Tomas: Time Has Come to Tighten Rules for Social Enterprises

Bratislava, 3 October (TASR) - The time has come to tighten the rules for social enterprises which serve a beneficial purpose by employing disadvantaged people, as various speculative practices have emerged, said Labour Minister Erik Tomas (Voice-SD) at a press conference on Friday, noting that these rules have been in place for seven years. "The aim is to tighten the rules so that social enterprises do not distort the market or undermine public tenders or other forms of competition. Yet, on the other hand, we must ensure we do not stifle them, as they genuinely provide employment opportunities for people with disabilities or otherwise disadvantaged people," explained Tomas. The first of the proposed changes concerns the so-called integration enterprises which prepare the disadvantaged people for the open labour market, rather than providing permanent employment. If such enterprises fail to accomplish this task, they will have to return a proportional part of the compensatory contribution they received from the state. "If this happens on a repeated basis, their status as social enterprise will be revoked, and the enterprise will effectively cease its operations," he added. Furthermore, the same social enterprise would be able to receive the compensatory contribution for the same employee only once, and that employee can start working in a different social enterprise only after the expiry of a six-month period. As the third rule, which is being tightened, compensatory contribution cannot be received for an employee who, along with employment in the social enterprise, conducts other income-generating activity in the labour market or as self-employed, Tomas explained. A newly-established social enterprise will have to meet the minimum 30 percent quota of disadvantaged employees within three months of its establishment, as opposed to the currently applicable period of one year. Profits can be retained by social undertakings in a special fund for two years, instead of five, and if the profit is not used for the socialisation of employees, it will be forfeited to the state. “The profit will also be forfeited if, within that two-year period, the social enterprise ceases its operations, whether voluntarily or due to any failures," the minister explained, adding that the aim is to prevent the funds from being misused through speculative practices. Also, social enterprises will be able to outsource the contracts only up to 20-30 percent of their value. After winning a public tender, social enterprises will thus be prevented from outsourcing the contract in its entirety. In public procurement procedures, they will be able to benefit from reduced 5 percent VAT. According to Tomas, no one has had the courage to come up with such fundamental changes in the past seven years, including the current opposition, which is now criticising the system. jrg/mcs