Reasons for Proposal
The large enterprise-oriented growth structure that has been sustained over the past 50 years enabled rapid growth, but it also brought serious adverse effects such as polarization. Recent statistics suggest that the large enterprise-oriented economic structure has not been fundamentally uprooted, with large enterprises accounting for 0.9% of businesses but 66.3% of total exports.
Amidst these circumstances, the nature of labor or work is transforming in accordance with the Fourth Industrial Revolution and a shift towards a low-birth, aging society. This has a sparked growing interest in the social economy, which focuses on fair distribution of the benefits of growth to all members of society. There is also an emerging need for social economic organizations that have established themselves in local communities and have devoted themselves to protecting the interests and strengthening the capabilities of the socially and economically vulnerable, to now become central agents of economic activity.
Accordingly, this Act establishes a legal framework to enable the central and local governments to efficiently promote social economy and prescribes necessary matters concerning the formulation, general management, and coordination of policies for a social economy, thereby aiming to promote efficient support for a social economy at the national level and contribute to the development of a sustainable, virtuously circular economic ecosystem.
Details
A. Stipulate that the purpose of this Act is to enhance the quality of life of the people by comprehensively and efficiently implementing social economy support policies designed to efficiently address polarization, wealth gaps, and other issues facing our society through the preparation of a common legal framework for a social economy, and formulation of measures for developing an ecosystem to promote a social economy (Article 1).
B. Stipulate that the fundamental principles of the social economy shall be: ① A pursuit for the common interests and social values of members of the community ② Autonomous, independent, and transparent operation ③ Encouragement of an open and democratic operating structure and participation by a variety of stakeholders ④ Prioritization of the common interests of all members and social objectives in the use and distribution of the gains obtained ⑤ Strengthening mutual cooperation for the development of local communities and local circular economies, and contributing to the development of communities (Article 2).
C. Define “social economy” as all economic activities performed by a social economic organization to resolve polarization, ensure virtuous cycles in local economies, create high-quality jobs, provide social services, and otherwise pursue social integration and common interests. Define “social values” as values that may contribute to public interest and community development, including the creation of high-quality jobs, increased employment opportunities for vulnerable groups, stimulation of local economies, mutual cooperation and fair trade, ethical production and distribution, safe working and living environments, sustainable conservation of the environment, democratic decision-making, and public participation (Article 3, subparagraphs 1 and 2).
D. Define “social economic enterprise” as a business organization that engages in the purchasing, production, sale, consumption, or other business activities in relation to goods and services while also pursuing social values, and that falls under the items of Article 3, subparagraph 3. Define “social economic organization” as an organization that has been recognized for ongoing engagement in activities associated with the social economy, and that is an enterprise or corporate group that has filed a registration in accordance with the Presidential Decree and the applicable municipal ordinances (Article 3, subparagraphs 3 and 4).
E. Define “social financing” as financial activities to pursue a sustainable, virtuous circulation of funds through investments, loans, guarantees, etc., for social economic organizations and social economy-related projects to address social issues and promote social values (Article 3, subparagraph 7).
F. Newly establish the “Social Economy Development Commission” to deliberate on and coordinate key policies on the social economy development, and to be in charge of formulating national strategies and prospects for social economy development. Allow the Commission to request the heads of relevant institutions to submit information or data on social economy development when necessary to perform the relevant duties (Article 11 and Article 13).
G. Prescribe that the Minister of Economy and Finance shall promote the development of a social economy and support the development of relevant policies by establishing the “Social Economy Center of Korea,” through which he or she shall conduct investigations and studies on the current status of the social economy, collect and analyze relevant data, develop policies and various business models regarding the social economy, and various other programs to promote the social economy at a national level; and shall strive to promote social economic organizations by increasing participation by private organizations in the implementation of such programs (Article 19, paragraphs 1, 4, and 5).
H. Require the State and local governments to lay the financial groundwork for a social economy by reorganizing financial systems and striving to obtain funds to stimulate private investments and financial support to assist with the development of new financial instruments that account for social values; development and introduction of tools to measure, assess, and disclose the social values of social economic organizations; and private economic activities that fulfill social values (Article 22, paragraphs 1 and 2).
I. Allow the State and local governments to invest in designated private social financial institutions in accordance with Article 23, paragraph 1. Allow social economic organizations and private social financial institutions, etc., to form, set up, and establish a private equity fund, investment association, etc., specializing in startups and venture businesses by obtaining a permit, etc., in accordance with the Financial Investment Services and Capital Markets Act, Act on Special Measures for the Promotion of Venture Business, and Support for Small and Medium Enterprise Establishment Act (Article 24, paragraphs 1 and 2).
