Reconnecting Competitiveness and Cohesion Through the Social Economy
Across the European Union over 4.3 million associations, cooperatives, mutual benefit societies, foundations and social enterprises pursue activities that prioritise social and environmental objectives over profit and apply participatory or democratic governance models.
These organizations provide at least 11.5 million jobs, accounting for around 6.3% of total employment, and operate across a variety of sectors, from care services to finance, agri-food, retail, and culture. The activity of these companies and the workforce shape the so-called European Social Economy.
The European Social Economy is increasingly becoming central to Europe’s economic thinking, as confirmed by the European Commission’s latest Action Plan. The Commission sees it as a key driver of economic growth and improved competitiveness.
The Action Plan for Social Economy was built as a way to put forward concrete measures to help mobilise the full European potential, building on the results of the 2011 Social Business Initiative and the 2016 Start-up and Scale-up Initiative (see here the Action Plan [+]).
The European Commission has just submitted the Mid-term review of the action plan for the social economy to the European Parliament, outlining its main achievements and a way forward.
The report highlights that more Member States are putting national frameworks in place, that access to finance is gradually improving, and that social economy actors are gaining visibility in areas such as public procurement.
At the same time, the picture across Europe remains uneven. Definitions still vary, administrative requirements can be heavy, and cross-border activity is not yet straightforward for many organisations.
What does that mean for managers
The environment in which companies operate is shifting. Expectations are evolving around how value is created and measured. Financial performance remains essential, but it is no longer seen in isolation.
Social impact, workforce engagement and contribution to local communities are increasingly part of the equation. This is already visible in funding programmes, in partnerships, and in how organisations position themselves.
There is also a forward-looking dimension. The direction set at the European level suggests that future initiatives will continue to favor organizations that can demonstrate broader contributions to society. Managers who anticipate this will be better placed to navigate upcoming changes, whether in relation to skills, the green transition, or digital transformation.
Diversity group of people held colorful balloons to show unity and solidarity in LGBTQ community.LGBTQ pride month
These developments are anchored in the European social market economy, a model that does not separate economic performance from social responsibility. Competitive businesses and strong social foundations go hand in hand. The Commission’s approach reflects this by supporting enterprises that generate both economic activity and social value.
This is where managers have a decisive role. Translating these principles into concrete business strategies, ensuring that organisations remain competitive while adapting to new expectations, and keeping teams engaged in the process are all part of today’s leadership responsibilities.
CEC European Managers continues to bring this perspective into the European debate. As a recognised social partner, CEC represents managers in discussions that shape employment and social policies. The social economy is one of those areas where this contribution is particularly relevant.
Through social dialogue, CEC works to ensure that European initiatives remain grounded in reality.
Policies need to support innovation and flexibility, not create unnecessary constraints. Managers are key to making these transitions work in practice, and their voice needs to be heard accordingly.
At the same time, the evolution of the social economy highlights something that has long been part of the managerial role: balancing different objectives, taking responsibility beyond short-term results, and creating conditions for sustainable growth.
For leaders and managers across Europe, the question is less about whether to engage with this agenda and more about how to do so in a way that strengthens both their organisations and the wider economy.
CEC European Managers will continue to engage in this process, promoting an approach where economic performance, social progress and responsible leadership develop together.
The European Social Economy Model: What is it
The European social economy refers to a segment of the economy in which enterprises operate in the market but follow a different set of economic priorities from conventional investor-driven firms.
These organisations produce goods and services, create jobs and generate revenue, yet profits are largely reinvested to serve a collective or societal objective rather than distributed to shareholders. Their governance structures often limit capital control and emphasise stakeholder participation, which affects how decisions on investment, wages and growth are made.
What distinguishes the European approach is its integration into the broader model of the social market economy.
In Europe, the social economy is recognised in public policy, supported through legal frameworks, and linked to objectives such as labour market inclusion, regional development and social cohesion.
This creates a hybrid economic space where market mechanisms coexist with solidarity-based principles, and where public authorities actively shape the ecosystem.
In other parts of the world, similar organisations exist but are often framed differently. In the United States, for example, social enterprises tend to be positioned closer to the non-profit sector or impact-driven entrepreneurship, with less structural integration into economic policy.
In many emerging economies, they may play an important role in informal or community-based activities but without the same level of institutional recognition or support.
The European specificity lies in this combination: market-based activity, collective purpose, and a policy environment that treats the social economy as a stable and legitimate component of the economic system rather than an exception.
