (13.5)
Cooperative associations 10 ( 9.0)
Nonprofit corporations 5 ( 4.5)
Incorporated foundations 4 ( 3.6)
Public service corporations 3 ( 2.7)
Others 6 ( 5.4)
Total 111(100.0)
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed
A closer look at the regional distribution of SEs mainly dealing with social welfare services revealed that Seoul(capital) marked 14.4%; other metropolitan cities 30.6%; and provinces 55%, which
appears somewhat different from what was observed with a total of 501 SEs (22.6% for Seoul, 24.8% for other metropolitan cities).
This indicates that as far as social welfare-based SEs are concerned, Seoul has relatively fewer establishments, as small cities or counties lacking in supply in terms of social welfare service have more need and leeway to get SEs installed than Seoul with sufficient social welfare infrastructure available.
That said, it was found that counties still have less exposure.
The social welfare-based SEs displayed 43.2%, 45.9%, and 10.8%
of distribution ratio for local autonomous areas, cities, and counties each. As SEs located at provincial level are far less concentrated in counties than in cities, the delivery of social welfare services to farming and fishing areas via SEs is still considered insufficient, pointing to a big variance in regions with regard to SE installation.
〈Table 3-1-2〉Social welfare-focused SEs distribution in terms of region
(Unit: count, %)
Ratio(%) Ratio(%)
Seoul (Capital) 16 (14.4) Local Autonomous 48 (43.2)
Other metropolises 34 (30.6) City 51 (45.9)
Province 61 (55.0) County 12 (10.8)
Total 111(100.0) Total 111 (100.0)
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed
Next, we looked into the year of foundation for SEs, and it was discovered that 55.3% of SEs were established after 2007, with 44.7% set up before that.
Ratio (%)
~ 2007 46 (44.7)
2007 ~ 53 (55.3)
Total 103(100.0)
Ratio (%)
Years of operation prior to acquiring certification
〈Table 3-1-3〉Social welfare-focused SEs distribution in terms of the year of foundation
(Unit: Count, %)
Note: 1) This outcome was arrived at by analyzing only 103 SEs with the relevant information available.
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed.
〈Table 3-1-4〉Years of operation prior to the certification for social welfare-based SEs
(Unit: Count, %)
Note: 1) This outcome was arrived at by analyzing 103 SEs with the relevant information available.
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed.
Meanwhile, the years of operation were compared against post certification period to check if gaining certification triggered the opening of SE. As stated in <Table 3-1-4>, it is discovered that 24.3% of SEs were founded at the same year as the certification
Ratio (%) Social job creation program led by the Ministry of Labor 34 (47.2)
Self-reliance program 9 (12.5)
Social welfare organization/work 12 (16.7)
Community/voluntary work 13 (11.7)
Others 4 ( 5.6)
Total 72(100.0)
was granted, with 15.5% staying in business for less than 1 year before earning certification. Overall, about 40% of total SEs were found to win their certification upon or around the creation thereof.
We then examined specifically what type of business SEs previously engaged in prior to certification as specified in <Table 3-1-5>. After conducting analysis for the 73 SEs with their pre-certification service information available in the [Social Enterprise Summary], it is concluded that 47.2% of SEs had prior experience in job creation program managed by the labor ministry, 12.5% in self-reliance program, 16.7% in social welfare organization, and finally 11.7% in community or voluntary work.
〈Table 3-1-5〉Service type involved prior to gaining certification as a social welfare service provider
(Unit: Count, %)
Note: 1) This outcome was arrived at by analyzing 73 SEs whose pre-certification service type information became available
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed.
<Table 3-1-6> below shows what relationship SEs are maintaining with their parents, juridical person or organization, currently. 59.3% appear being independently run, while 32.4%
are found being operated as part of parent entity or organization.
Ratio (%)
For the elderly
Free care service for the sick 16(4.2)
Fee-based care service for the sick 36(9.4)
Long term care insurance related care service 39(10.1)
Short-term shelter service 6(1.6)
Shelter for day & night 12(3.1)
Ratio (%)
Independently run 70 (64.9)
Operated as a component of parent 35 (32.4)
Others 3 ( 2.8)
Total 108(100.0)
〈Table 3-1-6〉Operational independence in terms of social welfare service provision
(Unit: Count, %)
Note: 1) This outcome was arrived at by analyzing 108 SEs except for 3 SEs failing to offer relevant information.
Source: MOEL/Social Enterprise Promotion Agency (2010); [Social Enterprise Summary]
outlined and analyzed.
All services offered by 111 SEs categorized as a social welfare service provider were outlined and discussed here. Services associated with long-term care insurance turned out to be the most popular, carried out by 39 companies. Fee-based care service came in second with 36 companies, followed by maternal
& infant care with 33, after-school tutoring and related center operation with 29, Bath aid service for the elderly and disabled and a comprehensive package of services caring for the senior with 27 companies each, domestic help with 23, and lastly job arrangement for the disadvantaged with 22.
〈Table 3-1-7〉Service provided by social welfare-focused SEs
(Unit: Count, %)
Ratio (%) Bathing via moving bathing facility or by visit 27(7.0) Care service with regard to a comprehensive service package
for the elderly 27(7.0)
Visit doctor service 6(1.6)
Welfare service for the elderly residing in rural areas 4(1.0)
Selling or loaning of silver items 2(0.5)
Service allowing the elderly to enjoy cultural, healthy life 5(1.3) Long term care insurer related consultation service 2(0.5) Funeral arrangement for the elderly living alone 1(0.3)
For women & children
Helper for maternal & infant care 33(8.6)
Domestic help 23(6.0)
After-school tutoring and related center operation 29(7.5) Selling or loaning of post-natal items 2(0.5)
For the disabled
Rehabilitation for handicapped kids 5(1.3)
Support for job search by the disabled 2(0.5) Travel related service for the disabled 1 (0.3)
Comforts for the disabled 1 (0.3)
Movement aids for the disabled 11 (2.9)
For multi-cultural families
Child care or housework support for foreign women living in
Korea 1 (0.3)
Counselling or other related services for foreign workers 1 (0.3)
Health care
Selling or leasing of medical equipment 1 (0.3) Medical service (i.e. checkup, counseling, prescription, etc.) 9 (2.3) Public health & prevention for community 8 (2.1) Job support Finding jobs for the disadvantaged (excluding the disabled) 22 (5.7)
Training for nurturing professional caregivers 12 (3.1)
Others
General tourism related service 1 (0.3)
Cleaning & outsourcing service 6 (1.6)
Surveillance & quarantine 1 (0.3)
Raise awareness for care service and improve working conditions 1 (0.3)
Integrated case studies management 3 (0.8)
Food Bank related service 4 (1.0)
Lifelong education related service 1 (0.3)
Offering of lunch boxes or food for the low-income families 5 (1.3)
Food business such as catering 1 (0.3)
Growing or producing of various agricultural products 13 (3.4)
Research and promotion for SEs 5 (1.3)
Total 385 (100.0)
Note: The analysis was conducted based on duplicate responses on the service offerings surveyed
2. SE Case Study Results and Their Implications
This section elaborates on the outcome of case studies targeted for social enterprises mainly engaging in social welfare services.4) Social enterprise policies adopted up to date tend to overemphasize 'job creation.' The SE standards proposed by EMES study and shared commonly by the European nations include: contribution to the profit of local community, leadership by civil societies, decision-making not driven by capital ownership, democratic participation by various stakeholders, limited distribution of profits, sustainable production, and sale of goods & services, high autonomy, meaningful level of economic risk, a minimum amount of paid work, etc. (Defourny, 2001). it is obviously not easy to gauge how much our social enterprises have managed to accommodate the philosophy and mission of SEs as set forth above. In this study, we will try to assess the growth potential and strengths that SEs may possess as a main component of social welfare service delivery. Then, we will look at the realities facing SEs that were identified by this study, before devising a detailed policy agenda required for the evolution of SE as a healthy social welfare service carrier.
4) SEs subject to analysis are 21. By organizational type, there are 9 incorporated associations, 3 social welfare organizations, 3 corporations, 2 nonprofit private organizations, 1 public service corporation, 1 nonprofit corporation, and 2 others.
In terms of SE type, 8 are classified as job creation type; 4 for social service delivery type; 7 for welfare mix type; and 1 for others.
A. Distinctive features and strengths of social enterprises:
recognition and identity
Strengths of social enterprises
The merits of SEs as a social welfare service provider lie in the fact that standards are being emphasized to meet their principles. Ethical principles compel SEs to run their business relatively in compliance with the law, while motivating them to raise their competitiveness through improvement in service quality.
For instance, most SEs agree that they should act by strict ethical norms by staying away from expedient marketing practices or unlawful exemption of deductions that are openly carried out by others, stressing that they can not compete in the same way as others do.
The lack of recognition for SEs remains prevalent in not only their customers but also local communities and competent authorities. Yet, there are cases in which they gain trust just because they are a social enterprise. We believe this is derived from the faith putting in for the government's certification. On the other hand, it was discovered that there is some concern that hiring a large number of the disadvantaged may undermine service quality.
In addition, guaranteeing autonomy in service operation is considered a strong point as opposed to the existing social welfare organizations, as it enables the delivery of diverse and differentiated services that existing peers have failed to offer.
Since the offering of social welfare services can not be handled neither by the market alone given their strong nature as public goods nor by the public domain alone, social enterprises backed by autonomy and publicness are at an advantage.
In some cases, companies with democratic decision-making structure in place have begun to perceive the reflection of opinions as a driving force for their business operation.
Hiring local residents as a community-based company and having its vision shared are also regarded as one of SE's merits.
Social enterprise enables a consensus to be formed among employees, and this is why it is seen as a strength. SE workers believe that they "work hard because it is worthy and rewarding doing so for a social enterprise."
That there is a foundation for people to work with pride is regarded as one of its advantages. The sharing of corporate objectives and values, a sense of belonging, and support for self-development have added to reinforce such foundation. The pride derived from the belief that "'my company' is a 'good' company and I am not working just for money" seems to motivate them to spread the purposes of SE to other people around.
B. Difficulties and limitations in terms of the operation of SEs
Social perception toward SEs
It is observed that due to the lack of general understanding and recognition of SEs, they are encountering many obstacles in the overall process of social welfare service provision, such
as ones associated with resource mobilization and networking.
Unless there is a change in the current perception formed mostly around their profit-making aspects with no consideration of their social contribution, it would be extremely hard for them to take root in local communities. This is attributable to the fact that they are widely viewed as a 'for-profit' company relative to other nonprofit organizations involved in social welfare services. As such, securing funding through public offering looks difficult, while gaining financial support from the Community Chest of Korea is deemed impossible. Even if they manage to get sponsorship, resolving tax issues would be a challenge. In the same context, efforts to promote themselves as a social enterprise and expand their user base have not paid off well, either.
Insufficient recognition by public organizations is also perceived as an obstacle. Though the preferential purchase system is available for use, the awareness for it is lacking, the products that can be sold to the public sector are limited, and the sale of SE goods via e-commerce (i.e. Nara Marketplace) is restricted.
Yet, the relationship with the government and the recognition by local autonomous seem to make progress. They still appear to remain in the process of building a mutual understanding rather than rendering actual support. However, amid the growing change in the government's approach as seen in the launch of Social Enterprise team by local government, it was found in the study that SEs were in anticipation of receiving support.
Tax burden
As 'Local (income) tax' was found to weigh on small SEs, a series of tax relief measures such as exemption or reduction in local taxes for micro firms were proposed to increase the hiring of the under-privileged.
As one of the limitations being faced by a corporation, the issue of 'value added tax (VAT)' was raised. Though social welfare facilities or nonprofit organizations are entitled to tax exemption, social enterprises however do not stand to benefit even if they offer equal services. Some consulting agencies even advised SEs to switch to a form of fee-based job agency instead of 'employing' workers. Whereas, it was discovered that they did not accept the advice citing such considerations as 4 public insurances subscription and job stability.
Constraints as a company carrying out social welfare services
The study revealed that as SEs are moving toward building a self-reliant operational structure through profit generation for their survival in the market upon certification, the low income class-oriented services or 'pro bono' services are on the decline, resulting in a conflict in terms of their corporate identity as a social welfare service provider.
The issue was raised that SEs either originated from social welfare organizations or currently affiliated with relevant foundations are suffering an identity crisis as there has been little change in the overall principle of their operation as well
as the view and perception of workers compared to the existing ones. SE workers seeing themselves only as a social worker was criticized as a constraint, because the change of their perception as being part of management and staff should be accompanied. In reality, this has been a source of constant conflict in the course of actual business operation.
In most cases, care-/service-based SEs are facing difficulty due to the lack of marketing skills, as the majority of staff are filled with social workers, etc. with poor understanding of business administration.
C. Evaluation on SE support mechanisms and tasks for improvement
Support for labor cost for the newly-hired
When it comes to the subsidy for labor cost for SEs, there are people in favor of continuous assistance and people against it citing the inefficiency of such subsidy. Opponents argued that simple financial handouts only undermine their chance of self-survival, adding that the support for business expenses or working fund is more appropriate, whereas proponents stressed the importance of sustainable assistance as the suspension of subsidy could drastically worsen their employment and business retention. That said, the current uniform support approach should be overhauled. Different assistance specific to each business type and nature should be in place while breaking away from the uniform wage support system that fails to take into
consideration the detailed growth stage of a company as well as the expenditure structure for labor cost suitable for the social welfare service type.
Support for social insurance premiums
Over 50% of SEs surveyed responded that continuous assistance for social insurance is required. The demand for such benefit is higher than for the subsidy for labor cost. Given that social welfare-focused companies are spending a large amount of money for direct & indirect labor cost, sustainable assistance until when they are able to stand on their own seems necessary. Also, a comprehensive consideration should be made for an increase in premium subsidy currently tied to a minimum wage level, actual contribution payable based on the size of employment, etc.
Corporate tax reduction/exemption
A majority of respondents said that they have seen little or no benefit from corporate tax relief due to the minimum tax regulation. Since the size of operating income is small for most SEs, the minimum tax either requires them to pay in full or have below 50% deducted, which is less than suggested by such tax benefit.
Loan for facility fund, etc.
For the sake of improving the financial health of a company,
low interest loans for business development, facility investment, etc. are found helpful and effective. Yet, it is concluded that, given the limited loan term, relevant policies need to be overhauled to allow such loan to be flexibly availed.
Support for professional workers
As more than 50% of SEs surveyed said that they have had good experiences with utilizing professional workers, it is believed the support for this area should be reinforced through some improvements. Two issues were identified, and some corrective actions were suggested. For starters, the eligibility criteria and scope for this support program should be adjusted appropriate to social welfare or care service domain, or upgraded to enable flexible operation. A strong need for leveraging social workers, nurses, etc. was detected, and there were even cases where some local government agencies recognized them as professionals.
The other issue was that the current standards (i.e. job experience, certificate, degree, etc.) for professional workers are set too high relative to the subsidy assigned. On top of it all, the need for more sustainable support was mentioned, too.
Business consulting
Of assistance programs required in the course of SE certification and operation, the rationalization of 'business consultation' was considered very meaningful. Over a third of firms surveyed rated it as 'not helpful' citing the paper-based, perfunctory