The republic does not live in stagnation alone: there are more and more entities of the social economy in Latvia — societies, foundations, enterprises, cooperatives.
According to official data, they unite about 29,000 participants and complement the public and private sectors. The plan to give new incentives to the social economy by 2029 is being presented today at a government meeting by the Minister of Economics, Reinis Uzulnieks.
Where Does So Much Come From?
Of course, protectionism is unavoidable here. Last year, the Cabinet of Ministers already took a decisive step towards the social economy — the Public Procurement Law reserves the right to participate in the procedure ONLY for those candidates or applicants who have the status of a social enterprise, or whose "social goal is the employment of groups of the population at risk of social neglect."
In total, there are 27,448 societies in Latvia, of which 1,613 are registered as "public benefit organizations." In principle, all of them can provide various services to their participants. However, there are only 235 social enterprises that are, so to speak, outwardly oriented.
So where does the figure of 29,000 participants come from? The Ministry of Welfare added cooperative societies to this number, including credit unions. It seems that there is some manipulation with statistics here, as such forms of economic activity existed in independent Latvia back in the 1920s and 1930s, and no one singled them out as a special segment.
The Main Thing – Benefit
In general, the Law on Social Enterprises and its legal status appeared relatively recently — in 2018. Such an entity "operates in market conditions, characteristic of entrepreneurial activity and in an innovative way, producing goods or providing services." However, "the most important goal of social entrepreneurship is not profit-making, but solving a social problem or creating benefits for society."
About half of Latvian social enterprises operate in the fields of education, sports, medicine, health, and social services. Another fifth is engaged in environmental and animal protection, cultural diversity, and promoting civic activity.
"A New Culture of Cooperation"
Social innovation, as postulated by the Ministry of Welfare, is the best, most effective, and rational (compared to existing ones) development and implementation of practical solutions to current social problems — "creating a new culture of cooperation and promoting social progress in society." These can be new products, services, models, processes, laws, organizations, methods, solutions to social problems, practices, etc., which simultaneously meet social needs and lead to new or improved capabilities and relationships, as well as more efficient use of funds and resources.
Geographically, social enterprises are more of an urban phenomenon. In Riga, there are 109 (or 46%); for comparison, in Latgale, there are 12 (5%). In a somewhat strange manifestation of "care," the decision of the Saeima on November 20 of last year was to abolish income tax benefits for social enterprises. However, active Latvians will be able to partially distribute up to 50% of the earned profit, "thus opening up opportunities for social enterprises to attract investment companies in the future."
