Announcement of Survey Results on Support and Management of Social Enterprises... Labor Minister Urged to Pay Attention to Management Tasks
[Asia Economy Reporter Ryu Jeong-min] An audit report revealed that the preliminary social enterprise support project is failing to fulfill its intended purpose due to poor management.
On the 4th, the Board of Audit and Inspection announced the results of its investigation into the "Support and Management Status of Social Enterprises." The Ministry of Employment and Labor oversees the operation of the preliminary social enterprise designation system, which is designated by central government ministries and local government heads according to the "Framework Act on Employment Policy" and other regulations.
According to the guidelines for preliminary enterprise designation, if the business performance related to the "realization of social objectives" can be quantified, the enterprise cannot be certified as an "other type" preliminary enterprise.
Among the total 3,792 preliminary enterprises designated in the past five years (2016 to September 2020), 1,422 (37.5%) were classified as the "other type," which is a higher proportion than other types. Some enterprises were designated as the "other type" despite having quantifiable performance.
The Board of Audit and Inspection pointed out, "This not only undermines the purpose of the 'other type' preliminary enterprise system but also makes it difficult to judge whether social objectives are being met during post-inspection, raising concerns about poor follow-up management."
The preliminary enterprise designation system was created to nurture social enterprises by providing various supports during the designation period (three years) even if some certification requirements are not met. The Board of Audit and Inspection explained, "If an enterprise that meets the certification requirements of a social enterprise is designated as a preliminary enterprise, there is a risk that other preliminary enterprises may not receive financial support."
It was confirmed that some ministries and local governments did not review whether enterprises met the certification requirements of social enterprises during the preliminary enterprise designation screening process. Furthermore, the support system for converting preliminary enterprises to certified social enterprises was found to be insufficient.
The Board of Audit and Inspection stated, "The Ministry of Employment and Labor needs to guide and inspect ministries and local government heads to manage reasons for non-conversion of certification and to prepare support measures for certification conversion of non-converted enterprises," and added, "It is also necessary to manage whether corrective orders and suspension of support payments are implemented for preliminary enterprises that have not submitted business reports."
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