Published : 2010-03-30 18:12
Updated : 2010-03-30 18:12
As the world roils in financial meltdown, there is a growing need for a society-wide cushion that will protect low-income earners. Whether that cushion is provided by the public or the private sector, the consensus is that it cannot be solved through traditional ways of government welfare or charity.
Kim Sung-ho, a former health and welfare minister who is now co-head of Sustainable Social Responsibility Forum, is one of the advocates of social enterprise and corporate social responsibility.
He believes that social enterprises, aiming to help social causes with their earnings, and private companies, whose ultimate goal is to make profits, can work together to improve the current situation more efficiently.
For that, he advises that for-profit companies should view their social responsibility or assistance of social enterprises as a task equally important as their profit-making activities. In an email interview with The Korea Herald, Kim also suggested a "one business-one social enterprise" movement, which will help both groups survive the economic crisis.
Korea Herald: How do you view the current status of social enterprise in Korea?
Kim: Recently, both the government and businesses have begun to show interest in helping those in the low-income bracket gain financial independence and lead healthier and more prosperous lives. However, such help is often temporary, falling short of having a continuous job creation effect or promoting social service expansion.
Social enterprises pursue social goals such as providing employment to jobseekers and social services to the less privileged with its profit from business activities. As of the end of 2008, some 218 social enterprises have been certified by the Labor Ministry. Korea introduced laws to promote social enterprises in 2007 and has since provided financial support and tax benefits to companies dedicated to social causes.
However, that number is still far below the figures of advanced economies: The United Kingdom has about 55,000 social enterprises, and in Europe, there are roughly 9 million workers employed by social enterprises. Compared to them, Korea is only in the beginning stage of social enterprise formation.
KH: Social enterprises are in the spotlight across the world as an alternative to solve a growing number of social tasks. What do you think Korea needs to do first in promoting social enterprise?
Kim: The Korean economy has entered a recession amid the ongoing global economic crisis. The number of unemployed is on the rise, and more people in the low-income bracket are suffering from the fallout of the crisis. The most urgent task at hand will be to give these people places to work.
Korea`s rudimentary social enterprises are faced with difficulties because their administrative workforce -- mostly devoted civic group participants -- lack business skills and leadership, thus failing to generate good profit and workplaces.
In order to solve this problem, I think Korea`s for-profit businesses need to be directly involved in growing social enterprises. Therefore, we need to promote what I would call a "one business-one social enterprise" movement in society.
KH: Some point out that Korea`s state-led social enterprise momentum will only have a limited impact on society. What is your take on that?
Kim: I think the government`s role is very important for social enterprises to take root in Korea. Koreans in general lack an understanding of social enterprise. In this present situation, the government should play a larger role in providing support and development plans for social enterprises. More specifically, the government should help social enterprises grow to be able to stand on their own.
KH: Corporate social responsibility, or CSR, has recently begun to draw people`s attention as a new way to address social needs. How does CSR relate to social enterprises and what are some of its pros and cons?
Kim: In order for Korean businesses to promote their growth and contribute to social development at the same time, it is imperative that they carry out business activities with corporate social responsibility in mind, which in the long term will help boost both their corporate value and image. In that aspect, it is also crucial that established businesses help social enterprises find ways to make lasting profits and create jobs, by sharing their management know-how.
There are an estimated 218 social enterprises in Korea that have been certified by the government. But they are still in the early stage where they rely more on state funds for support than on earning money by themselves. The effect those firms have on the overall employment in our society is also very limited. If large corporations actively participate in finding and growing viable social enterprise models, they can enjoy the win-win situation of improving their corporate images and providing more workplaces.
In particular, instead of reducing their workforce through restructuring, for-profit businesses can encourage their surplus employees to work for social enterprises or non-profit organizations for less pay, thus contributing to the formation of a social safety net.
KH: You`ve mentioned in a recent seminar that the quality of social investment should be enhanced. Can you elaborate on that?
Kim: When the economy is stagnant, companies should put a priority on enhancing the quality of their management efficiency and achievements, rather than expanding their businesses. It means that their social contribution should first take into consideration whether it will bring benefits to both their businesses and society. Then they need to make as many innovations as possible to develop future business models that will help them enhance corporate value and create new markets.
Looking back, Korean companies have largely focused on quantitative aspects of social contribution, investing money in overlapping areas like department stores do. That has significantly lowered efficiency and increased the so-called "social contribution stress" syndrome. So they should begin strategic social investment in areas that are relevant to their business ideology and products, and also necessary in protecting the community and the environment, for example, of our society.
Making efforts to contribute to social causes when people are closing their purses during a prolonged recession is a good way to reduce anti-business sentiment in society and enhance corporate image. In other words, established corporations can kill two birds with one stone by seeking active and effective participation in the expansion of social enterprise with less money, thus creating jobs and improving corporate images.
KH: Making profits is as important to social enterprises as it is to ordinary businesses. Can you give an advice on how these firms can approach the market?
Kim: As I`ve mentioned above, I highly recommend the "one business-one social enterprise" campaign in society. The movement, linking for-profit and non-profit businesses in our society, will provide a new momentum for the creation of bigger labor market for the low-income bracket, as well as for the improvement of business conditions in our society.
For example, if Samsung Group, the nation`s biggest conglomerate with 63 affiliates, joins the "one business-one social enterprise" campaign, it can establish scores of social enterprises and also promote its image in society.
In addition, for Korean businesses to take part in the development of social enterprises with more enthusiasm, it is important to have non-profit organizations with the right set of mind that can specialize in handling social enterprise issues. They will perform as a bridge between corporation and low-income earners in society, and channel information necessary for the development of social enterprises into the private sector.
KH: The term "social enterprise" is still new to the public. How can we raise social awareness?
Kim: According to a recent survey by the Research Institute for Social Enterprise, only about 16 percent of people understood the meaning of social enterprise as of November 2008. This is probably because Korean social enterprises are still in the beginning stage and have not yet got into full swing.
We have to introduce successful social enterprise models and cases from Europe and the United States. We should also continue to promote social enterprises in diverse ways to enhance public understanding, develop training and education programs, and hold academic seminars and forums more frequently.
Again, participation of large corporations in the ongoing social enterprise projects is crucial. If they can provide social enterprises with good examples to benchmark, they will be able to reduce the number of mistakes they make.
KH: What direction should Korea take to develop social enterprises?
Kim: In order for social enterprises to settle in Korean society, there should first be social entrepreneurs with talent and passion to change the world. In addition to that, the government and financial institutions should select social enterprises that have greater growth potential and funnel their funds into them. Businesses in the private sector should make efforts to relate to social enterprises by sharing their management know-how. I also believe social enterprises can help develop regional economies by setting up businesses catering to specific consumer needs. The government, for its part, should continue to evaluate certified social enterprises in Korea through means such as their annual business reports until they become credible companies that can set a good example to startups.
Overall, I would like to see the growth of qualified social enterprises that will continue to create jobs and provide social services for the less privileged in our society.
By Ahn Hyo-lim