Law embraces social co-ops that aid public good

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Law embraces social co-ops that aid public good

Korea is set to welcome a new kind of legally codified corporation as the government passed a bill on social cooperatives yesterday.

The Ministry of Strategy and Finance said yesterday that the government voted for a bill to legally classify nonprofit social cooperatives as small business entities at a crisis management meeting in Gwacheon yesterday.

The Small & Medium Business Administration was formerly opposed to the bill but changed its stance at the meeting. The law will take effect from Saturday.

Social cooperatives will be eligible for benefits provided by the government for small enterprises and will be able to win orders from state-owned institutions. They will also be exempted from the fair trade law.

Although social cooperatives remain barred from conducting financial and insurance businesses, a certain level of micro-financing and lending among members will be accepted.

Korea has two kinds of cooperatives: General and social. The latter are nonprofit and need to be approved by the Finance Ministry. Over 40 percent of their business should be for the public good. All stakeholders of a cooperative can vote, but they don’t receive any dividends.

The government expects there will be up to 10,000 cooperatives created over the next five years. This will add 40,000 to 50,000 new jobs to the market, the ministry said.

The first will be a cooperative comprising 100 private chauffeurs. The group, which was formed in an attempt to improve each of their working conditions, held a launching ceremony yesterday.

According to the industry, the drivers work from 8 p.m. to 5 a.m. and earn 2 million won ($1,840) a month on average. But they have to pay 20 percent of this to their call centers as commissions. They must also cover costs like car insurance.

Meanwhile, SK Happy Nanum Foundation said yesterday it will transform its Happy Lunch Box Center, a social enterprise, into a social cooperative. Established in 2006, it provides free lunches to low-income earners and hires the underprivileged to help society.

“If the entity is turned into a social cooperative that receives the same government support as profit-seeking businesses, it will be economically more independent and be able to provide better-quality food for people,” said a spokesperson for the foundation.

“The new law is set to be further improved as part of the government’s efforts to support small merchants and the self-employed,” said a government official at the ministry. “Social cooperatives will also have positive effects, such as giving jobs to those in need.”

By Song Su-hyun []
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