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Labor Welfare & Employment

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Tasks for Creating and Fostering Social Enterprises

※ This is a translated version of the paper published in the Monthly Labor Review (KLI, July 2008).
※ Charnim Park , Research Fellow, Korea Labor Institute

Ⅰ. Development of Social Enterprises The economic crisis of the late 1990s and the subsequent mass unemployment triggered a dialogue concerning social enterprise in Korea. The European concept of social employment and social enterprise was introduced, and numerous measures to overcome the mass unemployment situation were discussed and reviewed. These ideas determined the characteristics of jobs provided through the public work program, which paid cash to the unemployed in the low-income group as a form of emergency relief. These ideas also impacted the contents and organization of the self-support program. After the early 2000s, discussions on social employment and social enterprises expanded in scope to changes in the industrial structure and job creation. At that time, Korea had already overcome the economic crisis to a certain extent and needed to prepare for future increases in the demand for social services. Social employment and social enterprises provide support needed by the local community by employing its residents within the community. From this point in time, social employment and social enterprises were discussed from the perspective of job creation and changing the industrial structure. Social employment and social enterprises became a major labor policy issue, leading the Ministry of Labor to start a social employment program in 2003. The social employment program ultimately aims to develop social enterprises into self-supporting companies, in other words, to enable stable job creation in social services. In reality, the result was not in accordance with the original purpose. The social employment program in particular was criticized for its financial dependence on the government. Because the government provided 100% of the wages for the newly employed through the social employment program, it was structurally difficult to maintain the program without government money. As a result, the Korean government changed policy focus from social employment to social enterprise. In January 2007, the government enacted the Social Enterprise Promotion Act and related enforcement decrees and rules. According to the act, the government first certified 36 companies as social enterprises in October 2007, and the number of certified companies rose to 84 in May 2008. The Korean government plans to foster 1,000 social enterprises by 2012. This process set the stage for Korean social enterprises. First, NGO groups and researchers introduced the dialogue concerning social enterprises, and the government has set quantitative goals and driven the execution process. Second, there are two government ministries regulating the institutions and businesses of social enterprises. Although most social enterprises concentrate on social services managed by the Ministry of Health, Welfare and Family, it is the Ministry of Labor that initiated, managed, and financially supported social enterprises. Third, jobs could be created as a result of the development of social enterprises within communities, and this has become the main goal for fostering social enterprises. Job creation became the starting point for discussions on the development of Korean social enterprises

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