Deputies in Tajikistan have developed a law on “Social Entrepreneurship”

Social entrepreneurship is a business that not only generates profit but also leads to social changes in society. Although Tajikistan is a social state, it must meet the socio-property needs of society. The existence of various forms of ownership, the development of entrepreneurship, and the establishment of a civil society involved in socio-economic processes play a significant role here. In this situation, the state should act as a guarantor of meeting the socio-property needs of society.

As reported by Asia-Plus, regarding the legal foundations of social entrepreneurship in the Republic of Tajikistan, some institutional aspects are contained in the laws “On State Protection and Support of Entrepreneurship,” “On State Social Order,” “On Public-Private Partnership,” in the presidential decree “On Measures to Enhance the Role of Women in Society” dated December 3, 1999, as well as in the Rules for Grant Allocation by the President of the Republic of Tajikistan for Supporting and Developing Women’s Entrepreneurship for 2021-2025, approved by the government resolution dated January 28, 2021, No. 5, and in the President’s Addresses to Parliament.

Within the framework of the National Development Strategy for the period until 2030 and the Medium-Term Development Program for the period 2021-2025, the “establishment of new mechanisms for implementing state social policy aimed at modernizing the management system of sectors that form human capital, and the institutionalization of the system of production and social entrepreneurship” is provided.

The legislation and strategic documents of the republic contain separate elements of social entrepreneurship; however, the normative legal acts of the country lack a definition of social entrepreneurship itself. It is defined as socially responsible entrepreneurial activity aimed at supporting socially vulnerable groups of the population, producing or supplying socially designated goods, as well as providing social services carried out in the manner established by this law.

Why does Tajikistan need this law?

The relevance of the prompt implementation of social entrepreneurship mechanisms in Tajikistan has become extremely evident, as data from the Statistics Agency shows a significant increase in the burden on budget expenditures related to pension payments, benefits, and compensations for vulnerable groups of the population in recent years.

In 2022, the total number of people with disabilities in the country increased by 1.4 thousand people (0.88%) compared to the previous year, reaching 159.1 thousand people. Compared to the baseline year of 2015, the number of people with disabilities increased by 16.8 thousand people (or 11.8%). The average annual growth rate for the analyzed period from 2015 to 2022 is 1.66%, indicating a stable trend of annual growth in this indicator, which undoubtedly increases the economic burden on the state budget and forces the government to spend more on social support.

Another social burden on the state budget should be considered the increase in the number of pensioners (for labor and social pensions) and the decrease in the number of employed individuals per pensioner. This means that the republic is experiencing a steady annual increase in the number of pensioners. The average annual growth rate from 2015 to 2022 for the number of individuals of retirement age is 3%. At the same time, there is a trend of decreasing the number of employed citizens per pensioner, which complicates the situation regarding the economic sustainability of existing social expenditures.

If in 2015 there were only 3.9 employed individuals in the economy for each pensioner, by the end of 2022 this figure had decreased by 23% to 3 individuals. Therefore, the observed reduction over the past 8 years of nearly a quarter in the number of individuals employed in the economy per pensioner is a serious concern and significantly increases the pressure on the state budget.

Accordingly, it is important to understand that social support involves not only the implementation of a one-sided policy of state social protection for vulnerable groups through cash payments and material assistance, but also the creation of favorable conditions for restoring their employability and economic inclusion.

It is the economic inclusion of this category of individuals that can partially offset the increase in budget expenditures through tax revenues from economic activity, further financial stability, and their self-sufficiency. For this, as international practice shows, it is necessary to develop mechanisms to promote employment for vulnerable groups of the population by engaging them in entrepreneurial activities, or what is known as social entrepreneurship.

A striking example of the impact of social entrepreneurship on the socio-economic situation is Poland, where employment indicators were the worst in Europe, with an unemployment rate of 20%. By focusing on strengthening the social sector and adopting laws regulating business social responsibility, promoting volunteerism, and social integration of socially vulnerable groups, Poland reduced the unemployment rate to 10.1% in 2012, and by 2017 this figure had dropped to 4.9%.

It can be stated that the adoption of this law will be a significant contribution of Tajikistan to the implementation of the UN Sustainable Development Goals, thereby ensuring the fulfillment of international obligations and the formation of a positive image of the country at the international level. Social entrepreneurship will contribute to the achievement of the 17 Sustainable Development Goals, which include, among other things, the eradication of poverty, ensuring universal education, and preventing global warming. 

Therefore, the promotion of the idea of expanding social entrepreneurship should serve as a stimulating impulse towards reducing the level of poverty, saturating the market with social goods and services, introducing innovative approaches in the field of small and medium-sized businesses, increasing the tax base, and reducing the burden of social payments on the state budget with a delayed positive macroeconomic effect. 

What is discussed in the draft law?

Defining the tasks of social entrepreneurship, the draft emphasizes ensuring the participation of business entities and the public in solving social problems; creating new jobs for socially vulnerable groups of the population and their employment; promoting the market for goods produced, works performed, and services provided by social entrepreneurship entities, including through the personal labor participation of socially vulnerable groups of the population.

One of the key issues of the draft is the definition of the concept of socially vulnerable groups of the population. The developers of the draft consolidated all categories of citizens recognized as vulnerable in accordance with current legislation. According to the draft law, the subjects of social entrepreneurship are social enterprises and social entrepreneurs who meet certain criteria.  Among the subjects of social entrepreneurship, special attention is given to public associations, which largely fall within the context of social organizations, as they do not primarily aim to generate profit.

The proposed system of relations between the state and social entrepreneurship entities is primarily aimed at limiting bureaucratic procedures, while the state policy is directed towards supporting activities in this area and creating favorable conditions for attracting investments in social projects. 

The draft law also defines forms of state support for social entrepreneurship. Undoubtedly, it should not be said that the proposed draft will solve all the problems related to the organization of social entrepreneurship. This is the first attempt at legislative consolidation of the concept of social entrepreneurship in the republic. The status of a social entrepreneur or social enterprise will provide the opportunity to receive additional financial assistance from the state or non-profit organizations.

It should be noted that the presented draft law also pursues a number of additional objectives, which include ensuring the internal legal harmonization of the norms of legislation regulating the area of support for entrepreneurial activities, support for socially vulnerable groups of the population, and bringing these norms in line with the objective realities and needs of Tajik society.

In conclusion, it is important to note that the adoption of the draft law on social entrepreneurship is a significant step towards the development of this area of activity. Undoubtedly, further improvement of the legislation regulating measures to support social entrepreneurship will be required, along with innovations in the economic life of the state. 

The adoption of the law will accelerate the development of social entrepreneurship in the republic and will contribute to improving the quality of life of the population and economic growth in the country.