Pillar 2: Entrepreneurship New jobs in the Third Sector

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Pillar 2: Entrepreneurship
New jobs in the Third Sector (the social economy)

At least 1000 ADAPT projects, and 2000 EMPLOYMENT projects are concerned to some degree with new jobs and activities, and more than 600 have been actively working on the potential of the third sector (also referred to as the third system, social economy or solidarity economy). The Initiatives’ European Thematic Focus Group on New Jobs and the Social Economy identified the three key contributions of the third sector: it meets otherwise unsatisfied demand for ‘quality of life’ services, it creates job opportunities for those most at risk in the labour market, and it can provide more gradual pathways into completely open employment. EMPLOYMENT and ADAPT projects dealing with the third sector frequently approach it differently. EMPLOYMENT projects generally start from the objective of providing employment, activity or training for specific, often vulnerable groups. ADAPT projects generally approach the third sector as a potential creator of part or full-time jobs, and see its emergence as one of the ways in which the economy is changing. Both approaches recognise the importance of the third sector in integrating vulnerable groups into employment, creating a mixed economy of welfare and social services, and satisfying unmet demand for local social or environmental services.

Key messages

  • Third sector activities and business provide important stepping-stones to employability and jobs for many vulnerable groups.

  • Sustainable third sector businesses are an important aspect of economic growth, and depend on complex public/private relationships and special financing arrangements.

  • The business environment in which they operate needs to be both adapted and supported by appropriate structures and networks.

  • The quality of management, staff and the products and services provided by third sector businesses ultimately determine their success, and they need special help achieving competitive levels.

Guideline 12 of the 1999 European Employment Strategy identifies the need to intensify the creation of social economy enterprises, giving priority to the creation of economically sustainable jobs meeting unsatisfied needs rather than to the creation of a secondary labour market aiming at integrating people with difficulties. This sector of activity is variously described as third sector and the social economy. It is understood to encompass activities at a local level undertaken by organisations or enterprises, which reflect social as well as business values and concerns. These include organisations set up to provide training, activity and employment for vulnerable groups, companies run on a not for profit basis, workers co-operatives, social co-operatives, insertion enterprises and other forms of undertaking with a high degree of participation or mutuality.
In response to this and other guidelines relating to job and business creation, Member States’ responses in their National Employment Action Plans (NAPs) have reflected the emphasis placed by the Commission on 19 employment-intensive domains of activity with high job-creation potential. These place a strong emphasis on activities, which fall into the third sector’s portfolio including environmentally related services and neighbourhood services.
The NAPs strongly underline two main trends in the service sector, both of which show something of the current growth of activity in the third sector, and interest in it:

  • the growth of services geared towards unsatisfied social needs (health and care sectors, domestic services) in Belgium, Germany, France, Luxembourg, Netherlands and Austria;

  • the growth of local development activity in isolated areas and those severely affected by unemployment in Greece, Spain, Portugal, Finland and the United Kingdom.

After a long period of slow growth, the social economy has risen significantly in the public agenda of Member States in the last few years. It is now estimated to provide over five per cent of all jobs.

Job growth has arisen from reforms of welfare provision, from the focus on enterprise creation in new job sectors and from a growing commitment to job integration for vulnerable groups. A new legal status for social economy enterprises is being created in Portugal and Spain. Other Member States, including Belgium, Ireland, Finland, France, Greece and Italy, are extending support for the social economy and creating financial or other incentives for social enterprises benefiting unemployed groups.

The third sector expands as a result of a complex mixture of objectives and approaches. Some third sector enterprises exist to create jobs for specific groups and individuals who are vulnerable on the labour market. Their provision of socially useful services offers a context for employment, which attracts support from the public sector, provides a strong sense of relevance and motivation to participants, and has both economic and social benefit. Others are simply businesses, normally with democratic or mutual structures, addressing unmet need as a means of creating employment. ADAPT and EMPLOYMENT cover the whole spectrum of this work and point clearly to the defining issues which will determine the growth and the effectiveness of the complex mix of social and employment activities which characterise the third sector. Successful third sector developments reflect three key objectives:

  • upgrading the employability of specific groups;

  • developing sustainable social firms;

  • adapting the business environment.

Most projects have been concerned with all of these objectives, albeit with different emphases reflecting more client-centred than market-centred starting points in EMPLOYMENT as opposed to ADAPT projects, different stages of social enterprise development and different cultures and stages of development in policy and business environments. Key lessons are to be drawn in respect of each of them, and from three key practical areas of importance to all projects and activities in this field:

  • the special training of managers and workers;

  • the development of quality standards;

  • the development and consolidation of structures and networks to assist start-up and growth.

Project numbers indicated in the following sections refer to the European project data base.

Upgrading employability via the third sector

  • Third sector activities have been shown to be successful in providing stepping-stones to employability. The nature of the work they offer raises motivation, provides highly relevant work experience for vulnerable groups, and a training ground for workers with low or limited skills. It commonly improves their progress towards open employment by providing them with fresh experiences of guidance, support and training. There are many examples of this use of third sector work and the nature of the work is well explored. The lessons to be learned are in the training, support, management and socialisation activities, and in the relationships with both grant-providers and business clients and partners.

  • Many third sector projects have delivered their objectives by adopting a triple strategy: gradually re-skilling and re-socialising their workers by training them for new types of jobs demanding relatively low levels of skill, giving people the opportunity to use group dynamics to create new activities and opportunities for self-employment, and creating part-supported rather than sheltered jobs. This process of transnational partnerships have enabled projects to examine and validate their work by conducting joint studies, guides to good practice and a series of training handbooks on supported jobs (RELAIS: HH-1995-Ukgb-054 & H-1997-UKgb-501); activity creation and self-employment (ILLETECH: I-1997-F-674); substance abusers computer training; creation of part-supported jobs (MARIENTHAL: H-1997-D-546 & 692).

Developing sustainable social firms

  • Sustainability for third sector activities and businesses depends on their continuing ability to meet their combination of economic and social goals. A key aspect of this is good management. Sharing good practice is often difficult, especially in contexts where organisations may feel themselves to be in competition for public-sector support. The Ukgb ERMIS project has tackled this issue by establishing a "UK social firms support group" to support the development of social firms. Practical support and technical assistance, information and guidance through seminars, dissemination of materials on employment and enterprise development are all offered (HH-1995-Ukgb-057).

  • Sustainability is enhanced by generating a share of the turnover through the sale of goods and services in the open market. In areas where the climate is favourable to the subcontracting of public services to autonomous agencies, social enterprises have been able to devote part of their activities to open market trading in sectors like construction, hotel and catering, open space maintenance. On the business side, third sector enterprises can only flourish in a climate where public sector tasks are being devolved to alternative structures.

  • Creating sustainable jobs presents a different challenge in different economic sectors. Initiatives projects. Initiatives projects have tested the potential of a wide range of services and activities in the environmental sector, especially in relation to recycling as in the Austrian project Ecoprofi (HD-1995-A-007) when new standards and expectations have created new demand. Also, projects have been able to develop local partnership approaches to the development of a specific sector to respond to the developmental needs of the area.

  • The growth of the third sector depends on how relationships between the public and private sectors evolve. A key issue is the ability of third sector enterprises and their public sector supporters to evolve from the grant maker-grant recipient relationship to that of client-provider. Encouraged by the Sunflower project, the Dublin City Corporation has developed a waste management strategy that will set up a number of local recycling plants with local employment potential rather than a central plant (HD-1995-IRL-024). The point at which third sector enterprises cease to be privileged grant recipients and are obliged to compete on the open market for contracts can be a defining moment when their original social objectives may prove difficult to maintain.

  • Certain regulatory environments favour a business orientation. The pursuit of company survival and growth can be assisted by tailor-made assistance. This is the case of social integration enterprises in Germany (Soziale Integrationsbetriebe) that seeks to employ people with disabilities. The MARIENTHAL project (H-1997-D-546 & 692) developed quality management advice and training for this type of social firms to give them the capacity to sustain jobs for this vulnerable group.

Adapting the business environment

  • Many of the key lessons in the creation of third sector businesses lie in the approaches that have been taken to bringing new institutions and individual participants into partnership processes that anchor the development of these enterprises in local or national dynamics for economic and social development.

  • The viability of social enterprises is enhanced by an effective mobilisation of local public and private actors in support of their development. It ensures that any local asset can be brought into play to ensure the enterprises’ viability. The SERVCOOP project (I-1997-IT-637) has mobilised a wide range of local actors to anchor three new social enterprises in the social and economic dynamics of the town of Arese in Lombardia. Similarly in Belgium, the Réseau Bruxellois de Soutien à la Création d’Entreprises avec des Femmes (I-1997-Bfr-553) operates as a local development agency to mobilise relevant agencies in supporting social enterprises. Other advantages and support have been provided by the creation of a social enterprise zone underpinning the establishment of a social enterprise incubator in Wallonia (HD-1995-Bfr-012 & I-Bfr-1997-529). These and other similar examples strongly confirmed that creating partnerships with other local enterprises is essential as third sector businesses mature and become more important players in the open economy.

  • Partnership with both the public and the private sector has been used to assure essential support services for social enterprises. These include specialised training centres like that set up by the Italian League of Co-operatives' training institute, a national agency, adds a vital competitive edge to social co-operatives making use of it (HD-1995-IT-017). The same centre provides other vital services including research and development support, help with market research, financial engineering and product and service development. It also promotes the sector as a whole through new school-enterprise training models, special training workshops for people with mentally disabilities, and models of training pathways and codes of conduct for staff working alongside disadvantaged or disabled people.

Specific training for third sector managers and staff

  • The training of trainers, managers and workers in social enterprises has largely been confined to Member States where the third sector is already organised in powerful networks. New job profiles for trainer- managers and trainer-operators have been developed in ADAPT projects in Belgium (French-speaking and Flemish communities), France and Italy. Many EMPLOYMENT projects have created new job profiles for workers in social enterprises such as the work placement personnel and social manager profiles developed by the Finnish COPE project (HH-1995-FIN-009). In ADAPT, new ICT-based training materials have been developed for workers and managers, by French, Spanish and Italian projects. The HAVIVA transnational partnership pioneered a new ‘study circle’ methodology, initiated by the Swedish partner, to improve workers involvement in enterprise training. (A-1995-ESP-098) In Ireland a diploma for social entrepreneurs has been created which will begin the process of institutionalising and structuring training for managers in the third sector (HD-1995-IRL-011) and other projects have focused on improvements in the content and delivery of in-service programmes.

  • In social enterprises, ICT-based training is still the exception. However, a few projects have shown that access to ICT training is becoming essential to increase the chances of employment of vulnerable groups. Even when the learning is at introductory level, it can help low qualified people to obtain jobs. ICT skills offered in a working context have been shown to be particularly effective with those for whom classroom learning is not successful. Similar good results have been shown in ADAPT projects in Germany and France, where ICT training has been provided for poorly-qualified workers who would normally not be offered it. Project experience from France, Italy and Belgium has confirmed that the introduction of ICTs to the third sector workplace needs to be undertaken on an organised and professional basis.

  • The introduction of ICTs is not simply an opportunity for the employees of third sector enterprises. It is also a major commercial issue for the businesses themselves. The social economy does not yet widely capitalise on opportunities presented by the information and communication technologies. However, although a number of projects recognise it as an important element in their growth strategies, Swedish ADAPT projects are using them to train new workers, and entrepreneurs in the start-up phase.

The key importance of quality

  • Quality of work and quality of service ultimately determine the market success or failure of third sector enterprises. ADAPT and EMPLOYMENT projects have been active in ensuring quality in management, in the production of goods and services, in induction and training, and in the creation of sustainable employment. Transnational co-operation between projects has enabled partners to collaborate to produce common training programmes using best practice from different countries to improve quality and market credibility. Quality management in social enterprises obliges managers to balance social aims and economic viability. Typically, this has meant reinforcing the strengths of social enterprises, like their participative management, their use of networking, and their integration of social objectives, and adding the essentials of modern enterprise culture - business plans, new work organisation strategies, skills assessment tools, mentoring, quality standards, and customer-oriented production.

  • Also important has been clarifying the rules of engagement in open competition where services have been brought to the open market. In the process, new recognised qualifications and occupational profiles have been created (ADAPT in ESP, F, P, Bfr, IT). In EMPLOYMENT projects the emphasis has often been to help managers cope with regulatory frameworks, of which the guide for managers developed by IS.FOR is a typical example (HD-1995-IT-017).

  • Some social enterprises have taken advantage of the Initiatives to develop and apply specific quality standards to key aspects of their work and organisation. This can be done in a number of ways.

One is by using or adapting existing quality standards. One transnational partnership finds that it has improved motivation in social firms employing people with disabilities by applying the UK Investors in People quality standard to their personnel management (HH-1995-Ukgb-054 & H-1997-UKgb-501).

Another is by devising standards specific to the third sector. A group of French, Belgian and Spanish projects have developed a charter for the social economy which is used as a learning tool and is being countersigned by a growing number of social enterprises across Europe (HD-1995-F-005 & I-1997-F-668).
Quality developments have sometimes been recognised by changes in the regulatory environment. Spanish and Portuguese project networks have sought to improve the laws and regulations affecting them, producing joint examples of projects operating successfully under existing legislation (HD-1995-F-005 & I-1997-F-668). They contributed to the public debate on the added value of the social economy. Plans for more favourable regulatory frameworks are now part of the National Employment Plans for 1999.
New structures and networks to support growth

  • There is no single model for the structures and networks, which can underpin the development of the third sector. EMPLOYMENT and ADAPT projects, as well as other studies and initiatives conducted by the European Commission and Member States, have confirmed that the third sector develops locally. Therefore the most valuable lessons are those which can be divined from contrasting local approaches to building structures of support and co-operation. Networks and support structures have objectives as wide as accelerating movement into open employment, improving social enterprises’ management and training, and promoting the growth of the sector as a whole. Regional support networks have promoted equal opportunity for women and young people to start up social enterprises as in the case of the Spanish promoter FVECTA (N-1997-ESP-615 and Y-1997-ESP-523)

  • Wider social economy networks have been created at national and transnational level in Spain, France, Italy and Belgium in liaison with the European ARIES network. Networks set up or developed in the Initiatives have often arisen from the need to share information on regulatory issues essential to third sector survival, around activities like the development of management or product quality standards, new IT-based marketing techniques and the creation of new sources of risk capital: personnel management standards (HH-1995-Ukgb-054 & H-1997-UKgb-501); cross border finance co-operative (HD-1995-F-005 & I-1997-F-668). Other network have a special focus such as those in the UK and in Italy that develop direct co-operation between training providers and social co-operatives’ sector. In a transnational context, focus on a target group can bring dividends as with the Confederation of European Social Firms that arose from a transnational partnership approach to the employment of people with disabilities. (H-1997-D-546 & 692). It offers social firms support services in Italy, Germany and the UK and promotes a positive climate for the third sector via research and high-level dissemination activities.

  • These structures need to include viable sources of finance. New kinds of investment trusts geared to the social or solidarity economy, including the creation of innovative forms of micro-credit tapping into local savings, appeal to those concerned with ethical investment and are additional to existing sources of risk capital for SMEs in general. The French HORIZON 2001project (HD-1995-F-005 & I-1997-F-668) has been developing such local sources of finance for the third sector, combined with consultancy, tutoring during the start-up phase, the development of social enterprises as business consultants, the creation of commercial and support networks, and the location of consultancy services outside the third sector. Moving towards a more business-orientation is a concern of established social enterprises that seek to consolidate their autonomy and expand their business activities to ensure better sustainability. Creating enterprises operating on the open market (e.g. hotel and catering, open space maintenance..) that can employ people with disabilities has been successful in a number of projects. This has required particular attention to the quality of management, marketing techniques and innovative personnel management.


  • Local and regional government is beginning to acknowledge the contribution of the third sector. One example is the impact of the HORIZON transnational partnership based on the MARIENTHAL network of social enterprises, employing people with disabilities, which has created a consultancy and development consortia ‘Social Firms Europe’. The land of North Rhine-Westphalia is now considering the possibility of offering on-going support to the network.

  • Third sector’s efforts in upgrading the employability of vulnerable groups can have an impact on the flexibility of qualification systems. In Austria, third sector projects have specifically addressed the issue of low skill levels in the sector and created some new recognised qualifications for workers.

  • Training providers need to adapt to the needs of the third sector; In Ireland, the experience of A&E third sector projects has been used in submissions to various policy for a including the Sub-Committee on the Social Economy and Social Enterprises. A new two-year Diploma for Social Entrepreneurs, developed through INTEGRA, has gained national recognition.



Upgrading employability
Qualitäts- und Prozessmanagement im Kurwesen: A-1997-D-851

Mona Lisa: HH-1995-A-001

Abbey Sense Garden: HH-1995-IRL-044

RELAIS: HH-1995-Ukgb-054 & H-1997-UKgb-501

FREE: H-1997-S-510

FAIR WIND: H-1997-S-523

Marienthal: H-1997-D-546 & 692

DEVOTE: N-1995-FIN-009

Marier l'économique et le social: HD-1995-Bfr-012 & I-1997-Bfr-529

Financement d’activités de groupes solidaires (ADIE): I-1997-F-614

ILLETECH: I-1997-F-674

Ung I Parken: Y-1997-DK-512

Developing sustainable firms
ERMIS: HH-1995-Ukgb-057

Pan Pan Theatre Company: HH-1995-IRL-034

Marienthal: H-1997-D-546 & 692

FAIR WIND: H-1997-S-523

AIRE: N-1997-ESP-682

Ecoprofi: HD-1995-A-007

Caravan Repair: HD-1995-IRL-002

Sunflower: HD-1995-IRL-024

Retrieco (recyclage d’éléments informatiques): I-1997-Bfr-541

HORIZON 2001: HD-1995-F-005 & I-1997-F-668

Marier l'économique et le social: HD-1995-Bfr-012 & I-1997-Bfr-529

Adapting the business environment

Strawberry Field: HD-1995-IT-017

SERVCOOP: I-1997-IT-637

Réseau bruxellois de soutien à la création d’entreprises avec des femmes: I-1997-Bfr-553

Marier l'économique et le social: HD-1995-Bfr-012 & I-1997-Bfr-529

Specific training for third sector managers and staff

Transnational partnership "HAVIVA": A-1995-ESP-098

ASTRA: A-1995-ESP-083

Pilotage de la reconversion d'un ancien charbonnage en zoning d'économie rurale: A-1997-Bfr-506

Social enterprise managers: A-1997-IT-595

COPE: HH-1995-FIN-009

Forum Agenda: H-1997-A-507

Diploma for social entrepreneurs: HD-1995-IRL-011

Financement d’activités de groupes solidaires (ADIE): I-1997-F-614

The key importance of quality

ASTER: A-1995-ESP-049 & 083

ATENEA: A-1995-FIN-008

Strawberry Field: HD-1995-IT-017

RELAIS: HD-1995-Ukgb-054 & H-1997-UKgb-501

HORIZON 2001: HD-1995-F-005 & I-1997-F-668

New structures and networks to support growth

FVECTA: N-1997-ESP-615 and Y-1997-ESP-523

Marienthal: H-1997-D-546 & 692

HORIZON 2001: HD-1995-F-005 & I-1997-F-668

RELAIS: HD-1995-Ukgb-054 & H-1997-UKgb-501

"Social Enterprises and the Social Economy" Case studies from the EMPLOYMENT Initiative in Ireland, WRC Social and Economic Consultants Ltd, Dublin 1999
"La création d'activités", Racine, Paris 1999

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