Social Economy in Greece

A comprehensive institutional and national-accounting recognition 

By: Dr. Ioannis Nasioulas, PhD

LAP Lambert Academic Publishing
ISBN 978-3-8443-9142-8, paperback, 164 Pages

Institutional Identification of Social Economy in Greece

Definition

“Social Economy in Greece includes independent, non-compulsory, typically formed organizations, operating under the primary goal of serving their members, along with promoting collective interests. Such organizations may be active:

a) In the market sector, not possess a dominant capitalist enterprise identity and their members have one vote each

b) In the non-market sector and are non-profit-distributing” (Nasioulas, 2010, 177, in Greek).

Discussion

Social Economy involves independent institutions, meaning that any call on their operation is decided by their administration, with no external interference of the government, public administration or individuals, directly or indirectly through delegates in the institutions’ administrative boards. This provision would allow for government officials participation in such institutions’ administrative boards, as long as they would not represent a majority and do not exert decisive power (UN, 2003, 19).

Social Economy institutions are non-compulsory, which means that anybody is free to participate according to reasonable legal conditions. Moreover, those who do not wish to participate can are not obliged to so. Participation is not imposed by state law.

Social Economy institutions are organizations typically formed. Thus, we refer to collectivities and legal entities. Collectivities owe to have a significant degree of organizational stability and operational consistency. They should also derive their legitimacy by formal law or normative contexts in which their establishment and operation are explicitly described (UN, 2003, 18). More typically structured, they undertake a legal entity form. Greek institutional order recognizes two sorts of legal entities. According to Greek Civil Code (GCC 61), there is a distinction between legal entities of public and private law. “A legal entity of public law is commissioned to fulfill its goals, set off by state jurisdiction. Invariably legal entities of public law constitute bearers of public authority, which is exerted under state delegation. Contrary, legal entities of private law are established and operate in order to fulfill private causes, i.e. those defined by their founders and fall under private law” (Ladas, 2007, 478, in Greek).

Thence, legal entities are contrasted to individuals. “Legal entity is a union of individuals set out to promote certain goals, or the sum of property set to promote certain goals and becomes independent subject of rights and obligations by abiding to law provisions (Ladas, 2007, 470, in Greek). A peculiarity of Greek institutional order is the recognition of legal entities of public law operating under private law. In parallel, there exist legal entities of private law submitted to public law provisions. They are both described as legal entities of mixed nature. Since Greek Social Economy institutions owe to operate independently from the state, such legal entities of mixed nature are excluded from the field.

Next is the criterion on the primary goal of Social Economy institutions in serving their members’ interests and promoting collective benefit. Such institutions promote public or collective interest. This should be explicitly stated and described in their statutes.

Concerning institutions active in the market, i.e. offering products and services in economically significant prices, any surplus distribution should not depend on the members’ invested capital but on their individual vote (CIRIEC, 2006, 2007). Institutions active in the non-market sector, i.e. offering products and services in economically non-significant prices, any surplus or profit distribution to those creating, administrating or funding them is not allowed (UN, 2003).

Institutional foundations of Social Economy in Greece

Since the restoration of the Greek Republic in the 24th of July 1974, there has been an ongoing effort to strengthen the democratic right of free association, which was suppressed by the previous coup military regime. The Greek Constitution was set to implementation in the 11th of June 1975. Until then, Constitutional Acts, Legislative Acts and Presidential Decrees provided for the institutional basis of this sui generis transition to democracy.

Regarding the field of Social-Economy-related activities first was the Constitutional Act 1/1974 “On restoring democratic legitimacy and arrangements regarding public life, until the setting up of the new Constitution of the State” (CA 1/1974). Thereafter, several Legislative and Presidential Decrees were implemented. Amongst them: PD 700/1974 “On partial reinstatement of articles 5, 6, 8, 10, 12, 14, 95, 97 of the Constitution and withdrawal of the Law on siege-state”, LD 42/1974 “On restoring syndicalism freedom and related arrangements”, LD 53/1974 “On ratification of the Convention for the protection of human rights and fundamental freedoms signed in Rome the 4th of November 1950, along with the Paris Additional Protocol of the 20th of March 1952”, LD 66/1974 “On the restoration of legitimacy in Agricultural Cooperative Organizations, Enterprises and Joint Ventures of any kind and degree, PASEGES and related provisions”, LD 85/1974 “On restoration of syndicalism freedom of those working at sea”, LD 108/1974 “On restoration of democratic legitimacy in students’ unions”, LD 116/1974 “On restoration of democratic legitimacy in Cypriot students’ unions” and LD 149/1974 “On amending, supplementing and commentary of several clauses in LD 66/1974 “On the restoration of legitimacy in Agricultural Cooperative Organizations, Enterprises and Joint Ventures of any kind and degree, PASEGES and related provisions””.

As previously said, the Greek Constitution was set to implementation in the 11th of June 1975. According to Constitution, Article 12, as amended in 2001:

1. “Greeks have the right to form associations and non-profit organizations, while respecting the laws, which however, may never make exercise of this right subject to prior permission.

2. A Union cannot be dissolved for breaking the law or a substantial provision of its statute, unless by judicial decision.

3. The provisions of the preceding paragraph shall apply mutatis mutandis to associations that do not constitute union.

4. Agricultural and urban cooperatives of any kind govern themselves in accordance to law and their statutes and are protected and supervised by the State which is obliged to provide for their development.

5. It is allowed to establish by law compulsory cooperatives serving purposes of common interest or public interest or common exploitation of agricultural land or other wealth producing sources, provided that equal treatment of all participants is ensured”.

According to Greek Constitution, Article 12, Greeks have the right to form unions in order to pursue collective non-profit goals which abide by law and are deployed in a permanent and systematic manner. Legal entities also have this right, under the exception of fundamental rights only attributed to individuals.

Bodies of the right of association are unions possessing legal-entity-status or not. Their organizational status is to be decided by them only, according to what they prefer as suitable, efficient or feasible.

The inclusion of Article 12 in the Greek Constitution aims at providing increased typical force to the right of association. In its essence, it constitutes a negative command (nec facere) towards state legislative or administrative organs, as long as law and union’s statute are not violated. Nevertheless, paragraphs 1 to 4 are subject to suspension in case of war, according to Constitution Article 48 and are also subject to amendment, according to Constitution Article 110.

Constitutional order set by Article 12 is specified in Greek Civil Code Articles 78-107. Establishment of different unions aiming at the same or relevant purposes is not prohibited.

Article 12 would not make sense to relate to legal entities of public law. Notwithstanding the fact that this right is introduced to restrict state and other public law organs. Nevertheless, certain kinds of public law entities in Greece, such as state universities would be eligible for this right of free union and association, as long as this would serve their autonomy from the state and promote their development.

Article 12 sets the right of non-profit-making association. The non-profit constraint does not prohibit sorts of economic activities in order for the union’s viability to be ensured. Institutions under the primary goal of profit-making should undertake another form, as provided by Greek institutional order. There is only one exception regarding cooperatives. Even though cooperatives aim at making economically significant profits, they fall under the provisions of Article 12 due to their primary aim at serving their members’ purposes which constitute a collective interest.

There is also an exception in Article 12 regarding union-formed institutions bearing a public-law-legal-entity-status. In Greece, such are lawyers unions, doctors unions along with industrial and commercial chambers. They promote public causes and possess public authority. As such, they are not included in Social Economy.

According to Article 12, Paragraph 1, the formation of unions must be lawful. State or administrative organs of any kind and authority cannot exert preventive control upon an association’s purposefulness. “Law abiding” has the meaning of legality on behalf of each individual member and of the union as an entity. That given, there is a limitation posed in the general freedom of association. This relates to necessary measures in a democratic society: national security, public safety, social order, crime prevention, health, ethics, rights and freedom protection.

Further limitations are set by Article 12, Paragraph 4, concerning cooperatives. There is a joint responsibility between state and cooperatives regarding public goods. State has the right to exert preventive control not only upon the legality of cooperatives but also upon their purposefulness. State has the democratic right to revoke members of the board or even declare the transformation of a cooperative into a public law legal entity. Cooperative statutes may cover activities and interests to the extent of their availability by the state and institutional order.

Of importance to Social Economy is that Greece has also ratified the European Convention on Human Rights. Article 11 of the Convention, states:

“Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests.

No restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary in a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others. This article shall not prevent the imposition of lawful restrictions on the exercise of these rights by members of the armed forces, of the police or of the administration of the State” (LD 53/1974).

The European Convention on Human Rights is of inferior power compared to Greek Constitution and of superior power, compared to Greek Law. That said, the right to form unions according to the Greek Constitution, Article 12, is guaranteed only for Greek citizens. Nevertheless, with the ratification of the European Convention on Human Rights in LD 53/1974, this right is guaranteed for every individual, i.e. for Greek citizens and foreigners along. This clause is subjected to the rule of reciprocity between Greek and foreigner’s state, according to Greek Constitution, Article 28. It is also subjected to restrictions, especially when foreigners are involved in politically-related activities. Also, according to the Introductory Law on Civil Code (2783/1941), Article 107: “Those who manage associations must be Greek citizens”. To this day, it is not clear if this article is of general force or referring only to foreigners with politically-related action and other national-security-sensitive activities, as described above.

Social Economy institutions in Greece

Given our working definition and the existing institutional order, Social Economy in Greece may include the following institutions as provided by the current legal context:

Cooperatives

Civil Cooperatives

Civil Cooperatives are governed by Law 1667/1986 and its amendments: Law 2076/1992, 2166/1993 and 2515/1997. Individuals and organizations may constitute Civil Cooperatives in the first degree. Such cooperatives may have a vast array of primary purposes. At least five Civil Cooperatives in the same prefecture may constitute a Union of Cooperatives. This is the second degree representation. Third degree association includes sectoral federations of Civil Cooperatives and supreme form of representation is the Confederation of Greek Cooperatives. Civil Cooperatives are supervised by the Ministry of Economy, Cooperatives Department. There also exists a Cooperatives Council in which six of its members come from Cooperatives. Civil Cooperatives are registered in the General Commercial Register, kept by Central Department of General Commercial Register at the Chambers Union according to Law 3419/2005.

Agricultural Cooperatives – Agricultural Cooperative Unions

Agricultural Cooperatives are governed by Law 2169/1993 and its amendments: Law 2184/1994, Law 2538/1997 and Law 2810/2000. Primary purpose of Agricultural Cooperatives is the support of agricultural income, development of agricultural production and support of the life in the countryside. According to PD 590/1985, an Agricultural Cooperatives Register is kept in local Country Courts. Specifically for Agricultural Cooperatives Unions, Cooperative Organizations and “PASEGES” a register is kept in local District Courts.

Housing Cooperatives

Housing Cooperatives are a form of Civil Cooperative. Their primary goal is of serving housing needs of the people. Such institutions are governed by PD 17/1984, 93/1987, 2/1988, 23/1990 and 448/1991. According to PD 93/1987, Article 4, initiative on creating a Housing Cooperative may be undertaken by Municipality or Community, by an appeal of at least 25 citizens or by a Ministry of Public Works decision. A purposefulness advisement and related building approvals are also needed. Housing Cooperatives are excluded by the obligation to register at the General Commercial Register under Law 3419/2005. Registers are kept at the Ministry of Public Works, Local Government Organizations and local Country Courts.

European Cooperatives – European Cooperative Enterprises

In Nice European Summit, European Community Regulation 1435/2003 was adopted concerning European Cooperatives or European Cooperative Enterprises. Main concern has been to lift bureaucratic hindrances in cooperative activities at the European level. European Cooperative Enterprises are legal entities of European Community law. They are companies bearing legal entity, constituted by individuals or legal entities of public or private law, residing in at least two European Community member states and fall under local state law. Each of these members has one vote. European Cooperatives in Greece are registered at the General Commercial Register under Law 3419/2005.

Women’s Cooperatives

Law 921/1979 provided for the creation of the first agricultural women’s cooperatives, promoting local development and culture. The first Cooperative of this kind was created in 1984. Law 921/1979 was replaced by Law 1541/1985. Both legislations set the foundations for social enterprises in Greece. According to PD 590/1985, Women’s Cooperatives are registered at the Agricultural Cooperatives Register in local Country Courts. Specifically for Agricultural Cooperatives Unions, Cooperative Organizations and “PASEGES” a register is kept in local District Courts.

Limited Liability Cooperatives

Law 1167/1986 provides for the establishment of Limited Liability Cooperatives. Such institutions are free to engage in commercial activities, keeping the related Accounting books. They are registered under the provisions of Law 3419/2005 according to their main activity, as described for Cooperatives of the previously discussed kinds.

Limited Liability Social Cooperatives

Provided by Law 2716/1999, Article 12, Limited Liability Cooperatives can be established. They constitute a first solid form of Work Integration Social Enterprises. Limited Liability Cooperatives aim at social and psychological and work integration of individuals facing serious psychological and social issues, contributing to their therapy and economic self-sufficiency. They are legal entities of public private law with commercial faculty and are considered as Mental Health Units, under Mental Health Sectors. Cooperative members bear limited responsibility. They are supervised by the Ministry of Health, under Administrations of Mental Health. Limited Liability Cooperatives can at the same time be productive, consumer, commercial, logistics, tourist, building, credit, development, social, educational and cultural units. They are free to exert any economic activity. They are free to create commercial establishments anywhere and take part into European Groups of Economic Purpose, Joint Ventures, Limited Liability Enterprises, SAs, State and Municipal Companies.

Of extreme importance is the fact that members of Limited Liability Enterprises have the right to be individuals over 15 years of age. Ability of legal transaction is not needed, thus providing for the inclusion of individuals deprived by the right to participate in public activities. This is a strong integration factor. Such members have the right to compensation of their work, even if they already enjoy other allowances, pensions or benefits. Alongside, they enjoy the privilege of participating in any profit distribution.

Related Registers are kept at the Ministry of Health which has the right to judge upon the purposefulness of such a Cooperative’s establishment. In case of Limited Liability Agricultural Cooperatives Registers are kept as mentioned in the case of Agricultural Cooperatives.

Notable exceptions

Compulsory Cooperatives under Constitution Article 12, Paragraph 5 are not included in the Greek Social Economy. Also not included are Private Banks Credit Cooperatives under PD 329/2000 due to their compulsory nature.

Mutual Funds

Cooperative Banks – Credit Cooperatives

Law 2076/1992 provides for Cooperative Banks in Greece. They undertake the form of Credit Cooperative under the Law 1667/1986. A related register is kept by the Central Bank of Greece and they may also register at any local Chamber.

Professionals’ Insurance Funds

Law 3029/2002 provides for the creation of Professionals’ Insurance Funds. Participations is free and non-compulsory. At least 100 professionals are needed for a Fund’s creation. Such Funds are registered by the Ministry of Labor.

Insurance Enterprises – Insurance Cooperatives

The “third pillar” of Greek insurance system is represented by private insurance companies. It concerns collective insurance contracts signed between enterprises and insurance companies along with individual insurance contracts. Law providing for Insurance Enterprises, under the form of Insurance Cooperative, are: 3557/2007, 3455/2006, 2496/1997, 1569/1985, 400/1970, 21900/1920. Such Cooperatives are registered at local Country Courts. There is also a Register of Insurance Companies kept at the Ministry of Development.

Notable Exceptions

The dominant system of social insurance is Greece is that of public law, according to Constitution, Article 25, Paragraph 2. Institutions of main and subsidiary insurance are governed by Law 3655/2008. Core elements of this national system of insurance are its public character, its universality, its complaisance and redistributive character. Main insurance is provided by institutions of public law, exert public power and aim at supporting workers in case of insurance risk, old age problems, disability, death, maternity, labor accidents, labor-related diseases according to International Labor Convention.

Subsidiary insurance is provided by a mix of public and private law institutions. Participation here is also compulsory. Such subsidiary pensions are usually allowed for old age, disability or death. Along with public law entities, private law entities of the “third pillar” of insurance in Greece are excluded from Social Economy due to their public authority and compulsory character.

Non-Profits

Unions

Athletic and Sports Unions are governed by Law 2858/2000. They are registered at Prefectural Offices of Physical Exercise and local Country Courts. When recognized by the General Secretariat of Sports, they are registered at its Department of Athletic Unions.

Sports Unions

As mentioned above.

Students’ Unions

Students’ Unions are governed by Law 1566/1985 and are registered at local Country Courts and respective Higher Education Institutes.

Local Youth Councils

Law 3443/2006 provides for Local Youth Councils in every municipality of the country.

Parents’ Organizations

Parents’ Organizations are set with Law 1566/1985 in every school unit.

Hunting and Forest Clubs

Law 177/1975 governs Hunting and Forest Clubs. They are registered at local Country Courts.

Charity Unions

Charity Unions are set under Law 1111/1971 and registered by the Ministry of Economy.

Trans-vocational Organizations

Law 2732/1999 provides for the creation of Trans-Vocational Organizations as private law entities bearing non-profit character. They have an advisory and organizational role in supporting agricultural activities. They are non-commercial. There is one Organization per Industry: tobacco, olive oil, cereals, honey etc.

Private Public-Benefit Foundations

According to GCC 108, “Foundation is a sum of property se by founding act so as to promote certain cause and which attains law-entity status under a decree ratifying its creation”. Foundations are legal entities of property-base. Aims are set by the founder. Such aims may by of any nature, even private. Usually Foundations are of public-related aims. Public benefit Foundations are governed by Law 2039/1939. Accordingly, state has the right to exert not only legality control but also purposefulness control. State examines and judges upon the sufficiency of the property set, and non-conflict with state interests. Foundations are registered at the Ministry of Economics.

Fundraisers – Fundraising Committees

Fundraisers are governed by Law 5101/1931. Under Law 3672/1957, related permits are issued to Unions, Foundations and Fundraising Committees. Their usually non-functional nature is by-passed under provisions of Law 1889/2001. Permits are issued by local Country Courts.

Civil Non-Profit Companies

According to GCC 741, Civil Non-Profit Companies constitute a contractual agreement between two or more parts, bearing collateral commitment to contribute so as to pursue common causes, especially economic. There can be for-profit and non-profit civil companies. Civil Non-Profit Companies are registered at local Country Courts.

European Economic Interest Grouping

European Economic Interest Groupings are a specific kind of civil company bearing legal recognition. ER 2137/1985 governs related issues and was set to implementation in Greece the year 1989. Greek institutional order provided for the establishment of such Groupings under PD 38/1992: “The purpose of the grouping is to facilitate or develop the economic activities of its members by a pooling of resources, activities or skills. This will produce better results than the members acting alone. It is not intended that the grouping should make profits for itself. If it does make any profits, they will be apportioned among the members and taxed accordingly. Its activities must be related to the economic activities of its members, but cannot replace them. An EEIG cannot employ more than 500 persons. An EEIG can be formed by companies, firms and other legal entities governed by public or private law which have been formed in accordance with the law of a Member State and which have their registered office in the Community. It can also be formed by individuals carrying on an industrial, commercial, craft or agricultural activity or providing professional or other services in the Community. An EEIG must have at least two members from different Member States”. Greek institutional order acknowledges EEIG not as a commercial company but as a civil company bearing legal recognition. Non-profit EEIGs are included in Greek Social Economy. They are registered at the General Commercial Register under Law 3419/2005.

Workers Unions – Workers Councils

Laws 1264/1982 and 1767/1988 provide for Workers Unions and Workers Councils in Greece. They are registered at the Ministry of Labor.

Notable Exceptions

Law 590/1977 on the Constitutional Charter of the Greek Orthodox Church governs all related arrangements concerning Christian-Orthodox Church and its institutions. They all constitute public law legal entities. Customary the Church acts autonomously. As such, it is considered as “mixed nature” legal entity and cannot be included in the Greek Social Economy.

Law 2081/1992 governs Chambers of Commerce and Industry in Greece. According to Article 1, Paragraph 1, Chambers are compulsory unions and as such they are excluded from Social Economy in Greece.

Bibliography

In English

CIRIEC. (2007). The Social Economy in the European Union. European Economic and Social Committee. No CESE/COMM/05/2005

CIRIEC. (2006). Manual for drawing up the Satellite Accounts on Cooperatives and Mutual Societies. European Commission, Enterprise and Industry Directorate General.

United Nations. (2003). Handbook on Non Profit Institutions in the System of National Accounts. Series F, No. 91. New York.

In Greek

Nasioulas I. 2010. Greek Social Economy and its social capital. An integrated, institutional and national-accounting recognition. Orthos Logos Editions.

Ladas P. (2007). General Principles of Civil Law. Sakkoulas Editions.

Greek legislation

Constitution of the Greek Republic

LD 42/1974 “On restoring syndicalism freedom and related arrangements”

LD 53/1974 “On ratification of the Convention for the protection of human rights and fundamental freedoms signed in Rome the 4th of November 1950, along with the Paris Additional Protocol of the 20th of March 1952”

LD 66/1974 “On the restoration of legitimacy in Agricultural Cooperative Organizations, Enterprises and Joint Ventures of any kind and degree, PASEGES and related provisions”

LD 85/1974 “On restoration of syndicalism freedom of those working at sea”

LD 108/1974 “On restoration of democratic legitimacy in students’ unions”

LD 116/1974 “On restoration of democratic legitimacy in Cypriot students’ unions”

LD 149/1974 “On amending, supplementing and commentary of several clauses in LD 66/1974 “On the restoration of legitimacy in Agricultural Cooperative Organizations, Enterprises and Joint Ventures of any kind and degree, PASEGES and related provisions””

Law 2783/1941 Introductory on Civil Code

Law 1089/1980 “On Commercial and Industrial Professional and Crafts Chambers”

Law 1264/1982 “On the democratization of syndicalist movement and the guarantee of syndicalist freedoms of workers”

Law 1566/1985 “Parental Organizations”

Law 1667/1986 “Civil Cooperatives and other arrangements”

Law 1746/1988 “Arrangements on the institution of Chambers”

Law 2081/1992 “Arrangements on the institution of Chambers, amendments on Law 1712/1987 concerning the modernization of professional organizations of merchants, craftsmen and other vocations”

Law 2169/1993 “Agricultural Cooperative Organizations and other arrangements”

Law 2181/1994 “Amendment on Law 2169/1993 and other arrangements”

Law 2716/1999 “Development and modernization of mental health services and other arrangements”

Law 2731/1999 “Matters of Bilateral State Development Cooperation and Help, Matters of Non-Governmental Organizations and other arrangements”

Law 2732/1999 “Trans-Vocational Organizations and arrangements on Ministry of Agriculture matters”

Law 2810/2000 “On Agricultural Cooperative Organizations”

Law 2858/2000 “On matters of Amateur and Professional Athleticism”

Law 3029/2002 “System of Social Insurance Reform”

Law 3229/2004 “Motives for Private Investment in Economic Development and Regional Convergence”

Law 3389/2005 “Public and Private Sector Joint Ventures”

Law 3390/2005 “”Ergo Politon” Citizens’ Voluntarism Organization”

Law 3419/2005 “General Commercial Register and modernization of chamber legislation”

Law 3443/2006 “Local Youth Councils”

Law 3479/2006 “Establishment, Organization and Operation of Athletic Professional Unions”

Law 3522/2006 “Amendments on Law 3299/2004”

Law 3610/2007 “Fighting tax evasion”

Law 3655/2008 “Administrative and Organizational Reform on Social Insurance System”

Law 4169/1961 “On Agricultural Social Insurance”

Law 590/1977 “On the Constitutional Charter of the Church of Greece”

PD 104/2003 “Motives for conglomeration and development of Agricultural Cooperative Organizations”

PD 95/2006 “Election, formation and synthesis of administrative committees of chambers regarding Law 2081/1992”

CA 1/1974 “On restoring democratic legitimacy and arrangements regarding public life, until the setting up of the new Constitution of the State”

PD 700/1974 “On partial reinstatement of articles 5, 6, 8, 10, 12, 14, 95, 97 of the Constitution and withdrawal of the Law on siege state”

PD 38/1992 “On European Economic Interest Groupings”

European legislation and communication

ER 1435/2003 “On European Cooperative Enterprise Statute”

ER 2187/1985 “On European Economic Interest Grouping”

ER 2223/1996 “On the European System of National and Regional Accounts in the Community”