Hannover B2 inclusion through enterprise

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Hannover policy forum background paper


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Workshop objectives

  • To demonstrate the role of social economy and inclusive entrepreneurship in creating work opportunities for disadvantaged people.
  • To give some examples of successful models of work integration
  • To provide an overview of the range of strategies available in this field and the main lessons that have been acquired over the last few years.
  • To discuss the main challenges and what should be done to strengthen these strategies in the future.

What is the challenge?

In the last years Europe has suffered from an overall economic downturn, which has been associated with a slowdown in employment growth and an increase in unemployment. In the enlarged Europe, 68 million people are still facing the risk of poverty, i.e. 15% of the European population . The groups most at risk are the unemployed, single parents, elderly people living alone and families with a large number of children.

In this context, there is an increasing need to find successful models of enterprises integrating disadvantaged people. In order to help these enterprises to achieve their social goals and to operate on the market, the European Union and especially the member states should ensure positive, environmental conditions, appropriate legal and fiscal frameworks and different kinds of support.

Entrepreneurship is often not considered as a viable solution for disadvantaged people and vulnerable groups. One reason is because, for many disadvantaged groups, the risks of losing income (from benefits, casual work or the submerged economy) by becoming an entrepreneur often appears greater than the likely gain, especially when they have a dependant family and/or a precarious legal status (for example, they have just arrived from another country). Moreover, they are not likely to approach or do not find adequate response from traditional business support providers.

On the other hand, social economy has proved to be very successful in providing work opportunities to disadvantaged groups. Social enterprises offer either transitional job opportunities for workers needing to train or update theirs skills before going back to the general economy or permanent and adapted jobs for the most disadvantaged categories (mental ill people, physical handicapped, etc.).

What kind of solutions are being tested?

Within the broad galaxy of social enterprises some have played a major role in the fight again social exclusion: those aiming at the social and professional integration of disadvantaged people.

A specific term has emerged in recent years in Europe to refer to work-integration initiatives within the social economy: Work Integration Social Enterprises (WISEs). WISEs are autonomous economic entities whose main goal is to help poorly qualified unemployed people who are at risk of permanent exclusion from the labour market. These enterprises integrate them back into work and society in general through productive activity.

In a broad research project, EMES (European Research Network on the Emergence of Social Enterprise - http//:wwww.emes.net) has done a comparative analysis of 160 social enterprises in 15 countries, identifying 44 different types of WISEs. They address, through various modes of integration, the problems of long-term unemployment and occupational inactivity of disadvantaged people.

One of the major differences between the different types of WISEs is their legal framework. It is up to governments to ensure adequate legal and institutional frameworks for work integration social enterprises. Where there are specific legal provisions for WISEs (no matter if there is only one model – as in Italy, or several legal schemes, like in France), social enterprises can prosper and provide benefit.

Most social enterprises strongly rely on public subsidies. Their aim to promote social inclusion and integration of excluded groups justifies the need of public support to compete on the market on equal footing with businesses in the general economy. Policy makers should create the right conditions to ensure fair competition, even if this requires tax-relief, subsides or some other tools.

Access to public tenders is also an important factor to develop work integration social enterprises. The internal market legislation of the European Union obliges public authorities to adhere to formally-agreed and transparent procedures when spending public money, the EU’s last Public Procurement directive (2004/18/EC) provides for environmental and social clauses and gives local authorities lots of scope to avoid a levelling down of social services and to encourage high standards and community benefits, namely in the field of social inclusion. Partnership with the public and/or the private sector can also help the development ow WISEs. Participation to the planning of public policies means that the voices of the users can be heard and their needs taken into account. Collaboration with private companies providing contracts or work will help sustainability and reduce dependence from public subsidies. Finally, the existence of support organisations and networks is a determining factor in the success or failure of the initiatives of this sector and its consolidation. There is no unique model or standard in terms of support structures, these must be adapted to contexts, territories, and life cycles of the social enterprises. In the case of Work Integration Social Enterprises, the specific needs of the different target groups who the enterprises wish to help integrate due to discrimination or other obstacles in accessing the traditional labour market, must also be taken into consideration.

Support structures sometimes specialize in one function but, in general, offer various kinds of services. The types of services provided are:

  • Technical support to factors of production (training and other human resource support mechanisms, finance, supply and marketing);
  • Economic and social support for economic sustainability of enterprises (social and economic development, development of community links, administrative and managerial support, consulting and research, networking and exchange of information);
  • Political support (promotion, political activities in its strict sense, regulation).

EQUAL has tested many solutions to the issues mentioned above.


In Greece Synergia has boosted the development of the KoiSPE, a legal form of limited liability social co-operative aiming at work integration of people with mental illness. Although the law was enforced in 1999, it was not until the end of 2002 that the first of them was established. The Synergia project supported the establishment of 9 KoiSPEs through a number of specific, targeted actions to support mentally ill persons and mental health professionals in becoming entrepreneurs. The success of the project has enabled horizontal mainstreaming to different target groups, towards the institutionalisation of the social economy and towards the involvement of NGOs and it is contributing to local development.


Since its creation in 1989, the Barka Foundation in Poland has worked for social re-integration of disadvantaged people. It has made a major effort to promote a law on social cooperatives. A new act was enforced in 2006 allowing long term unemployed, handicapped and other categories of disadvantaged people to create social cooperatives, whose objective is not to generate profit but the professional and social re-integration of persons with minimal qualifications. Through EQUAL Barka is developing a new model of support structure (Social Economy Centre) and providing education to both social entrepreneurs and local administrators in order to create a

Second Chance

Second Chance, in Germany, has helped social integration and training firms working in the electronic recycling sector to maintain their position on the market providing them with an impressive range of practical tools and solutions for companies needing to re-organise. The method used was to involve users implicitly in the production of tools, which are therefore very easy to use as they have had a lot of ‘running in’ under real conditions. Other projects have tested innovative models of collaboration between social firms and public authorities and have promoted the presence of WISEs in new and growing economic sectors (environment, tourism, etc).

Questions for discussion

  • What are the benefits of WISEs?
  • What are the main features of successful legal and fiscal frameworks?
  • How to create the right conditions to ensure fair competition, even if this requires tax-relief, subsidies or some other tools?
  • Social clauses in public procurement can be an important development factor for WISEs: what is the role of contracting authorities and how to measure public benefit?
  • What are the economic sectors in which WISEs have a greater development potential?
  • Is support and networking a key factor to make social enterprises viable and sustainable?

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