Social enterprises can offer the long-term unemployed an exit from the vicious circle of inactivity, France is showing.
For decades now, under the pressures of globalisation and technological change, advanced economies have been confronted with many social shocks. Among them are the emergence of the working poor and the long-term unemployed, rising poverty and inequality, job insecurity for young people and vulnerability for single mothers and their children.
Existing unemployment mechanisms, such as the dole, can no longer cope. Things have to be done differently. We need radically to rethink how to address the problem.
Structural obstacles
Take France: every year France spends €40 billion on unemployment benefits but this has not enabled the country to come to grips with long-term unemployment. In 2021 no fewer than 1.5 million people had been jobless for a year or more.
Most of them face structural obstacles which prevent them returning to permanent work. Some lack mobility: buying and maintaining a car and filling the petrol tank are expensive and public transport is limited. Childcare or care for a loved one requires a time commitment incompatible with business hours. Health and disability are major obstacles. Many lack the skills required. And many face discrimination—according to gender, ethnicity and so on.
The plunge into long-term unemployment is often preceded by a life accident, such as the death of a loved one or a divorce. This creates a vicious circle which shatters self-confidence and limits the prospects for a rebound, with many falling into poverty. Even if the economy reaches notionally full employment this does not help, as the long-term unemployed do not even participate in the job market and employers look elsewhere to recruit.
Social enterprise
France is experimenting with a way of tackling this long-term unemployment. The Territoires zéro chômeur de longue durée (territories with zero long-term unemployment) pursue a French tradition of solidarity based on grassroots mobilisation.
The idea is fairly simple: small municipalities (up to 10,000 inhabitants) identify those who are permanently out of the labour market. Their skills are cross-referenced with the town’s needs and appropriate activities—which do not compete with existing service providers—are developed. These are organised through an entreprise à but d’emploi (job-creation company), a special social enterprise which converts beneficiaries’ unemployment benefits into the minimum wage.
This is not a top-down experiment ‘for’ the people but rather one ‘with’ them: the long-term unemployed participate fully in the development of the project in their town, along with other local actors (inhabitants, companies, elected officials and so on). A permanent job contract is offered to individuals who, on average, had been out of work for almost five years. Also, on average, close to 25 per cent have some sort of disability. Contradicting the stereotype of the ‘lazy poor’, a large majority of the eligible unemployed volunteer to work for these companies.
The services provided address key challenges in the municipality—for example, accelerating the green transition, improving food security (as through horticulture and market gardening) and recycling, expanding local services, offering alternatives for the mobility-challenged and, in some cases, ‘reshoring’ industrial activities. This is not charity: turnover generated by the social enterprise, supplementing unemployment benefits, covers the cost of the initiative.
Successful pioneers
Ten French towns have successfully pioneered the concept since 2017. So far, about 2,000 long-term unemployed have found a job in these companies and the experiment has helped an additional 1,000 to find work in the conventional labour market.
But this is just a start. Building on this success, in 2020 a second law gradually certified another 40 municipalities to implement the experiment, and a third law is expected to scale up the initiative once more in 2026.
Belgium will start experimenting in about 20 municipalities. Rome will join in, while Austria is piloting a similar concept in a small town near Vienna and Groningen, in the Netherlands, is testing a ‘basic jobs’ programme.
Political will
Other countries are showing interest. Perhaps, in the not-too-distant future, emerging economies and developing countries will follow suit, with more effective delivery of social protection for their unemployed.
Traditional unemployment mechanisms are no longer fit for purpose. We need a new way to support those who have been left out of the dizzying transformations of recent decades.
France shows, that in the 21stcentury, we have the resources and mechanisms to deal with long-term unemployment. The main ingredient lacking is political will.
Laurent Grandguillaume, a former French MP, sponsored the first law to launch this social experiment. He is president of the association Territoires zéro chômeur de longue durée.
Niels Planel is a founder and vice-president of EBE 21, a job-creation company, and a visiting professor at Sciences Po Paris.