Abstract
The system of social cooperatives seems to be the most promising social innovation. Experts also recommend this model to participants of the social land programme in Hungary as a way of stepping forward. According to the Rochdale and Manchester Principles—which laid down the main characteristics of social cooperatives—the organisations are voluntary and open for the members, they secure autonomy, independence as well as democratic control by the members. In this chapter we examine the way the state’s direct involvement and growing paternalism in Hungary hinders the grassroots social inclusion models and processes. Due to the individual and organisational dependence that has arisen over the recent years as part of the centralised allocation of funds, a sharp split has appeared within social cooperatives as well. Voluntary social cooperatives are gradually being replaced by local organisations initiated and funded by the government.
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Notes
- 1.
Regarding the principles of cooperation and the legal regulation, see Kuncz 1935; Bak 2012; Réti 2007.
- 2.
The Statement of the International Co-operative Alliance on cooperative identity (The international principles of cooperation) Manchester, 22 September 1995, http://www.szovetkezetikutato.hu/szovetkeze-ti_identitas.php.
- 3.
Paragraph 1 of Section 8 in the original version of the law, prior to modification.
- 4.
- 5.
The NPFE is a public foundation established by the government in 1992, which was responsible for supporting innovative forms of employment, and the planning and realisation of programmes serving employment and labour market integration. In the initial period, the model experiment programmes were financed by the Labour Market Fund (the source of which was the contributions of employers and employees), while after the accession of Hungary into the EU, it was also the NPFE that utilised the significant amount of community resources in connection with various tenders.
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- 8.
TÁMOP = the Hungarian acronym for the “Social Renewal Operative Programme”.
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- 10.
When justifying Paragraph (1) of Article 34 of Act CXLV of 2016, decision-makers claimed that the amendment of Act X of 2006 (which required social cooperatives to include their main activity in their names) was necessary because, among other things, social cooperatives perform activities other than those determined by legislation. See further details on the website of the Social Cooperative, http://www.szoszov.hu/sites/default/files/letoltheto/ngm109652017valasz.pdf.
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Led by Flórián Farkas FIDESZ Member of Parliament who was charged with being responsible for the missing resources in the programme.
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On the other hand, loan agreements do come at a price regarding the independence of social cooperatives. One section of the agreement states that the Ministry of Interior plays a state supervisory role in these cooperatives. Part of state supervision is that a representative of the Ministry of Interior attends the cooperative’s meetings, and the cooperative reports to the Ministry.
- 16.
- 17.
Act XLI of 2013 on the amendment of specific laws in regard to social cooperatives, as well as specific laws in regard to public employment.
- 18.
Social cooperatives are exempt from the requirement to pay healthcare contribution in the first year following the start of the member’s official employment. In the second year, 25% of the healthcare contribution has to be paid, in the third year, 50% of it, in the fourth year, 75% of it, and it is only the fifth year when the full amount has to be paid, http://szoszov.hu/az-eu-tenyleg-szocialis-gazdasagot-epit.
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- 20.
The head of the National Association of Social Cooperatives warned us that when it comes to the analysis, it is advised that we differentiate between two types of cooperatives. One is the category of longer-established social cooperatives, which use more “traditional” rules of organisation, and many instances of which are present and successfully working in Hungary as well. The other is that of the “new type” or “public employment-based” social cooperatives, which were initiated by the Ministry of Interior, and which have been created after the changes in legislation. Thus, hereby, we would like to emphasise again that the objective of our study is to highlight the characteristics of the “new type” of social cooperatives and to present the pitfalls of the changes in law regarding social cooperatives. On the other hand, we do not question the fact that there are several successful social cooperatives based on the Manchester principles present in Hungary.
- 21.
- 22.
The new regulations of the amended Article 34 Paragraph (1) of Act X of 2006 on cooperation. The part about member employment came into effect on 1 January 2017, while the change of name and the compulsory membership of a government or charity organisation will be carried out before 1 January 2018.
- 23.
The organisation established in May 2010 for the representation of social cooperatives. Website: http://www.szoszov.hu.
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Op. cit.
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According to the calculations of the head of the National Association of Social Cooperatives, within the GINOP programme of this funding period, 6 billion Ft were announced to be allocated for the funding of social enterprises, including 51 thousand organisations (in the convergence regions). The chances of each organisation acquiring funds are 1.7%. Among all social cooperatives, there are 123 with local governmental membership which have been established by the Ministry of Interior in combination with public employment. The “Focus” programme has been established to specifically target these cooperatives, and it has a total budget of 9.4 billion Ft. The chances of these organisations being granted funds are 100%.
- 29.
Source: the head of the National Association of Social Cooperatives’ letter to the author, written on 21 October 2017.
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Csoba, J. (2020). The Characteristics of Social Cooperatives in Hungary. In: Revitalisation of the Household Economy. Prekarisierung und soziale Entkopplung – transdisziplinäre Studien. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-29350-5_9
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