Introduction:
Belgium is a country in Western Europe that borders the North Sea.
The government system is a federal parliamentary democracy under a constitutional monarchy. The chief of state is the king, and the head of government is the prime minister. Belgium has a mixed economic system which includes a private-enterprise system, combined with centralized economic planning, and government regulation.Belgium has a mixed economic system which includes a private-enterprise system, combined with centralized economic planning, and government regulation. Belgium is a member of the European Union (EU).
Politically and economically for the registration of SME’s it depends on the region they are established in. Belgium has four different governments, which all do things differently from one another: the federal level, Flanders, Wallonia and the Brussels-Capital Region (Brussels and its direct neighborhood). When doing research for Belgium, most data will touch upon the three local regions and not the federal level.
Based on business figures from 2019, more than half of all small and medium enterprises in Belgium were located in the region of Flanders. When doing research for Belgium, most data will touch upon the three local regions and not the federal level. Belgium has four different governments, which all do things differently from one another: the federal level, Flanders, Wallonia and the Brussels-Capital Region (Brussels and its direct neighborhood).
New businesses are being founded every day in Belgium, and Flanders as a region. The number of newly created firms even exceeds pre-crisis highs. Most of the start-ups are active in the services sector.
Thanks to the rising number of firms, employment rates are up as well. SMEs and young as well as established businesses have been the main drivers of the boost in employment.
Self-employment has increased, especially the number of individuals who engage part-time in self-employment activities. This increase is due to new opportunities presented by the emergence of the “gig economy”, i.e. the rising phenomenon of flexible employment arrangements that complement or substitute for full-time jobs.
Regarding social entrepreneurship there is no official or commonly accepted definition of social enterprise in Belgium. The concepts of work integration social enterprise (WISE) and social economy are more popular in different parts of the country. The terms social enterprise and WISEs are often used interchangeably, especially in Flanders. In Wallonia, the concept of social economy is more widely used and specific references to social enterprises are rare.
The idea of social enterprise has however, started to gain visibility and attract the attention of the media in recent years with the launch of dedicated platforms for networking and the emergence of new specialist investors and financial intermediaries.
While men still outnumber women in self-employment activities, the younger generation is closing the gap. The percentage of women among young self-employed – individuals under 30 – in Belgium (7%) is higher than the OECD average of
HISTORY AND DEVELOPMENT OF SOCIAL ENTERPRISES IN COUNTRY
Figure 1 – Total number of small and medium enterprises (SMEs) in Flanders, Wallonia and the Brussels Capital Region (Belgium) from 2007 to 2018 – published by Statista research 01/2022
Based on business figures from 2019, more than half of all small and medium enterprises in Belgium were located in the region of Flanders. Overall, there were around 1.1 million SMEs in the country. In comparison, neighboring Netherlands had around 442,500 SMEs in 2019.
In Belgium, the concept of ‘social economy’ is far more developed and prevalent than the concept of ‘social enterprise’, especially in Wallonia. On the other hand in Flanders, the term ‘social enterprise’ has traditionally been (narrowly) equated with work integration social enterprise (WISE). However, in the 1990s, the term ‘social enterprise’ also started being used more broadly, reflecting the trend of non-profit organisations such as associations gradually adopting market-based and more entrepreneurial approaches to some of their activities. This development reflects the adoption of a law recognising ‘social purpose companies’ (société à finalité sociale/vennootschap met sociaal oogmerk) in 1995.
‘Social purpose company’ is a transversal legal status that can be obtained by any commercial company, regardless of its underlying legal form (cooperative or investor-owned), provided it adheres to certain statutory obligations.
Under the Law, social purpose companies cannot be “dedicated to the enrichment of their members”, while their “members are only seeking a limited profit or no profit” and “do not seek as the main aim of the company to procure members any indirect profit”.4 They must also set out “a policy for distribution of profits appropriate to the internal and external purposes of the company”.
Why are there inconsistencies in the SME numbers for Belgium?
When cross-checking numbers on SMEs, one might notice large differences in the reporting for Belgium. When adding, for example, the number of SME enterprises based on company employment size together, the total number reached roughly 620,000. A difference of 500,000 compared to the number mentioned here. These large differences stem from the source’s methodologies. Reporting on SME numbers in Belgium is based on the so-called NACE-BEL 2008, the official statistics groups Belgium uses when filing reports for Eurostat. These groups indicate economic activities and are used as a reference when creating numbers on, for
example, SME activities. Simply put, different sources sometimes select different economic activities. The difference of 500,000, for example, stems from the fact that one source used the Agriculture category whereas the other did not.
How big is the impact of SMEs in Belgium compared to other countries?
In 2017, roughly 69 percent of the Belgian workforce was employed by SMEs. This was noticeably higher than in neighboring countries France, Netherlands and Luxembourg, as well as the EU-28 average. This was, however, lower than, for example, Italy and Portugal.
SMEs play an important role in the non-financial business economy of Belgium. They generate 63.3% of total value added and 68.8% of total employment, exceeding the respective EU averages of 56.4% and 66.6%.
The country performs strongly in access to finance and in skills & innovation, being one of the top performer among all EU Member States in these two principles. Belgium also scores above the EU average in ‘second chance’ and in single market. It remains in line with the average for
environment and internationalisation and performs below the EU average for ‘responsive administration’. Its weakest scores are for entrepreneurship (despite several measures taken in this area) and State aid & public procurement, where the country is one of the worst performers, although some progress has been made in these areas. The impact of recent measures in entrepreneurship are not yet reflected in the indicators.
Belgium regularly launches new measures to support SMEs. Areas requiring greater efforts include State aid & public procurement, where SME access to public procurement could be improved, and entrepreneurship, where a stronger entrepreneurship culture could be developed. The administrative burden on SMEs should be minimised, especially for business transfers, where it is particularly heavy, or by creating more one-stop shops where SMEs can meet all administrative requirements and ask for guidance.
NGO’s / ASBL / VZW: (based on research from 2018):
There are four types of entities that can be regarded as comprising the ‘spectrum of social enterprises’ in Belgium (as per the EU operational definition), namely: social purpose companies (Sociétés à Finalité Social); work integration social enterprises / WISE; non-profit organisation or NPO (association sans but lucrative or ASBL in French/vereniging zonder winstoogmerk or VZW in Dutch); and foundations (stichting/fondation). These categories are not mutually exclusive – the first two are mission-driven organisational typologies (which partially overlap); while the latter two are legal forms of organisations and as such, there would be some overlap with the mission-driven typology of organisations. For instance, a WISE could have the underlying legal form of an NPO or a foundation.
Belgium has a growing and relatively flourishing non-profit sector. The various organisations have significant resources but are not managed profitably. The findings come from the study upon the “Development of the Non-Profit Landscape”, produced by the financial data organisation Graydon.
The non profit sector varies from education, charity, culture and even production of beer by priests.
Currently Belgium has 150,247 organisations which are active in the non-profit sector. Of these, 97% have Belgian ASBL status, the rest being international non-profits or private foundations. Within the sector, Graydon notes the high growth in a series of large, even very large, organizations. Over ten years, this group has grown by 35%. In 2016, the sector employed 306,138 full-time staff.
Around a mere 1.48% of these organizations were classified “in a bad economic position” or “in the danger zone”.
The study indicates that the significant reserves of non-profits and foundations are not sufficiently invested for their development. “The organizations in the charity sector need to be operated professionally and to receive sound advice. In relation to the non-profits organisation which publish an annual report, Graydon notes a volume of €19.6 billion of investment in cash and other liquid assets.
The term “non-for-profit”, also used to refer to the ASBL or VZW, has caused confusion as to whether they can make profits. A profit may be made as long as the money is reinvested in the organisation, and not distributed to members. Such a profit can be invested for organizational growth and the its continuity.
The number of non profits in Belgium is still on the rise.
Overview of the key actors in the social enterprise ecosystem (Hermann)
| The table below provides a snapshot of the main actors involved in the social enterprise ecosystem. This should, however, not be seen as an exhaustive list. Governmental departments or institutions designing or implementing policy, support instruments and measures for social enterprises and infrastructures | Federal:
■ Public Policy Service Social Integration, anti-Poverty Policy, Social Economy and Federal Urban Policy
Brussels: ■ Brussels Regional Government ■ Innoviris
Flanders: ■ Flemish Department of Work and Social Economy ■ Flemish Subsidy Agency for Work & Social Economy ■ Flemish Department of Innovation ■ Flemish Agency for Innovation by Science and Technology
Wallonia: ■ Conseil wallon de l’économie sociale (CWES) ■ Ministry of Economy ■ Ministry of Employment ■ Ministry of Health |
| Customers – authorities contracting social enterprises | Local and regional authorities |
| Organisations promoting, certifying and awarding social business labels | N/A |
| Institutions, civil society initiatives or other social enterprises promoting social entrepreneurship education and training, and presenting role models | ■ ConcertES (Wallonie-Bruxelles)
■ In-C ■ Netwerk Rentevrij |
| Organisations that have the capacity act as an observatory and to monitor the development and to the assess needs and opportunities of social entrepreneurs/social enterprises | ■ VOSEC/Collond SE
■ Observatoire économie social (Wallonie-Bruxelles) |
| Providers of social enterprise start up and development support services and facilities (such as incubators) | ■
■ Oksigen Lab ■ Netwerk Rentevrij |
| Business support providers | ■ Expertisepunt
■ Innovatiepunt |
| Facilitators of learning and exchange platforms for social enterprises | ■ in-C
■ ConcertES |
| Social enterprise (support) networks, associations | ■ National Cooperation Council
■ VOSEC/Collond SE ■ Umbrella associations of the different WISE associations in Flanders and Wallonia. ■ Positive Entrepreneurs Network ■ Verbond Sociale Ondernemingen (VSO) ■ UNIPSO ■ Business & Society ■ Ashoka |
| Key providers of finance | ■ Flemish Subsidy Agency for Work & Social Economy
■ Netwerk Rentevrij ■ Recognised ‘solidarity funds such as Hefboom, Trividend and Socrowd, Triodos Bank ■ SOWECSOM (Wallonia-Brussels) ■ Crédal (Wallonia-Brussels) ■ Triodos (Wallonia-Brussels) ■ CERA Foundation ■ King Baudouin Foundation ■ Korys ■ SI2 FUnd |
Hermann Raus and Anneleen Dewitte, comment paper on ‘Public sector capacity – strategic partnership and governance models, SEN network, September 2013
Financial support
There are several support initiatives existing in the region of Flanders:
- The Subsidy Agency for Work and Social Economy (VSAWSE)
- Trividend (Vlaams Participatiefonds voor de Sociale Economie)
- The Social Investment Fund (Sociaal Investeringsfonds SIFO)
- The Social Innovation Factory
- Flanders Agency for Innovation by Science and Technology
Initiatives in Wallonia and Brussels include:
- SOWECSOM (Société Wallonne d’Economie Sociale Marchand)
- BRUSOC (Brussels Capital Region)
Financial support by EU
Belgium being the capital of Europe is also supported by the European commission for innovation and entrepreneurship. Overall, The European Commission’s objective is to encourage market uptake of innovative solutions and stimulate employment.These actions facilitate the inducement, uptake and scaling-up of social innovation solutions. The main objectives are
- promoting social innovation as a source of growth and jobs
- sharing information about social innovation in Europe
- supporting innovative entrepreneurs and mobilising investors and public organisations.
What the Commission does on social innovation
- Networking
- Competition
- Funding – we offer direct funding to support social innovation through the Employment and Social Innovation Programme, Horizon 2020,SME Instrument(which is open to social enterprises), or the Collective Awareness Platforms. Moreover, the Commission also offers seed funding for the development of innovative ideas that address social challenges through the Social Challenges Platform.
- Ecosystems – improve the conditions for social innovation and social enterprises in Europe Social Business Initiative, Start-Up & Scale-Up Initiative
- Impact – we gather and disseminate evidence about the benefits of social innovation and methodologies for result measurement. See the report Strengthening social innovation in Europe Journey to effective assessment and metrics, Social Business Initiative, research projects carried out for that purpose.
- Incubation – support incubation structures for social innovation in Europe, through EU-wide networks of incubators such as Transition and Benisi.
- Exploring – look for new ideas, applications or fields for social innovation
Sector size and activity areas
After the service industries, manufacturing and construction enterprises are the largest employers. Agriculture and mining employ only a tiny percentage of the labour force. About half of Belgian workers belong to labour unions.
POLITICAL AND ECONOMIC ENVIRONMENT
As previously mentioned the political and economic in Belgium is divided by its regional politics. Following this, Belgium’s startup ecosystem has been consistently strong for a number of years now. It currently ranks 8th in Europe in terms of capital investment in fintech according to 2018 figures, with $39 million (€35 million) invested throughout this year. According to the OECD’s 2018 Entrepreneurship at a Glance report, it is also a healthy environment for new startups. There were around 120 new enterprise creations and over 150 new venture capital-backed companies in the country in 2017.
Political environment
*Critical perspectives on the weaknesses of public policy production and delivery. Why do mainstream policy frameworks fail to resolve the root causes of chronic social and economic problems? How does social entrepreneurship help to fill gaps left by mainstream policy failure?
Economic environment
*Non-repayable resources for and skills development start-up and consolidation, Resources from income generating activities, Repayable resources, Tax breaks and fiscal benefits
Policy and legal framework
There are no legal forms specifically designed for social enterprise in Belgium. In 1995, the legal status of a ‘social purpose company’ was created. This status can be obtained by any commercial enterprise (cooperative or investor owned company) pursuing a social purpose rather than dedicated to “the enrichment of [its] members” and meeting a set of pre-defined conditions. The legal status of ‘social purpose company’ is however, not widely used.
There is no national policy document aimed at supporting the development of social enterprise. In the implementation of the sixth State reform, the responsibility for “social economy” was completely transferred from the federal state to the regions earlier this year.
Cooperatives
Under Belgian Law the cooperative society is governed by Commercial Law in the same way as any other commercial company. It may take the form either of the limited-liability cooperative society (société coopérative à responsabilité limitée – SCRL) or the unlimited-liability cooperative society (société coopérative à responsabilité illimitée – SCRI).
A cooperative under Belgian law is ‘loosely’ defined as being “made up of members the number of which and contributions from may vary” (Commercial Law, Article 350). This definition does not embody any of the elements of the cooperative spirit other than the variable nature of members and contributions.
Moreover, as the legislation provides for a system that is more flexible, less burdensome than for other commercial companies; this legal form was chosen for establishing an enterprise by many entrepreneurs purely for convenience and without necessarily adhering to cooperative principles.
Social Security, Pension and Welfare System
In Belgium, there are health mutuals and insurance mutuals. The former are integrated within the national social security system and are closely associated with the management of compulsory health insurance. This field of their activities cannot therefore, be regarded as autonomous. However, they also develop – in parallel and autonomously – complementary insurances and various social services, but by definition these activities serve the interests of their members rather than collective or general interests. Similarly, mutual insurance societies
also act in the interests of their members and as such, cannot be regarded as pursuing a social aim.
However, each local government provides free courses for the unemployed in which they can receive management courses, vocational education and many more, to pursue a career.
Obstacles
There are currently no fiscal benefits related to the majority of legal forms used by social enterprises, with the exception of certain tax reductions in cases of gifts to NPOs and foundations. These NPOs and foundations, nonetheless, run the risk of taxation under the
corporate taxation regime if they develop economic activities that fall outside the limitations that apply to them.
Additionally, there is a lack of awareness on the part of customers and investors that social enterprises operate differently to for-profit businesses and create tangible benefits to society. There are no fiscal or other incentives for major mainstream enterprises to incorporate social enterprises in their supply chains.
Finally, social enterprises report difficulties in attracting qualified workforce and accessing public support schemes due to the scattered and fragmented nature of such schemes.