Compendium 2.1.1 Welfare bridges

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EQUAL COMPENDIUM ON INCLUSIVE ENTREPRENEURSHIP

2.1.1 Welfare bridges from benefit to self-employment

Contents

The challenge

One of the first steps of EQUAL and similar projects in the field of entrepreneurial culture has been to try to improve the two-way information gap that often exists between business support systems and potential entrepreneurs from disadvantaged groups and areas. This involves both obtaining first-hand knowledge of the real obstacles these groups face and also building trust and providing more reliable information to them.

How EQUAL has approached the issue – examples

Research

Providers of business support services participating in EQUAL have undertaken extensive research to acquire better intelligence about the barriers, the specific business support needs, profiles and opportunities of disadvantaged groups, areas and sectors (i.e. the social economy). The results of this research have been directly used:

  • To provide guides on routes out of benefit dependency into entrepreneurship that try to overcome the major hurdles faced by disadvantaged people and by all those in the submerged economy when trying to move from social security benefits into self-employment. On the basis of international comparisons, a series of policy recommendations for improvements to benefit systems and proposals that should be taken into account when providing business advice have been formulated in some countries.
  • To increase the quality of business support strategy and procedures in national and regional programmes by adapting them to the needs of under-represented groups – for example, specific targets and monitoring arrangements which take into account the needs of specific groups, contracts specifying when, how and how much specialist outreach services intervene, when they hand over to mainstream support services, and quality guidelines for specific services, such as women-friendly business incubators.
  • To train both specialist and mainstream business advisers to take the differences between potential entrepreneurs into account.
  • To allocate more resources to business support programmes and schemes, targeting under-represented groups (up to 30% of the budget for entrepreneurship).

Business start-ups have been shown to increase by up to 20% per annum in regions where the above approaches have been undertaken.

Smoothing the transition from benefit to entrepreneurship

The Créative project is strengthening the identity of business and employment co-operatives through branding, and establishing a territorial structure both within France and transnationally. Through this project, EQUAL has helped a very successful new style of business incubation, particularly suitable for disadvantaged clients, to spread across Europe from its birthplace in France. Business and employment co-operatives (BECs) build new bridges between benefit dependency and independent economic activity by combining peer support with incubation services. Since the first was started in 1996, a wave of some 70 has sprung up all across France. Further afield, there are eight in Belgium (for example De Punt, 10 in Sweden (for instance Egenanställning), and there are also BECs in Morocco, Poland (e.g. Partnerstwo Inicjatyw Nowohuckych in Nowa Huta), Madagascar and Quebec.

BEC clients are in all sorts of activities from cookery, industrial cleaning, furniture restoration and organic horticulture to violin making, jewellery, translation and web design. BECs are launch pads that provide budding business people with an easy transition from inactivity to self-employment. Intending entrepreneurs pass through three stages:

  • First, they remain technically unemployed but develop their business idea under the wing of the BEC. The BEC takes care of the administrative headaches, which frees them to focus on succeeding;
  • Next, if it looks like being a success, they become that oxymoron, a ‘salaried entrepreneur’ with the security of a part-time employment contract;
  • Finally they become a self-sufficient business, sharing in the ownership and management of the co-operative.

BECs thus provide the small business person with the best of both worlds – control over one’s working life, but with the support of a group of people who are facing the same problems and want to pool their enthusiasm and expertise. They help to overcome one of the most discouraging features of becoming self-employed – isolation. They thus lower the bar for becoming an entrepreneur, and open up new horizons for people who have ambition but who lack the skills or confidence needed to set off entirely on their own.

Recommendations for mainstreaming policies

Tax and benefit policy play a crucial role in encouraging all sections of the population to take the risk of going into business. Welfare systems can unwittingly deter people from making the leap into earning their own living, by making income support conditional on being available for work. Schemes such as Enterprise Allowance, under which unemployed entrepreneurs could retain their benefit while testing their business idea, have enabled many people in Britain and Ireland to set up on their own.

Links to EQUAL case studies

Créative (F): http://www.avise.org/spip.php?article307

De Punt (B): http://ec.europa.eu/employment_social/equal/data/document/etg2-suc6-socialact.pdf

Egenanställning (S): http://ec.europa.eu/employment_social/equal/news/200702-bec_en.cfm

Partnerstwo Inicjatyw Nowohuckych (PL): http://ec.europa.eu/employment_social/equal/practical-examples/entrep-07-nowa_en.cfm

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