Basta (Tivoli)

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How can the social economy contribute to local development?

Tivoli, 5-6 December 2006

Report of Workshop C - No one left behind

Presenter: Alec Carlberg. Case study: Sven Bartilsson

How to widen the local labour market integrating the most disadvantaged

See also: Basta

Contents

Summary

The social enterprise Basta has shown that social economy can play a decisive role for a vulnerable group by creating employment and ways for integration by building a structure based on empowerment. A socio-economic report calculates a socio-economic gain of around €100,000 per co-worker, mainly generated from reductions in expenses caused by marginalisation. Basta has shown that it is possible to replicate a success of social enterprise in a new region. If this knowledge is going to be widespread there has to be a recognition of the social enterprises at the highest levels in the EC and followed by policies in many policy areas at both European and national level.

The problem

Despite the high growth rate in the Swedish economy the last few years (4.1% in 2006) and the fact that corporate earnings have been unusually good, the situation for the 800,000 people excluded from the labour market has not changed much. The unemployment rate in September 2006 was “only” 4.6%. The old government has not appeared to be successful in their employment policy. Over and above the 4.6% declared unemployed, another 2.4% are subject to employment policy measures. In total, this is 370,000 people. A further 350,000 people under 60 years old are granted an early retirement pension due to sickness or disability, another 100,000 are on long-term sick-leave (over a year) and 26,000 people were in prison or in care for drug rehabilitation.

In this situation it is for former drug abusers and criminals very difficult to get jobs - almost impossible. There are more than 30,000 drug abusers in Sweden, of whom the majority lack an earning of income. Crimes are committed to finance drugs. 58% of the 13,000 people that every year are put into prison in Sweden are drug abusers. Of those who leave prison, 70% have no work or placement in education. 20% have no permanent address.

To rehabilitate drug abusers and criminals is thus an industry, an industry with limited effect since the majority returns to a life of drugs and crime.

The number of social enterprises with the primary aim of integrating people that are excluded from the labour market and that are founded on the active involvement of the co-workers is low in Sweden in spite of the fact that 5-6% of total companies is within the social economy. In Western Sweden only 30 of the enterprises in the Social economy, employing 500 co-workers, are the social enterprise with the primary aim of integrating people. Of these 500 employees, only 20-25% have their main income from a salaried employment. The main income of the others is sickness pension, sickness benefit or a small allowance. But for most of these people the long-term aim is to progress from benefits to salary.

Social entrepreneurship is growing but it is still very invisible. But Basta has been an exception. It started in 1994 and currently has 100 employees, nearly all of whom have been drug abusers.

There are many actors including Basta itself that would like to see more successful social enterprises as Basta. But for the creation of a successful social cooperative like Basta there need to come up more entrepreneurs. These need to have or develop the right skills to run the enterprises. They normally need network to access the right resources and to market. They need premises and equipment to start the business and this demands capital. To get all these factors in place there must be suitable methods and support.

Good practice from EQUAL

Objectives of Basta and the partnership

In cooperation between Folksam (a leading Swedish insurance-company), the University of Lund and the non for-profit organization FUNK, Basta Arbetskooperativ in the spring of 2001 applied for Equal financing to the project Empowerment For the Future. The overall objective for the EFF project was to create possibilities for vulnerable groups to gain power and empowerment. Basta is primarily about leaving your drug abuse behind you and create your own way of supporting yourself through work. The platform for this is the social enterprise. It is the belonging to a group and the empowerment it provides that enables you to change yourself to such a degree, that you are able to take responsibility for yourself, your work and not the least for the common enterprise. Thus, it is also about becoming an entrepreneur. Basta is registered as a non-profit association. The turnover is 2,5 Million Euro.

To Basta you arrive as an apprentice. The stay is paid by social welfare departments of local governments and by the National Prisons and Probation Administration (NPPA). They make a contract for one year.

During 2005, sixtyfive per cent of the apprentices were not paid for by public sector institutions. They had stayed and worked there for more than the first year. This figure will increase as more people choose to settle at Basta. Fifty per cent of Basta’s turnover are generated from the public sector.

Today, Basta has twelve semi-independent units – finance and administration, canteen, vocational education, construction, gardening, agriculture, horse breeding, dog-hostel, carpentry, insulation of buildings, graffiti removal and rehabilitation. Eleven of these are headed by persons who have been heavily addicted to drugs.

The objectives of the project and the Equal development partnership was intended to be reached via three sub-projects:

  • the start and running of a vocational and entrepreneurial education (Yes-school)
  • the start of a social enterprise in West Sweden, Basta Väst as a replica to Basta Arbetskooperativ
  • the evelopment of a new transnational education at university level, European Certificate in Community Enterprise.

All these three goals were achieved. The YES-school is today a one year vocational traning in upper secondary school mixing school drop outs with adults who earlier been either drug abusers or long term unemployed. At the University of Lund social enterprise is included in their range of courses, mixing student, becoming social workers, with persons who earelier been socially marginalized.

The replication of Basta

During the project period, a new social enterprise, Basta Väst (Basta West), has been developed. It is now a company employing 20 people, and has grown from a starting point of only five people.

They work in maintenance and the cleaning of train coaches, demolition work and carries out other work for a local construction company.

The replication included the appearance of an entrepreneur, the transfer of know how from Basta to entrepreneurs in West Sweden and establishing relations with local actors including City of Göteborg.

The solution of on financial capital and the building of a trustful relation between the original site and the new was to make Basta Väst to a subsidiary of Basta Arbetskooperativ, and that the leaders of Basta Väst became members of Basta Arbetskooperativ and its board. Both Basta and Basta West are settled in a local community in a rural district. An hour’s drive from a major city by car. In these areas these two companies have a great impact on local trade and industry.

Basta is a socio-economic efficient enterprise. Within the framework of NTG Equal Social Enterprise we have developed a method for socio-economic reporting. The calculation shows that the socio-economic gain of Basta and Basta Väst each year is around 9,000,000 Euro. It means a gain of around 100,000 Euro per co-worker. These gains are generated from reductions in expenses for social care, correctional treatment, thefts, insurance expenses and increased tax payments.

Basta Väst makes a difference! in the drug abuser group and in the local development and is a good investment to reduce costs for the society.

Lessons for future development

The analysis and discussion of the case during the workshop at Tivoli revealed the following factors and qualities that needed to be included in project design and taken into account while developing social economy or working with social enterprises in local development.

  • The failure is the starting point: The failure to solve the needs of the local people or the discrimination of a group is the cause for the emergence of social enterprises. The demand is expressed by the unsatisfied community. The innovative part is to design new ways of supplying the services. The challenge is to have politicians, authorities and helpers that don’t create solutions based on their assumptions and interpretations of the demand.
  • Power to the group: Basta is a good example of the importance that the group that has the “pain” is in power of the project or the enterprise. There need to be management systems that ensures that the power remain in the control of the target group. Without the democracy they couldn’t succeed to break the marginalisation.
A requisite to reach social goals as empowerment and motivation is that the participation is of one's own free will.
  • A social enterprise is a business: There is a need for entrepreneurship to create and maintain social enterprises. There must be persons with entrepreneurial skills involved. Normally social enterprises interact to little with traditional business sector where know-how and business opportunities could be reached. For Basta as other successful social enterprises there is no ambivalence towards profit.
  • Support: In creating and developing social economy entities there is a need for support. In the case there was the transfer of know how from an existing enterprise. Another way, to make this more effective and bigger scale is to apply social franchising. There is also a need for specialised agencies giving tailored support to social enterprises with their dual goals.
  • Balance between social values and profit: The raison d’être for the social enterprise is the social aim but it can never reduce the demand for profitability so that long-term sustainability and development is threatened. There is a need for developing knowledge on management of this kind of enterprises. The division in the education system between business administration and social skills is an obstacle for the sector to have educated staff combining these fields
  • Credibility for social economy: The overall feeling is that social economy is not recognised and not credible. This has to be dealt with in two ways. The best performing social enterprises must be promoted in order to show the potential of social economy. This can be done in many ways; for example to have a quality brand. The social economy also has to measure the impact that their activities have for the society. This can be done by social reporting, as done at Basta.
  • Productivity compensation: A task for social economy is to create job for people thrown out from the labour market. Normally the social enterprise is competitive businesses. Due to the competition in the markets there is sometimes a need to fill the productivity gap related to individuals impaired function.

Policy recommendations

European level

  • Social enterprises and social economy is not an issue to be dealt with merely within employment policies. If the full potential of social enterprises and social economy shall be used in the achievement of the Lisbon Strategy there has to be a recognition on the highest levels in the EC and followed by policies in various areas such as enterprise, competition, education and social affairs.
  • In order to fulfil European strategies on job creation and inclusive labourmarket there is a need for European principles that inspires national strategies on funding the productivity gap so that social enterprises employing the most vulnerable can compete with companies with lower social aims. In a globalized economy the ones with reduced capacity for work get excluded. The social enterprises has shown their capacity to make everyone to a resource. This funding of the productivity gap should be done in a way that doesn’t divide the labour market or prevent the social enterprises to compete with regular companies and give proper salaries to the employees.
  • The growth of the sector is depending on the general attitudes towards social enterprises and the credibility of their performance. The development of social reporting could serve to improve the quality of the sector, prove that the social and economical benefit of the enterprises pays back the investment and helps to change attitudes among decision-makers. A quality mark or brand together with a yearly social economy prize on European level is examples on tools that could help to improve the recognition.

National level

At national level there is a need for measures that in the same way as suggested on European level coordinates different policy-areas as enterprise, employment, social, education and competition in order to create favourable conditions for development of social enterprises.

  • Within general education and training there has to be reforms for cross fertilisation between social and business skills. There is also a need for training-systems that provide the sector with people that has integrated social and business skills. Another group that need to understand entrepreneurship, and especially social entrepreneurship, is social workers, who have the task to assist people with integration. The absence of social economy in school and higher education is a difficulty for those interested in a stronger development of the social economy.
  • The promotion of social economy and social entrepreneurship is needed in almost all countries. This is more important than special regulations.
  • Project is an important source for “seed capital” to the development of social enterprises. In future this need to be more focused on sustainable businesses. It is also important to give priority to projects and businesses that build on real participation from the target groups. This priority must take into consideration that many groups have less opportunity to start development processes by themselves. The priority for participative initiatives should not be carried out so that the most vulnerable will receive less resource. To strengthen the bottom-up and participative perspectives, the final beneficiaries could take part at a much higher extent in policy-making and grant allocations.
  • Almost everyone understand the need of time and patience in the starting process of a social enterprise but programmes, support and financial structures are not yet designed by this understanding. The bureaucratic perspective is predominant over the entrepreneurial.

Local and regional level

  • The fact that there is a strong connection between social and economic local development has to get stronger attention in planning and policy making. The potential of social economy will then be more taken into consideration when planning local development is done in this way. Also innovative ways of supply services will have higher chance to break through barriers of tradition and stereotype thinking. In many countries this will be reinforced if social policy was changed towards more active forms.
  • Such changed planning process could also include joint planning between social economy organisations and public sector where the goals are shared.
  • Use systems to estimate and communicate the social value and impact of the social enterprises. It will legitimate support for social initiatives and strengthen the balance between profit and social values in social enterprises.
  • Encourage co-operation and networking between social and regular enterprises to raise the efficiency of social enterprises and to spread social values. This could go hand in hand with stronger relations among the social enterprises in order to maintain the social values and cooperate to become stronger in the market.
  • Establish accessible support organisations with competence to support development of excellent social enterprises. Let this be a part of a strategy where a culture and skills for self-employment are developed.