financial instruments and mechanisms of funds’ allocation to social economy practices in european...
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Financial instruments and mechanisms of funds’ allocation to social economy
Practices in European Union member states
JEREMIE Initiative – ESFLombardy Region
Prague, November 8-9th 2011
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Agenda
ESF ROP Lombardy 2007-2013
JEREMIE in Lombardy: instruments and context
ESF JEREMIE – How it works
Conclusions
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Agenda
ESF ROP Lombardy 2007-2013
JEREMIE in Lombardy: instruments and context
ESF JEREMIE – How it works
Conclusions
3
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ESF ROP Lombardy 2007-2013: priorities
Implementation of ESF ROP Lombardy 2007-2013:• contrast to the crisis• enhancement of competitiveness through human capital development• social inclusion
• More adaptable workers and firms
Axis 1
• Easier access to work
Axis 2
• Combating social exclusion in labour market
Axis 3
• Enhancing human capital
Axis 4
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ESF ROP Lombardy 2007-2013: tools
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ESF ROP Lombardy 2007-13
DOTEPUBLIC
PROCUREMENT
FINANCIAL ENGINEERING INSTRUMENTS
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ESF ROP Lombardy 2007-2013: tools
DOTE:
a mix of financial resources and services assigned to
a citizen to be provided with training and employment services
Pillars:
Person’s centrality
Focus on demand and individual freedom of choice
Competition between public and private operators
Focus on results
ESF ROP Lombardy 2007-13
DOTEPUBLIC
PROCUREMENT
FINANCIAL ENGINEERING INSTRUMENTS
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ESF ROP Lombardy 2007-2013: tools
• “Dote lavoro” (employment services): 112 M€ in 2009-2011 • “Dote formazione” (training services): 25 M€ in 2009-2011• “Dote” social shock absorbers: 100 M€ in 2009-2011
Main initiatives
ESF ROP Lombardy 2007-13
DOTEPUBLIC
PROCUREMENT
FINANCIAL ENGINEERING INSTRUMENTS
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ESF ROP Lombardy 2007-2013: tools
PUBLIC PROCUREMENT:
public contracts and in-house providing
Pillars:
Transparency and publicity
Code of ethics for contractors (pending approval)
ESF ROP Lombardy 2007-13
DOTEPUBLIC
PROCUREMENT
FINANCIAL ENGINEERING INSTRUMENTS
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ESF ROP Lombardy 2007-2013: tools
FINANCIAL ENGINEERING INSTRUMENTS:
ESF ROP Lombardy 2007-13
DOTEPUBLIC
PROCUREMENT
FINANCIAL ENGINEERING INSTRUMENTS
JEREMIE
ERDF ESF
Support to micro and SMEs in the sectors of manufacturing and services to enterprises
Support to micro-enterprises (including individual ones), non-profit bodies and private social service agencies
Two instruments in Lombardy
20 M€ 20 M€
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Agenda
ESF ROP Lombardy 2007-2013
JEREMIE in Lombardy: instruments and context
ESF JEREMIE – How it works
Conclusions
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Implementation of JEREMIE in Lombardy
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…promotes financial instruments to easier access to credit to micro and small and medium enterprises
JEREMIE
…promotes access to employment and education to disadv. people in the EU (unemployed, women, disabled, etc.)
ESF
Strict link between financial exclusion and social exclusion
• The OP provides the use of JEREMIE (3rd axis - social inclusion) in order to:• deploy innovative instruments for the provision of loans or small grants to
SMEs and non-profit organizations operating in the social inclusion;• encourage easier access to work for excluded (or at risk of social exclusion)
people and access to credit
ESF JEREMIE
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Regional context of ESF JEREMIE
• Around 1.200 social cooperatives operating in Lombardy (16,2% of national no.)• 400 cooperatives dedicated to integration of disadvantaged people into the
labour market • 14 disadvantaged workers are employed per cooperative (> of national average
equal to 12)• Around 600 disadvantaged people in Lombardy are employed by the
cooperatives’ system, divided among: disables (45%), addicted to drogues or alcohol (24%), affected by psychological impairments (19%), with problems with justice (12%)
• 54% of total social cooperatives’ workforce represented by disadvantaged people (>30% imposed by law)
Facts and figures
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Agenda
ESF ROP Lombardy 2007-2013
JEREMIE in Lombardy: instruments and context
ESF JEREMIE – How it works
Conclusions
13
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ESF JEREMIE – How it worksLOMBARDY REGIONLOMBARDY REGION
Loans
Equity
SELECTED FINANCIAL INSTITUTIONSSELECTED FINANCIAL INSTITUTIONS
COOPERATIVESCOOPERATIVES
BENEFICIARIESBENEFICIARIES
JEREMIE FUNDJEREMIE FUNDcreates
disburses
disburses
to
subscribe
to
Phase 2
Phase 1
Phase 3
Phase 4
managed by FINLOMBARDAFINLOMBARDA
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ESF JEREMIE – How it worksLOMBARDY REGIONLOMBARDY REGION
JEREMIE FUNDJEREMIE FUNDcreates managed by FINLOMBARDAFINLOMBARDA
• In-house providing• Funding agreement in 2008
• setting-up of the Fund (10 M€) in 2008• supplement (+10 M€) in 2009
Phase 1
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ESF JEREMIE – How it works
SELECTED FINANCIAL INSTITUTIONSSELECTED FINANCIAL INSTITUTIONS
JEREMIE FUNDJEREMIE FUND
disbursesPhase 2
• First call in 2010 (10 M€):• 2 Financial Intermediaries selected by FL:
• Banca Popolare di Bergamo • Federazione Lombarda BCC
• Second call in 2011 (9 M€):• 3 Financial Intermediaries selected by FL:
• Banca Popolare di Bergamo • Banca Popolare Etica• Banca Popolare di Sondrio
5 M€ * 2
3 M€ * 3
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ESF JEREMIE – How it worksSELECTED FINANCIAL INSTITUTIONSSELECTED FINANCIAL INSTITUTIONS
Loans (€ 4.000)
FI’s co-financing (50%)
JEREMIE contribution (50%)
Amortizing component
Bullet component
5-year loan, fixed rate, monthly refundable
5-year loan, zero rate, single refund
Loans
BENEFICIARIESBENEFICIARIES
disburses
to
Phase 3
Cooperative shareholders
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ESF JEREMIE – How it works
Equity
COOPERATIVESCOOPERATIVES
BENEFICIARIESBENEFICIARIES
subscribe
to
Additional or new shares
COOPERATIVES
TYPE A social coop.
TYPE B social coop.
“WORKER” coop.
provide health, social or educational services
integrate disadvantaged people into the labour market
owned and democratically controlled by its workers-owners (at least 30% from disadvantaged target groups)
Phase 4
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ESF JEREMIE – How it worksDisadvantaged target group
• physically, mentally or sensory disabled• former patients of psychiatric institutions or subjects in psychiatric treatment• drug-addicted• alcoholics • people under 18 who live in a difficult family environment• condemned people that make use of alternative to detention measures
but also any person who…• is between 16 and 25 with a completed time education• is a woman older than 40• is a man older than 50• is a migrant worker• has not attained an upper secondary educational qualification or its equivalent• is a long-term unemployed person (12 months)• lives as a single adult looking after a child or children
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ESF JEREMIE – How it works
Equity subscriptionEquity subscription
Refunding Refunding
Amortizing componentAmortizing componentBullet componentBullet component
• If the beneficiary works in the cooperative for the duration of the loan and refunds the amortizing component: no refunding
• If not: covered by the guarantee fund (10%)
• If the beneficiary does not work in the cooperative for the duration of the loan: advanced refunding
• Coverage of the guarantee fund (10%)
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Agenda
ESF ROP Lombardy 2007-2013
JEREMIE in Lombardy: instruments and context
ESF JEREMIE – How it works
Conclusions
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Conclusions
• Supporting cooperatives in achieving the ESF ROP objectives in terms of social and professional inclusion of disadvantaged people
Motives
• Development of business and employment of cooperatives that deal with social inclusion and have difficulties in acceding to credit
Needs
• Promoting access to credit to cooperatives’ shareholders that are excluded /at risk of exclusion
• Promoting recapitalization of cooperatives that pursue programmes of social inclusion
Objectives
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Conclusions
• FL’s monitoring system measures efficiency and effectiveness of the instrument in order to re-programming
• Use of SFC• RL’s M&E system measures coherence with ROP’s objectives
M&E
• Financial, economic and structural strengthening of the cooperative system as a key actor playing an important role in promoting the inclusion of excluded people in the local labour market
• Strengthening of the awareness of being shareholders and turnover reduction• 8.700 target people reached• 35 M€ of total capital’s injection towards the cooperatives’ system
Achieved results
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Conclusions
Focus on results
Asset consolidation30%
Further access to credit50%
Investment in energy20%
Main investment destinations
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Conclusions
Focus on results
M51%
F49%
Beneficiaries by gender
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Conclusions
Focus on results
15-24 2%
25-5480%
55-6419%
Beneficiaries by age
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Conclusions
Focus on results
Type A44%
Type B39%
Workers16%
Beneficiaries by cooperative
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Conclusions
• Hypothesis of a further supplement of the endowment of the fund• Evolutions and modifications of the tools must consider:
• results achieved (i.e. synergy with foundations and ethical banks)• rules (complex instrument, long procedures, strict regulation)
• Possible evolutions are:• strengthening of guarantees• simplification• more focus on disadvantage• contrast to poverty• guarantee for youth (r&d or new sectors such as green economy,
sustainability) and new emergencies (women, youth, etc)
Future
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Conclusions
• Respect of EU regulations’ provisions concerning information and publicity • Calls are published and FI provides information (information desks)• Transparency of selecting procedures
Information
• Only FL’s management costs are covered by the Fund• No FI’s operating cost is eligible• The funding agreement provides that FL’s management costs can not exceed
2% of the ROP contribution (actually less that 1%)
Operating costs
• De minimis
State aid
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Conclusions
• Pros and cons…• synergy of interventions is an opportunity• eligibility of expenditure is a restriction• focus on social inclusion is both an opportunity and a restriction
• Possible combination with other mechanisms and tools:• Combination with private sector: ethical finance• Combination with public policies: ERDF, typical tools of Active Labour
Market Policies
Use of ESF
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Conclusions
• Focus on disadvantaged people• First case in Europe• Coherence with ROP and EU
provisions and recommendations• High level of co-financing by the
private sector ensured• Coverage of the target and good
draugh of the instrument
Strengths
• Risk of discrimination for non-disadvantaged people
Threats
• Interest of the private sector (FI and social agencies)
• Presence of new needs in a context affected by the global crisis
Opportunities
• Complexity of the instrument• Limitation ESF (inclusion)
Weaknesses
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Thank you for your attention!