Social Enterprise Finds Jobs where the Market Fails

With unemployment on the rise, many Australians face particular barriers to work that are not easily addressed through conventional economic policy levers, but social enterprise could be the answer, writes Head of Enterprise Development at Social Traders, Lisa Boothby.

When we exclude large portions of our citizens from mainstream training and employment opportunities, we significantly increase the economic and social burden on Australian communities.

By using the market to trade and earn revenue, social enterprise provides thousands of Australians who would otherwise be excluded from the labour market with jobs that build skills, self-esteem and career paths.

Official statistics reveal that close to 800,000 are out of work. The unemployment rate is above 6 per cent, and while the monthly figures move around a little, the trend is up. Of even greater concern is that chronic unemployment levels are on the rise. Long term unemployment hit a 16-year high, 160,000, in the June quarter. Moreover, these ABS figures grossly understate the scale of the problem. The underemployment rate is estimated to be equal to, or higher than, the official unemployment rate.

Within Australian communities, certain groups are disproportionately affected by unemployment. Over 15 per cent of Indigenous Australians and 14 per cent of young people are out of work. 9 per cent of people with disabilities cannot find work, and a further two million Australians of working age with disability do not participate in the workforce and so do not register as unemployed. And for some new migrant groups up to 10 per cent are unemployed.

To put it bluntly, if you are disabled, Indigenous, young, a refugee or new migrant, recently released from prison, unemployed for more than 12 months – or any combination of these – you have an unacceptably high chance of being excluded from the workforce.

The question is: What can we do to increase employment in Australia to those most marginalised and disadvantaged?

Market economists would recommend traditional policy levers; increasing demand for labour through higher levels of investment and lower tax rates, and improving supply of labour through mechanisms such as training and apprenticeships. No doubt these play a significant role. It’s also where social enterprise, using innovative market, and often place-based approaches, can supplement mainstream economic mechanisms.

Realising the employment generation potential of social enterprise

It is estimated that Australia’s 20,000 social enterprises already employ over 250,000 people, across all of Australia’s major industry sectors including construction, environmental management and recycling, manufacturing, hospitality and catering, retail, IT, cleaning services, landscaping and maintenance, arts, health and human services.

Yet the full potential of social enterprise to generate more training and employment opportunities for marginalised people in our cities, regional towns and remote rural communities is not being fully realised. Many individuals and community organisations wanting to take greater responsibility for their economic futures are often ill-equipped to achieve these ambitions. To start-up and grow their community projects and enterprise initiatives, many require business skills and support.

This year Social Traders worked with eight early stage social enterprises that are employing people facing barriers to employment across disability, mental illness, ex-offenders, refugee and new migrant populations – The Social Outfit, Jigsaw Business Solutions, Figtree Conference Centre, Mates on the Move, Blak Markets, Fresh Ground, Uni2Beyond and Studio A.

Digital information business, Jigsaw Business Solutions, provides employment and training for people with a disability. Jigsaw highlights how a social enterprise can identify a demand in the market for services that can then be matched to the skills and abilities of a marginalised community. The result is the creation of sustainable and meaningful employment opportunities. Jigsaw is currently managing five local government contracts from a disability hub in Sydney with the potential to scale operations nationally in the coming years.

Displaying a strong understanding of their employee groups, the biggest focus for all of these enterprises has been on understanding and testing the market. What problems are they solving for their customers? What unique propositions can they offer? How much will their customers pay?

In regional NSW, Resource Recovery employs 22 full-time and 15 part-time staff for the long-term unemployed, early school leavers, the Aboriginal community and ex-offenders across two regional recycling centres. With a commitment to a strong market focus as well as to its social impact of providing employment pathways for those most in need within the local community, Resource Recovery has generated a profit of 10 per cent every year for the past 10 years, which is reinvested back into its training and employment activities.

For social enterprises employing people facing barriers to employment, the cost of doing business can be high. Many incur support costs for their employees that can significantly add to standard labour costs. This really ups the ante for a strong market solution.

Whilst social enterprises do not necessarily need to generate the same return on investment as standard businesses, they ultimately need to cover operating costs, so a market focus is imperative. Generating a profit also allows the enterprise to reinvest into the business and provide more people with training and employment opportunities.

In Victoria, social enterprise CleanForce has delivered more than $6.6 million in commercial cleaning services. Providing a strong business focus on high-quality, timely and price competitive commercial cleaning, CleanForce employs over 200 people with mental illness or intellectual disability.

Raising awareness and providing appropriate capacity building support are two critical factors that will enable Australian social enterprise to create much needed additional training and employment for the disadvantaged in our communities.

As Australia faces slowing growth rates providing the opportunity to generate economic outcomes alongside social benefit should be front and centre in policy.

Social enterprise has a unique ability to act as an employment solution where the market traditionally fails by creating real change in Australian communities and empowering the many wanting to work but unable to find it.

About the author: Lisa Boothby is the Head of Enterprise Development at Social Traders, where her focus is on building capacity of start-up social enterprises with the objective that they become investment ready and ultimately begin trading. She provides consulting and coaching support to enterprises participating in The Crunch and a range of other start-up enterprises.