The rise of employment motivated social enterprise

Mark Daniels's picture

The idea of the market being used to fix the problems society creates is social policy nirvana. But in reality it's not that simple. Mark Daniels looks at how social enterprise works for the long-term unemployed.

Social enterprise is a new brand for something that has been occurring for hundreds of years. It is a name given to organisations that trade to achieve social goals, that deliver a public benefit and use the majority of their profits to support their mission.

Research released by QUT and Social Traders in 2010 indicated that there are between 15,000 and 20,000 social enterprises in Australia operating in every industry. They range from consumer cooperatives and charitable business arms through to community buy-outs and businesses set up to employ people with disabilities.

At the same time as the term social enterprise came into being  in the late 1990’s we started to see the emergence of social enterprises designed to move the long term unemployed back into the labour market and the two have become synonymous. Fortuitously, the political and entrepreneurial interest in employment motivated social enterprise has created momentum for the broader social enterprise movement.

There is a certain attraction attached to the idea of social enterprises that deliver employment outcomes for marginalised groups using the marketplace to earn their income.

Its social policy nirvana really - the market being used to fix the problems society creates. Ofcourse, it’s not that simple. Social enterprises are challenging to run both operationally and financially, and on the whole it’s  easier to get a grant and run a program. But programs end when the funding ends and social enterprises don’t.

The rise of this form of social enterprise is a response to the failure of the universal employment system run by the Federal Government to deliver outcomes for the long term unemployed and marginalised job seekers.  Many of these social enterprises are operated by not-for-profit organisations with contracts to deliver employment services to mainstream unemployed and those with disabilities. These organisations see better than any, the need for different models to support the long term unemployed and marginalized into the labour market.

I ran a number of employment motivated social enterprises for the Brotherhood of St Laurence (BSL) in Melbourne in the noughties. The social enterprises took people that were long term unemployed and wanted to work, but lacked the skills and work history to obtain a job, and employed them for 12 months in a social enterprise where they completed a nationally accredited qualification, developed 12 months work history in a supportive workplace and were assisted to obtain a job in the open labour market. The social enterprises operated in commercial cleaning, street cleaning, landscaping and customer service. When BSL evaluated the model in 2007 they found that 80 percent of those that started in the social enterprise went on to successfully obtain work in the open labour market when they exited. The number of people moving through the social enterprises ranged from 20-40 per year, people predominantly excluded from employment. The effectiveness of the social model was outstanding.

As a business did it meet the needs of the customer? This question is just as important as the performance of the social model. Without happy customers there is no business.  Of the social enterprises that I managed, two businesses kept the customer very happy and were cash positive, one was cash positive but some customers were dissatisfied and the other ran a deficit but had happy customers. Developing a successful business that can deliver the social goal often gets forgotten in the romance of social enterprise.  Sometimes it is best to deliver a reduced social outcome in order to have a sustainable social enterprise.

And perhaps we should be looking at the need that social enterprises are addressing in the universal employment system and understand how to grow and scale the impact of these organisations to benefit the many others excluded from employment in the Australian labour market


Mark Daniels was appointed Social Traders Manager Policy and Development in 2008. He has wide ranging experience in service delivery, advocacy and policy development. Prior to Social Traders, Mark worked with the Brotherhood of St Laurence managing a number of social enterprises aimed at assisting people into mainstream employment as well as providing expertise to other agencies looking to establish social enterprise. Mark has extensive experience developing policy and community development activities for public housing estates in inner city Melbourne. Mark is a Director on the Board of Yarra Community Housing.