<h1>Why South Korea Still Doesn’t Have a Basic Law for the Social Economy</h1>

One of the main reasons the social economy has grown so rapidly in South Korea is because it was driven by government initiatives.

Social economy enterprises pursue values while also competing in the general market economy. Without government support, rapid growth is difficult.

Recognizing this, the Korean government has continued to provide various forms of support to ensure that the social economy can operate and grow sustainably.

 

Ironically, however, South Korea still does not have a Framework Act on the Social Economy.

 

In South Korea, discussions on enacting a Basic Law for the Social Economy have been ongoing for years.(Photo by Milly) 

What Is Included in the Framework Act on the Social Economy?

 

The Framework Act on the Social Economy includes essential legal foundations aimed at promoting the social economy.

The currently proposed bills include key provisions such as:

👉Establishing a basic development plan for the social economy

👉Conducting regular surveys on the status of the social economy

👉Creating and managing a Social Economy Development Fund

👉Strengthening the legal framework for social finance

👉Prioritizing the purchase of goods produced by social economy organizations

 

In short, the law is designed to create a legal environment that allows the social economy to develop more effectively and stably.

 

In particular, the proposed bill not only includes direct support but also provides institutional foundations to improve the sustainability of each organization—such as social finance reform and market access support.

 

The Current Situation in Korea

 

The Framework Act on the Social Economy was first proposed in 2014, but it failed to pass the National Assembly.

Since then, the bill has been reintroduced multiple times, yet even after nearly a decade, it still has not been enacted.

 

Currently, there are individual laws related to the social economy in place—such as the Social Enterprise Promotion Act and the Framework Act on Cooperatives.

More recently, a Village Enterprise Act was passed to support locally-based enterprises.

 

However, because each type of enterprise operates under a separate legal framework, social economy organizations remain divided despite being under the same broader umbrella.

Although these enterprises share a common goal of pursuing both “social value” and “profit,” they are treated differently depending on their legal type.

This fragmented approach inevitably reduces policy effectiveness.

 

As a result, whenever the policy environment shifts, the scope and method of support also tend to change.

 

Conclusion: The Framework Act Must Be Enacted

 

South Korea's social economy has grown rapidly even without a comprehensive framework law.

This proves that the sector has great potential.

 

However, enacting a legal foundation for nurturing and supporting the social economy would enable it to play an even greater role.

 

The social economy fills the gaps where the public sector falls short, while also remaining competitive in the general market economy.

In other words, it ensures both public interest and market performance.

This makes it a crucial part of running a healthy, balanced society.

 

Creating a robust institutional environment for the social economy is not just about legal reform—it’s a prerequisite for building a better society.

 

As social issues continue to diversify, the need for a more active role from the social economy becomes increasingly urgent.

That’s why I believe the Framework Act on the Social Economy must be passed without further delay.

 

Recent Government Developments

 

The newly launched Lee Jae-myung administration has created a "Social Solidarity Economy Task Force" (also referred to as the Social Economy TF) within the National Policy Planning Committee.

This TF is actively listening to voices from both government officials and field practitioners to revise related laws and strengthen the autonomy of social economy organizations.

 

We hope these efforts will pave the way for the enactment of the Framework Act and further energize the social economy in Korea.