Busan announced on August 3 that it will accept applications for the '2026 Preliminary Social Enterprise Designation' from August 14 to September 4.
Local preliminary social enterprises aim to provide jobs and social services to vulnerable groups while contributing to the community, with the potential to grow into certified social enterprises recognized by the Ministry of Employment and Labor.
This application process has no limit on the number of designations. This means that businesses meeting the criteria will be designated after a review, rather than a fixed number being selected within budget constraints.
A representative from Busan's Small Business Support and Social Economy Team stated, "The budget for the designation itself is primarily for issuing certificates. Since there is no structure limiting the number of designated enterprises due to budget constraints, any business that meets certain conditions can be designated." However, it was noted that financial support programs available after designation operate separately. Even if designated as a preliminary social enterprise, support for labor costs and business development expenses requires individual project budget approval and review.
The number of businesses applying for preliminary social enterprise status in Busan has recently seen a significant decline. According to the city, "In 2021, 61 businesses applied, followed by 7 in 2022, and 64 in 2023," but recently the number of applicants has dropped to around 10 or 6, with only 4 and 3 businesses designated, respectively.
The city believes that the decrease in related financial support programs has impacted the number of applications. A city official remarked, "Businesses applying for preliminary social enterprise designation are very interested in the national and municipal financial support programs available after designation. However, the lack of related support programs in recent years has reduced the perceived benefits of designation." The official added, "With a slight increase in related budgets this year, we expect the number of applicants to rise compared to last year."
The designation of preliminary social enterprises is evaluated based on the realization of social purposes and the sustainability of the business rather than the years since establishment. For job-providing enterprises, a certain percentage of employees must be from vulnerable groups. There are five types of enterprises: job-providing, social service-providing, community contribution, mixed, and others (creative and innovative), with a designation period of three years.
The official emphasized, "The key is not how long the business has been established, but what social value it creates," adding that the evaluation will comprehensively consider whether the type-specific requirements and business sustainability are met.
The review process will be based on submitted documents and on-site inspections, incorporating quantitative indicators such as the employment ratio of vulnerable groups, as well as qualitative assessments of the feasibility of social purpose realization and business model sustainability. The transition rate to certified social enterprises recognized by the Ministry of Employment and Labor after designation has been found to be low.
The official noted, "Many businesses apply for designation expecting to participate in financial support programs, but recent support programs tend to focus on employment and care sectors. If a business's main operations do not align with the support direction, the number of available programs decreases, reducing the practical benefits of designation." Additionally, while some businesses apply for formal social enterprise certification, others allow their designation to expire without applying for certification or re-designation after the three-year period.
There is also a lack of a comprehensive post-management system to monitor changes in revenue, retention of vulnerable group employment, closure rates, and certification transition rates after designation. The official stated, "After designation, businesses must submit their revenue, operational challenges, and employment status of vulnerable groups directly. While businesses that have received financial support are relatively proactive in providing data and feedback, those that have not are less cooperative, making statistical management difficult."
The city is continuously seeking cooperation by informing businesses that they may be asked to submit post-designation data and is working to reflect the collected data in post-management statistics, despite the absence of specific incentives.
Businesses wishing to apply for preliminary social enterprise designation can do so through the social enterprise portal by contacting the relevant social enterprise department in their local district or county. The city plans to conduct document reviews and on-site inspections in September and October, followed by expert evaluations and deliberations by the Social Enterprise Promotion Committee in October, with final designation results to be announced on the city’s website in early November. Once designated as a preliminary social enterprise, businesses can participate in various support programs, including consulting to meet the Ministry of Employment and Labor's certification requirements, priority purchasing by public institutions, market support, and financial assistance.
The city will hold an information session for participating businesses on August 13 at 4 p.m. at 'Social Campus On Busan' (688 Suyeong-ro, 6th floor, Suyeong-gu), where it will provide guidance on designation requirements, evaluation criteria, application procedures, and how to use the social enterprise portal.
Kim Gi-hwan, head of the city's Digital Economy Office, stated, "Through this application process, we aim to discover capable Busan-style preliminary social enterprises and actively support them in realizing social value while growing alongside the community."
* This article has been translated by AI.
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