International insights into job creation in the social economy

Briefing paper 97 (May 2013)

There has been much political interest in the role of the social economy, or third sector, in providing jobs and supporting vulnerable people into the workforce.

Although SEOs make a significant contribution to employment, jobs in the social economy are often precarious and low paid. Many SEOs, particularly those employing vulnerable people, operated in sectors where pay was low, and competition with private sector organisations was pushing them to reduce costs. Organisations found job security, career progression and adequate pay hard to deliver.

This report is based on international research produced for the OECD. It studied 655 social economy organisations (SEOs) across 8 countries, looking at their contribution to job creation, quality of employment, and role in working with vulnerable groups. The term ‘social economy’ is not widely used in the UK, but is broadly comparable with the third sector and includes social enterprises, cooperatives and associations. Organisations included those working in sectors such as social assistance, education, work integration, culture and recreation.

Governments play a pivotal role in financing many of these organisations, and therefore affecting conditions and services. Drawing upon data from the survey and our wider knowledge of employment in the social economy, we outline how policy makers might enhance the role of the social economy in providing quality employment for disadvantaged workers.

Social clauses can help ensure that social as well as economic value is taken into account when commissioning, but the cost of creating this additional social value must be considered. Social clauses must be coupled with a commitment to meet the full cost of fulfilling contracts.

Heather Buckingham and Simon Teasdale