The Social Solidarity Economy Basic Law has been enacted after 12 years, marking a significant step in the government's implementation of social solidarity economy policies. The focus is on expanding support beyond individual organizations like social enterprises and cooperatives to include finance, market access, and local economies. There will also be a strengthened connection with the living economy, including care, housing, and energy.
Yoon Ho-jung, the Minister of the Interior and Safety, has been addressing this legislative issue since his time as a lawmaker. He first proposed the Social Economy Basic Law in the 20th National Assembly in 2016, and after the bill was discarded due to the expiration of his term, he reintroduced it in the 21st National Assembly in 2020. Since taking office as minister, he has emphasized the importance of moving beyond legislation to policy execution. In June, the government prepared a comprehensive plan involving 20 relevant ministries, focusing on finance, market access, and local economies following the enactment of the basic law.
During a recent international symposium on social solidarity finance, Minister Yoon emphasized that "institutional foundations alone are insufficient." He stated that the focus will be on establishing a functioning base for policies to operate in the field, with key measures including social solidarity finance, market expansion, local innovation models, and international market entry.
Integrating Dispersed Policies to Build Local Economic Ecosystems
Previously, social solidarity economy policies were implemented separately by organization type and ministry. Support systems varied for social enterprises, cooperatives, and village enterprises, and business areas such as care, housing, energy, and local economies were scattered across multiple ministries.
The scale of the policy target is already significant. As of 2024, there are over 35,000 social solidarity economy organizations in the country, employing more than 360,000 people, which accounts for approximately 1.8% of total employment.
The 'Comprehensive Plan for the Development of the Social Solidarity Economy' established by the government in June aims to consolidate these dispersed policies into a unified system. The three main strategies focus on supporting growth and competitiveness, creating local innovation ecosystems, and innovating systems and infrastructure. Support that was previously concentrated on individual organizations will now expand to create regional ecosystems, linking with living sectors such as care, housing, energy, and agriculture.
The Social Solidarity Economy Basic Law provides the institutional framework to support this initiative. According to Article 7 of the law, the Minister of the Interior and Safety will consult with relevant central administrative agencies and gather opinions from local governments to establish a basic plan for the development of the social solidarity economy every five years. Implementation plans by ministries and local governments will also be linked to the basic plan.
At the local level, a structure will be established for cooperation among local governments, social solidarity economy organizations, public institutions, businesses, and universities. This approach aims to address local issues while simultaneously creating jobs and income.
Actual projects have already begun. The government has selected 17 innovative models for the social solidarity economy this year. These projects aim to solve local issues using the social solidarity economy approach by leveraging local characteristics and resources. In Asan, South Chungcheong Province, a project is underway to provide integrated meals and care for the elderly by connecting local food-related businesses and social solidarity economy organizations. In Jeju, a model is being developed to increase local income by combining surplus agricultural products with tourism.
The Jeongwonsu Social Cooperative in Sinan County, Jeollanam-do, is an example of connecting production and income within the community. Residents supply the saplings they produce to the county's 'One Island, One Garden' project. According to the Ministry of the Interior and Safety's excellent case materials, this initiative has generated a cumulative income of 8 billion won for residents, with budget savings for the county amounting to 50.6 billion won since 2023.
Social Solidarity Finance Intensified: Expanding Market Access and Growth Foundations
Minister Yoon particularly emphasizes social solidarity finance as a key policy execution tool. The Ministry of the Interior and Safety believes that social solidarity economy organizations, which create social value but lack collateral or financial performance, face challenges in securing growth funds from existing financial markets.
The Social Solidarity Economy Basic Law also provides the basis for designating a dedicated agency for social solidarity finance. Under Article 18 of the law, the Minister of the Interior and Safety can designate an agency to foster and support the establishment of a social solidarity finance foundation and intermediary organizations. This dedicated agency will be responsible for investment, loans, guarantees, and supporting the establishment of regional and private funds.
The government will also increase its financial input. The budget related to the social solidarity economy is expected to rise from approximately 100 billion won in 2026 to about 300 billion won in the 2027 government proposal. This funding will be allocated to strengthen growth and competitiveness, create local innovation ecosystems, and improve systems and infrastructure.
Among this, the 2027 government budget proposal includes 41.3 billion won for the dedicated social solidarity finance agency. The financial support structure will also expand to include private funds. Public resources will serve as a catalyst to encourage participation from private social investment institutions, banks, and mutual finance. Recovered funds will be reinvested into social solidarity economy organizations.
Market access will shift from a focus on public procurement to the private market. The government will utilize large distribution channels and social vendors, linking with private companies' social contribution and ESG initiatives. Support will also be provided for entering domestic and international markets based on growth stages.
The Daegu Muhansangsa Social Cooperative is an example of how securing market access has led to business growth. It involves 56 social solidarity economy organizations and contracts with approximately 180 public institutions annually. Revenue has increased from 300 million won in 2017 to 9.6 billion won in 2024.
The government has set a goal to increase the economic scale of the social solidarity economy. By 2030, it aims for the social solidarity economy to account for 7% of the gross domestic product (GDP) and 6% of employment. The plan also includes nurturing 1,000 leading companies with annual sales of 10 billion won or more or employing over 100 people.
Linking Living Economy: Supporting International Expansion through KOTRA and ODA
While expanding the growth foundation through finance and market access, the scope of the social solidarity economy will also be broadened. Areas closely related to residents' lives, such as care, housing, energy, and agriculture, will be targeted.
The participation of social solidarity economy organizations in integrated care linked to medical and nursing services will be expanded. Initiatives for providing social housing and community-based renewable energy projects will also be pursued. In rural areas, social farms and service communities will be utilized to supplement the lack of living services.
The Ansan Medical Welfare Social Cooperative provides medical, care, and welfare services with participation from both residents and healthcare professionals. A community-based energy cooperative operates a solar power plant funded by residents, returning profits to the local community, serving as a model for social solidarity economy at the local level.
Models developed domestically will be connected to international markets and cooperation. The government plans to expand policy exchanges with organizations such as the International Labour Organization (ILO), the United Nations Task Force on Social Solidarity Economy (UNTFSSE), and the Organisation for Economic Co-operation and Development (OECD). Efforts will also be made to enhance networks between local governments and private organizations through the Global Social Economy Forum (GSEF).
Support for the international expansion of social solidarity economy enterprises will be strengthened. The government will promote export support through KOTRA and link it with official development assistance (ODA) projects. This includes connecting overseas exhibitions, export consultations, and investment attraction, as well as supporting participation in international development cooperation projects by businesses and civil society.
Internationally, the institutionalization of the social solidarity economy is also progressing. In 2023, the United Nations adopted a resolution to promote social solidarity economy for sustainable development. The OECD published recommendations on social solidarity economy and social innovation in 2022, while the ILO issued a resolution on quality jobs and social solidarity economy in the same year.
France enacted a Social Solidarity Economy Law in 2014, while the UK established a legal basis for related policies through the Social Value Act, and Italy through the Third Sector Law. The government plans to expand exchanges with international policies and support the overseas market entry of domestic social solidarity economy organizations.
Since the enactment of the basic law, the focus of policies has shifted to subsequent execution. The Ministry of the Interior and Safety will prepare a five-year basic plan for the development of the social solidarity economy in line with the law's implementation. The designation of a dedicated social solidarity finance agency, the activation of regional and private funds, and the expansion of market access will be pursued sequentially.
Minister Yoon is also discussing follow-up policies with local governments. Plans include spreading innovative models that have shown results in regions to other local governments and promoting international expansion projects in collaboration with relevant ministries, including KOTRA export support and ODA linkage.
* This article has been translated by AI.
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