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RISHI MAHARAJ

In my last column I highlighted the hidden pandemic that has been left naked for all to see. That is the pandemic of inequality that has affected so many of us and our loved ones during these times. This situation is not only unique to us here in the Caribbean but has been widely felt in every corner of the world.
Some have argued that the current crisis has exposed the failure of a capitalist economy to provide a level playing field for all. Covid19 has exposed the other phase of the economy that has always been conveniently rejected or has been paid not much heed to in the identification of the “wealth of a nation.” These are the unorganised sector workers and their very exposition to the world in this time of worldwide lockdowns.
The world as we know it is currently facing at least three major crises simultaneously. A pandemic-induced health crisis has rapidly ignited an economic crisis with yet unknown consequences for financial stability, and all of this is playing out against the backdrop of a climate crisis that cannot be addressed by “business as usual.”
We are therefore at a turning point, due to circumstances most of which I believe are of our own making, where we need to rethink how our economic and social activities are organised. The crises we currently face call for strong responses based on solidarity, co-operation and responsibility. One such rethink I would like to recommend is the idea of adopting a social economy enterprises approach.
Defining the social economy is not an easy task, because it includes a large variety of stakeholders, between the private (business) and public sectors (government). It includes organisations such as cooperatives, non-profit organisations and charities. In the interpretation adopted by the European Commission, social economy enterprises (SEEs) are economic and social players active in all sectors of society; they are set up to respond to people’s needs.
They are run according to shared features, values and principles such as the primacy of the individual and the social objective over capital, voluntary and open membership, and democratic governance. They seek not to maximise short-term profits, but to ensure their long-term viability. Profits are reinvested in creating and maintaining jobs or in developing activities that pursue the social objective, or else are distributed among the members on the basis of their personal contributions.
According to the OECD, “the social economy is a significant economic and social actor in its own right, and one that has proven resilient in past crises. In the EU, there are 2.8 million social economy entities, accounting for, on average, 6.3 per cent of EU employment. The social economy was resilient in economic downturns following the global financial crisis in 2008. For example, in countries such as Italy and Belgium, employment in the public and private sectors decreased sharply during the period 2008-2010 just after the crisis, while employment in social enterprises actually grew (11.5 per cent growth in Belgium and 20.1 per cent growth in Italian social co-operatives). In France, between 2000 and 2014, employment in the social economy registered significant and continuous growth (25 per cent), while employment growth in the private sector was much lower (6 per cent).”
At a time when TT and the wider Caribbean needs fresh impetus, promoting diversity in types of enterprise is a factor in job creation, social innovation and cohesion, and competitiveness.
Unfortunately, our current legal frameworks are based on a simplistic perception of the existing types of enterprise in the single market, such that social economy type organisations don’t currently fit, being neither capitalist-type for-profit firms nor not-for profit (financially altruistic) entities. Our laws do not take account of the intrinsic nature of the social economy, in particular its different approach to profits.
It is clear that the pandemic has driven numerous changes to economic activities and the way society’s function. In examining the EU, it has been noted that SEEs have proven to be an important element in mitigating the effects of the pandemic.
We have reached a stage where, through bold leadership, the current situation offers momentum to take bold, courageous decisions to build a more sustainable and inclusive future. I ask the question why not adopt a mix of policy measures to help in the creation of SEEs here. I therefore close with the following recommendations for those who are willing to think outside the box:
• For our university: launch a study on the concept of SEEs and limited profitability and on business models that operate in this way, in order to identify more precisely what is required, in terms of legal, financial and tax frameworks, for cultivating the competitive strengths of these enterprises and ultimately, where appropriate, to prescribe good practice; and
• For the government: introduce into law a legal framework suited to better recognition of SEEs. This framework would be based on a new concept – limited profitability – which would apply to all enterprises that can make a profit but do not intend to distribute that profit to their owners, as their purpose is based on solidarity or the general interest.

Rishi Maharaj is the executive
director of the EquiGov Institute. The institute provides consultancy, training and research in data privacy/protection, governance, information access, transparency, and monitoring and evaluation.
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