EESC calls for reforms to EU State Aid rules to support social economy entities

The European Economic and Social Committee (EESC) has called for changes to the European Union’s State aid rules in order to recognise and better accommodate the needs of social economy entities, which play a critical role in tackling societal challenges.

In the  opinion entitled How to support social economy entities in line with State aid rules: thoughts following the suggestions in Enrico Letta’s report, adopted at its plenary session in January, the EESC warns that existing regulations are failing to provide adequate support to these enterprises, which often reinvest their profits in efforts to achieve social objectives instead of distributing them to investors.

"We want to make more people aware of the benefits of effective regulation on competition and State aid for both social economy enterprises and the entire system of services of general interest," said the opinion's rapporteur, Giuseppe Guerini.

"The Letta Report calls on the European institutions to recognise the specific characteristics of social economy enterprises, adapting the rules governing the internal market and competition and improving the legal framework for State aid in order to ensure that social economy enterprises have readier access to loans and financing," he said, adding that the EU had chosen to be a social market economy, where economic prosperity entails not only the accumulation of wealth but also the ability to ensure that the wealth that is traded and built up in the market benefits everyone.

Social economy entities – which range from cooperatives to mutual societies and foundations – employ over 11 million people across the EU, i.e. 6.3% of the working population. They operate in areas such as social and health services, renewable energy and poverty alleviation. Despite their contributions, many face systemic barriers to securing long-term investment capital and navigating public procurement processes, as the current regulatory framework often fails to account for their non-profit or solidarity-based nature.

The EESC’s recommendations also point to the fact that public authorities are underutilising existing tools such as the General Block Exemption Regulation (GBER) and the framework for services of general economic interest (SGEIs).

Key issues and proposals

One of the EESC’s central arguments is the need to reconcile EU State aid rules with the growing reliance on social economy entities, which have taken on functions previously performed by the State. The Committee points to sectors such as social and health services, renewable energy and social housing, where these entities are addressing critical gaps.

The EESC specifically highlights the following challenges:

• Aid for disadvantaged workers: The existing rules under the GBER for supporting the employment of disadvantaged and disabled workers are seen as outdated and overly complex. The EESC is calling for their simplification and modernisation to reflect current economic realities, echoing some of the recommendations from the Letta Report on the single market.
• Misuse of de minimis aid: While the recent increase in de minimis aid ceilings – €300 000 for ordinary companies and €750 000 for SGEI entities – is welcomed, the EESC notes that this framework is often used inappropriately as a default mechanism. It argues that more tailored instruments, such as the GBER or specific SGEI provisions, would better address the needs of social economy entities in fields like health and social services.
• Underutilisation of the SGEI framework: Public authorities are not fully exploiting the flexibility provided by the SGEI framework, the EESC says, often overlooking the discretion granted by EU Treaties to classify certain activities as services of general economic interest.

A call for change

The EESC’s opinion aligns with the European Commission’s Social Economy Action Plan, which aims to unlock the potential of social economy entities across the bloc. The Committee urges EU institutions and Member States to recognise the unique characteristics of these organisations in State aid regulations and ensure that they are adequately supported.

By addressing these regulatory gaps, the EESC argues, the EU can enhance the ability of social economy entities to address Europe’s pressing social challenges while fostering greater solidarity and inclusion at both local and regional levels.