The Social Economy in Times of Retreat: A Call for Hope

The following article is an adaptation of a previous briefer one on Spain’s New Social Economy Law. It arrives at a moment of widespread political retreat across Europe and the USA. Against timid political calculation, perhaps the time has come to accept that defending this model is, above all, an ethical etance for transformation.

I. A Context of Political Recession

The social economy appears to be entering a process of «political recession», with setbacks in both tangible aspects (budget cuts in France, the dissolution of the dedicated unit within the Industry portfolio of the European Commission) and in less tangible but equally significant developments: the gradual disappearance of the agenda from numerous public spaces, the loss of centrality of concepts that orbited around it, such as responsible investment or non-financial reporting, and its progressive depoliticisation and reduction to mere technical exercises.

In this context of generalised retreat, it is significant that legislative advances in the social economy are occurring precisely in countries whose governments are confronting, directly or indirectly, the rise of the far right to power. This is no coincidence: defending the social economy is also a form of democratic resistance.

II. The Spanish Case: Updating the Legal Framework

This is why the approval by Spain’s lower house of parliament (the Congreso de los Diputados) of the Comprehensive Law for the Promotion of the Social Economy (Ley Integral de Impulso de la Economía Social) constitutes good news. The law updates and strengthens Spain’s pioneering 2011 legislation, the first framework law of its kind in Europe.

But understanding this law requires grasping what kind of policy instrument it represents. Not all public policies are the same: there are strategies, programmes, action plans (instruments that allow governments to mobilise funding, set priorities, experiment with tools and respond flexibly to changing circumstances), and then there are laws (instruments that establish the structural framework, define who is recognised as a legitimate actor, determine rights and obligations, and generate expectations of institutional stability over time).

Spain has advanced on both fronts in recent years:

• On the operational side, through explicit funding programmes such as the PERTE for the Social Economy and Care Sector (Proyecto Estratégico para la Recuperación y Transformación Económica), European funds, and both national and regional strategies.
• On the legal side, through this reform, which aims to consolidate those advances into durable institutional architecture.

The political significance of the law lies precisely here: it complements the conjunctural policies with an update of the institutionalisation of the policy area.

III. 2011 Is Not 2025: A Necessary Historical Contrast

Comparing this process with the approval of the 2011 law is inevitable, but doing so without context leads to misunderstanding.

In 2011, very specific circumstances converged:

• A deep economic crisis in which the social economy stood out for its capacity to understand the limits of orthodox economic thinking and to propose alternatives: ways of reintroducing the market as a sphere subordinate to the reproduction of life and care, rather than as a supposed law of physics that constrains what is politically possible and empties collective action of meaning.
• A conservative government (Partido Popular) with incentives to show social sensitivity without committing significant resources.
• A social economy still perceived primarily as a «shelter sector» in emergency contexts.
• A law that largely ordered and recognised existing realities more than it transformed them.

This context facilitated a virtually unanimous political consensus, but it also limited the material scope of the law.

Today the context is radically different:

• The macroeconomic situation is better.
• The government is a coalition led by the social-democratic PSOE, with the more left-wing SUMAR as a junior partner, and it is precisely SUMAR that holds the Ministry of Labour and Social Economy, which is responsible for this policy area.
• The social economy is now presented as a structural tool for addressing systemic challenges (energy transition, digital transformation, demographic change, territorial cohesion) not merely as an anti-cyclical buffer.
• There is an explicit commitment to accompany legal recognition with real funding and institutional advancement.

This inevitably raises the level of political conflict.

IV. Greater Ambition, Greater Resistance

In this legislature, social economy policy is being driven by a ministry led by the junior coalition partner, with a clearly more transformative orientation. This translates into:

• Greater normative ambition.
• A will to strengthen institutional recognition.
• A disposition to back the law with resources.

But it also generates tensions:

• With other key ministries (Social Security, Economy and Finance).
• With more conservative administrative cultures.
• With political balances that are sensitive to external pressures.

This internal coalition dynamic (where SUMAR controls the Ministry of Labour and Social Economy but the PSOE controls Finance and Social Security) shapes what is politically achievable. The limits of the law are not simply technical; they reflect the balance of power within the government itself.

V. CEPES: Strategic Ambition and Legislative Realism

CEPES (the Spanish Confederation of Social Economy Enterprises) is not merely a sectoral actor; it operates as a political interlocutor with a transversal agenda that includes taxation, social security, public procurement, governance, and institutional recognition, including participation in the Social Dialogue (the institutionalised tripartite negotiation between government, employers’ organisations and trade unions).

However, the legislative process reveals something fundamental: not all strategic demands are translated at the same level into parliamentary outcomes.

CEPES has described the text approved by the Congress as “a good starting point”, while simultaneously noting that “significant aspirations remain unaddressed”. These are not marginal issues. The confederation itself has consistently identified structural pending questions in three core areas: the legal configuration of social economy entities, Social Security provisions, and the cooperative tax regime.

The distinction between strategic aspirations and legislative battles is therefore crucial.

• Some demands, most notably explicit recognition of the social economy as a participant in the Social Dialogue, appear clearly in CEPES’s programmatic documents but do not surface as sustained claims in the parliamentary committee hearings. Where such claims do appear in the legislative file, they do so in a procedurally fragile manner, for example by being tabled as amendments and subsequently withdrawn at the Ponencia stage. This absence is politically intelligible: advancing this demand as a central line of confrontation would likely have opened a structural conflict with entrenched actors in the industrial relations system, risking a reframing of the bill beyond its viable parliamentary scope.
• Other demands, particularly those relating to Social Security, taxation, and labour market instruments, were explicitly articulated during the legislative process and translated into concrete amendment proposals. This includes extending the capitalisation of unemployment benefits to facilitate worker takeovers and generational business transitions, as well as correcting the treatment of cooperative worker-members under the self-employed social security regime (RETA).

A review of the parliamentary record shows that these demands were clearly expressed and formally tabled, and in some cases channelled into transaccional packages. However, the extent to which the final Commission-approved wording reflects the full scope of CEPES’s proposals remains constrained by coalition governance, inter-ministerial balances, particularly in Social Security and fiscal matters, and the narrow parliamentary margins under which the law was ultimately approved.

VI. What the Law Does: Real Advances

The law approved by the Congress is not a minimal law. Its ambition is considerable:

• It updates the Cooperatives Law (Ley 27/1999) to reinforce cooperative identity against bogus cooperatives, recognise digital participation and advance gender equality.
• It modernises the Social Integration Enterprises Law (Ley 44/2007) by decoupling the concept of vulnerability from the individual to focus instead on the external factors that generate exclusion.
• It revises the Social Economy Law itself (Ley 5/2011) by incorporating new types of entities already recognised at European level.
• It introduces fiscal improvements, such as the recognition of housing cooperatives operating under a right-of-use model as specially protected cooperatives.
• It clarifies the distinction between Special Employment Centres of social initiative (which are included within the social economy) and those of profit-seeking initiative (which are not); a distinction that has generated significant controversy but which responds to a logic widely accepted in both academic literature and international practice.

These are changes that reduce legal uncertainty and support a sector that in Spain comprises more than 74,000 enterprises and organisations, generates 2.5 million jobs and accounts for 10% of GDP.

The text approved by the Congress also includes amendments from the conservative Partido Popular, particularly in relation to social integration enterprises (provisions that reinforce the role of these enterprises in defining insertion pathways and that introduce mechanisms to combat intrusion and unfair competition). This means that, despite the PP’s vote against the final text, the law is not entirely devoid of cross-party input.

VII. What the Law Does Not Do: The Structural Limits

However, the law is also incomplete. CEPES and its member organisations identify structural pending issues that have not been fully incorporated:

• Extended capitalisation of unemployment benefits: The sector has long demanded that workers be able to capitalise their unemployment benefits to acquire viable companies undergoing generational transitions, even if they are not formally unemployed. This would facilitate the transformation of conventional businesses into cooperatives and prevent closures. Spain was recognised by the European Commission during the 2012 crisis as the country where the most failing companies were converted into cooperatives. The current law does not fully address this.
• Social Security treatment of cooperative members: CEPES has argued that the modification of Article 308 of the General Social Security Law, introduced by Royal Decree 13/2022, creates confusion regarding the contribution base for cooperative members in the self-employed regime (RETA). This correction was explicitly requested but does not appear as a central modification in the approved text.
• Exclusion from the de minimis regime: Social integration enterprises have demanded that public aid to the sector be expressly excluded from the European de minimis framework, which currently limits growth. This does not appear to have been resolved.
• Full bonification of social security contributions: FAEDEI (the Spanish Federation of Social Integration Enterprises) has called for 100% bonification of employer contributions for integration contracts. This has not been incorporated.
• Deeper fiscal reform: The sector has long called for a comprehensive reform of the Cooperative Tax Regime Law (Ley 20/1990), which is now 35 years old. The current law introduces some modifications but does not represent the structural overhaul that CEPES considers necessary.
• Participation in the Social Dialogue: CEPES has explicitly stated in its programmatic documents that one of the objectives of the law should be «to guarantee [the social economy’s] participation in public governance spaces, including the Social Dialogue». This aspiration does not appear in the parliamentary committee hearings of CEPES members and does not translate into explicit normative recognition in the approved text. The absence is significant: it reveals the extent to which the social economy is recognised as an economic actor, but not yet fully assumed as a subject of the social pact.

These omissions are not random. They reflect the political limits of the current moment: the balance of forces within the coalition government, the resistance of key ministries, and the reluctance to open structural conflicts with established actors.

VIII. The Senate: A Moment of Real Political Risk

The move to the Senate now opens a particularly delicate phase. The Partido Popular holds a majority there that would allow it to block the legislation through a veto or introduce substantial amendments. VOX, the far-right party, has only three senators. Although the PP’s final position has not yet formally materialised, its vote against in the Congress introduces a high degree of uncertainty.

To this must be added a further factor: the possibility of an early general election. Should parliament be dissolved, the bill would automatically lapse if it had not completed its passage, forcing the entire process to restart in the next legislature.

This is, therefore, a moment of real political risk, in which timing, parliamentary strategy and the willingness not to block sectoral legislation may prove decisive. Furthermore, the PP will probably not want to give any political victory to the government in what they perceive as the final months of its life. The situation is therefore extremely delicate.

IX. A Decisive Ideological Controversy: The Special Employment Centres

It is significant that the main media attacks on the proposal focus on the exclusion (fully consistent with public procurement law) of Special Employment Centres that are not promoted and controlled by non-profit entities.

This criticism touches on a deeper conceptual debate that extends well beyond Spain. Some actors still defend a minimalist conception of «social enterprise», one in which «doing good» is considered sufficient, where dedicating a majority of profits to social goals qualifies an organisation for social economy status, regardless of its governance structure or ownership model.

But both academic literature and policy practice (and, one might add, common sense) demonstrate that this is not enough. Without effective mechanisms to ensure that the value generated cannot be appropriated individually, the «social» character of an enterprise remains contingent and reversible. What distinguishes the social economy is not merely the destination of profits, but the governance architecture that prevents capital from exercising prevalent ownership rights over other factors (labour, community, purpose).

This is why asset lock mechanisms, non-profit control, and limits on individual appropriation are not bureaucratic obstacles but constitutive features of the model. They are what ensure that value created collectively remains oriented toward collective ends, rather than being redirected toward anti-social or environmentally harmful purposes at the discretion of capital holders.

The Spanish law’s insistence on distinguishing Special Employment Centres of social initiative from those of profit-seeking initiative responds precisely to this logic, a logic widely accepted in international practice and increasingly central to European policy frameworks. Stating this clearly is not sectarianism, but conceptual rigour.

X. An Ambitious Result Within the Current Political Constraints

The Government, and in particular the Ministry of Labour and Social Economy, has fulfilled its role and pushed the legislative process forward in an adverse context. The scenario that now opens up is complex. A strictly utilitarian analysis might warn that a law approved without the support of the Partido Popular risks becoming an «orphan» piece of legislation, easily challenged or even reversed under a future government of the right and far right.

Yet the result must be evaluated in context. This is not a minimal law. It incorporates real advances, updates four key laws, recognises new actors, and even includes cross-party contributions. The text approved in the Congress is ambitious given the correlations of force in parliament—fragile in the face of changes in majority, and open to future disputes, especially in the Senate and in subsequent legislatures.

XI. A Call for Hope

The social economy cannot afford a politics of retreat or of timid calculation. Its own historical logic is one of advancing in adverse contexts, disputing common sense, and building institutions step by step.

Being ambitious, in this context, does not mean denying the limits, but refusing to naturalise them. And fighting from hope is not naivety, but coherence with a project that, by definition, places people, cooperation and the common good at the centre.

Perhaps the time has come to be consistent with the humanist and empathetic approach that constitutes the very foundation of the Social and Solidarity Economy, and to reject both extreme utilitarianism and an overly timid political calculation. Perhaps this is the moment to accept that the social economy is not merely about managing values-driven enterprises or palliative public policies, but embodies an ethical and political stance of systemic transformation: that of those who choose to be actors of hope, committed to the collective construction of a future worth living.

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XII. Postscript, March 2026: Hope Confirmed

Added 27 March 2026, three months after the original article was published.

When I wrote the preceding analysis in December 2025, the law had just left the Congress and was heading into a Senate controlled by the opposition. I described it as «a moment of real political risk.» I noted the possibility of early elections that would kill the bill. I suggested it might not survive.

It survived. On 26 March 2026, the Congress of Deputies definitively approved the Comprehensive Law for the Promotion of the Social Economy — rejecting the PP’s Senate amendments and preserving, in substance, the December text.

This was not inevitable. The coalition that sustained this law — PSOE, SUMAR, ERC, Bildu, PNV, and others — did so through months of political uncertainty, a hostile Senate, and the permanent temptation of tactical retreat. In a fragmented parliament where every vote carries risk, they chose to hold. That choice is the first thing worth recognising.

What the parliamentary record reveals

Going back to the full documentation — 194 amendments from June 2025 (BOCG A-36-3), the Commission debate of 9 December (DS Comisión 482), the Senate text, and the final congressional vote — allows us to understand not only what happened, but why the doubts I expressed in December were not borne out.

The PP submitted forty-three amendments in the congressional phase. Three lines of argument stood out and would reappear, almost unchanged, in the Senate eight months later.

The first concerned the cooperative tax regime. Amendment 189 proposed a legislative mandate requiring the Government to submit a comprehensive reform of the 1990 Cooperative Tax Act (Ley 20/1990) within one year. The PP acknowledged that the Constitutional Court’s doctrine on «intrusive amendments» precluded inserting a full fiscal overhaul into a labour law, framing it instead as a mandate. The same party also sought to suppress the law’s only fiscal provision — the recognition of housing cooperatives operating under a right-of-use model as specially protected. Read together, this was a connected position: do not patch the 1990 Act piecemeal; reform it through its own vehicle.

The second concerned the definition of «social enterprise.» Amendment 185 proposed incorporating the concept into the Social Economy Law, drawing on the EU’s FSE+ Regulation and the Council Recommendation of November 2023. The problem with this proposal is one of legislative quality: introducing a form-neutral «social enterprise» category into an ecosystem built over thirty-five years on the basis of specific legal forms (cooperatives, mutual societies, integration enterprises, social-initiative sheltered workshops) would amount to policy layering — adding a transversal normative layer without resolving the tensions it creates with the existing architecture of fiscal incentives, procurement reserves, and registration systems. This is a well-documented phenomenon in comparative regulation, and few countries that have attempted it have achieved satisfactory results.

The third concerned transparency of social balance sheets for integration enterprises (Amendment 183) — a narrowly targeted measure, technically sound but not one whose absence materially weakens the law.

All three were rejected in the Commission on 9 December 2025, voted down in bloc alongside other PP amendments. Only two minor procedural improvements (amendments 175 and 179) survived the congressional phase.

The Senate — and the vote that defines everything

In the Senate, holding an absolute majority, the PP chose not to exercise its constitutional veto power under Article 90 — a veto the Congress could have overturned in any case. Instead, it reintroduced its positions as amendments, now numbering more than forty. The substance was largely familiar: softening gender balance requirements, eliminating the obligation for large cooperatives to maintain a corporate website, capping mandatory reserve funds, and again pressing on the fiscal, social enterprise, and transparency provisions.

On 26 March, the Congress rejected almost everything. Only two technical corrections survived — one updating a disability reference to align with the reformed Civil Code, the other combining fixes from the Senate’s own legal counsel. Neither was politically substantive. Both passed near-unanimously.

Here is what matters: the PP’s key proposals drew, in some cases, on real sector demands and EU recommendations. The cooperative tax reform is genuinely urgent — the Economic and Social Council, the National Markets and Competition Commission, and CEPES all say so. Yet the PP voted against the law in its entirety, both in December and again in March. If the reforms it proposed were genuinely needed, voting against the only vehicle that could advance them is difficult to read as anything other than a calculation to deny the government a legislative victory. Consistency of proposals, combined with a blanket vote against — that is the portrait of a party that chose partisan positioning over sectoral progress.

The coalition that approved this law made a different choice. And that difference is the story.

An institutional tension, confirmed

In the original article (Section IV), I noted that the limits of the law reflected the balance of power within the governing coalition itself — specifically the tension between the Ministry of Labour and Social Economy (SUMAR’s political space) and the Ministry of Finance (controlled by the PSOE). The parliamentary process confirmed this analysis.

On the morning of 9 December, minutes before the Commission vote, the Presidency announced that the Ministry of Finance had vetoed Amendment 52 — submitted by the Basque Nationalist Party — invoking Article 134.6 of the Constitution, which allows the Government to block any legislative initiative implying increased expenditure. The PNV’s spokesperson protested that her party had not even been informed. The message was clear: Finance was guarding the fiscal perimeter of the law and would intervene to protect it.

This explains why the cooperative tax reform — which practically everyone agrees is needed — was left outside the law. It is not a matter of political will alone; it sits in the institutional space between the ministry that champions the social economy and the ministry that controls its fiscal levers. Resolving this tension is one of the clearest avenues for future progress.

A shifting landscape

The political context has evolved since December, in contradictory directions.

The geopolitical landscape has darkened. The crisis with Iran has deepened. The erosion of multilateral frameworks continues.

But counter-currents have emerged. In January 2026, Zohran Mamdani won the New York City mayoral race on a democratic socialist platform — the first such victory in a major Western city in decades. In England, the Green Party won its first ever parliamentary by-election in Gorton and Denton — a former Labour stronghold in Manchester — with over 40% of the vote, a result that prompted 15,000 new members to join the party in a single week. In Denmark, a snap election in late March saw the Green Left (Socialistisk Folkeparti) double its seats to become the country’s second-largest party. These are not transformations, but they are signals that the space for alternatives is not foreclosed.

France offers both complexity and a sharp warning. The March 2026 municipal elections produced mixed results: Paris, Lyon and Marseille were held by left-wing alliances, but Bordeaux fell to the centre-right candidate Thomas Cazenave, defeating incumbent Green mayor Pierre Hurmic — one of Europe’s most visible champions of social economy policy at city level and president of the Global Social Economy Forum (GSEF). His defeat is a reminder that municipal-level progress remains fragile and reversible.

And France offers a deeper lesson. The Cour des comptes’ September 2025 report (Les soutiens publics à l’ESS 2018-2024) revealed that France channels approximately €23 billion annually toward social economy structures, yet the sector’s relative weight has not grown: the share of ESS establishments among all employers declined from 10% to 9% between 2018 and 2021, while employment remained flat at 10.6%. The diagnosis: massive public funding without strategic coherence, with eighty per cent of financing flowing through the ESS rather than being directed at developing it.

The lesson for Spain is direct: a good law is necessary but not sufficient. France had its own pioneering law in 2014 (Loi relative à l’économie sociale et solidaire). A decade later, the evidence suggests it has sustained the sector without transforming it.

What remains

The three structural gaps I identified in December remain unresolved.

The 35-year-old cooperative tax regime has not been comprehensively reformed. The law’s only fiscal innovation — the recognition of right-of-use housing cooperatives — survived the Senate, but the systemic overhaul that the sector, the advisory bodies, and even the opposition agree is urgent remains outside the door. Unlocking the institutional tension between Labour and Finance is the clearest path to progress on this front.

The Social Security treatment of cooperative worker-members, particularly the confusion around contribution bases in the self-employed regime (RETA) created by Royal Decree 13/2022, has not been corrected.

And the social economy has not been recognised as a participant in the Social Dialogue — the institutionalised tripartite space where economic and social policy is negotiated between government, employers’ organisations and trade unions. A sector representing 10% of GDP and 2.5 million jobs remains outside the room where systemic decisions are made.

These are the pillars that would convert political recognition into institutional durability. They will define whether the Comprehensive Law becomes a genuine turning point or merely a well-intentioned update that, like France’s 2014 law, sustains without transforming.

Hope, confirmed

In December I wrote that «perhaps the time has come to accept that the social economy is not merely about managing values-driven enterprises or palliative public policies, but embodies an ethical and political stance of systemic transformation: that of those who choose to be actors of hope.»

Three months later, the actors of hope delivered. The coalition held. The law survived the Senate, the political uncertainty, and the opposition’s blanket rejection. This is, in the first instance, a story about democratic persistence — about the parties and the institutions that chose to advance structural legislation for the social economy when it would have been easier not to.

The real test now is not legislative but institutional. It lies in unlocking the fiscal reform that Labour cannot deliver alone. It lies in correcting the Social Security anomalies that make cooperative membership unnecessarily precarious. It lies in securing a seat at the Social Dialogue table for a sector that represents a tenth of the economy. And it lies in the patient, unglamorous work of regulatory development — the decrees, the registers, the verification mechanisms — that will determine whether the law’s provisions become operational reality or remain elegant text.

In a Europe where the political space for the social economy is contracting, Spain chose to expand it. That choice deserves to be recognised for what it is — not merely a legislative achievement, but an act of democratic persistence. And an invitation to build further, from hope, not fear.

Note on sources and parliamentary tracking

A substantial part of the factual reconstruction of the parliamentary process presented in this article draws on the work of the Observatorio Español de la Economía Social y del Trabajo Autónomo, managed by CIRIEC-España. In particular, the Observatory’s legal and parliamentary monitoring, including its detailed reporting on the approval of the Proyecto de Ley integral de impulso de la economía social in the Commission with full legislative competence, has been essential for identifying which amendments were incorporated at the Commission stage and for situating the law within its precise procedural context. The Observatory’s synthesis provides a level of clarity and reliability that is not easily accessible through the raw parliamentary documentation alone, and has therefore been used as a primary reference for the analysis of legislative outcomes in this article.¹

¹ Observatorio Español de la Economía Social y del Trabajo Autónomo (CIRIEC-España), La Comisión de Trabajo y Economía Social del Congreso de los Diputados aprueba el Proyecto de Ley integral de impulso de la economía social, 11 December 2025.