October 25, 2016
Forward thinking by social enterprises has the potential for enormous impact on employment for marginalised and vulnerable Australians.
At around 6%, unemployment in Australia is not bad. However, unemployment of new migrants, indigenous Australians, youth, ex-offenders and people with disabilities is unacceptably high, ranging from 15% in some groups to over 50% in others.
Employment focussed social enterprises exist to solve this problem. Their purpose is to provide employment for people who would otherwise be marginalised from the workforce, and sustain themselves by trading in the market as regular businesses do. For example, the Big Issue employs people at risk of homelessness by selling magazines. Endeavour Packaging provides employment for people with disabilities by selling packaging solutions to companies. STREAT Café employs vulnerable young people by selling coffee.
Starting or growing a social enterprise with the purpose of generating employment is complex. It involves careful consideration of your employee group, the type of employment they are best suited to, and how best to support vulnerable people so they stay in employment. These are all important supply side factors.
The other – equally important – side of the equation is demand. For an employment focussed social enterprise to succeed, it needs to have customers for the product or service it is selling. And now, for the first time, Social Traders is beginning to understand where demand lies for social enterprises.
Launched in November 2015, Social Traders’ Connect platform matches corporate members wanting to procure socially with certified social enterprises. With thirteen corporate members each feeding us their demand for social procurement, a picture of where Australian business will pay for social outcomes is emerging.
As part of this new and unique service that links social enterprise to corporate contracts, Social Traders has observed demand in three categories; quick wins, substantial staples, and growth opportunities.
1. Quick wins
These are typically small spending amounts that carry little or no risk to the organisation if the procurement is unsatisfactory. Often, individual employees can select suppliers at their own discretion which means it can be relatively easy for social enterprises to become part of the supply chain this way, but equally they may not provide a reliable source of business.
Demand currently exists for social enterprises suppliers in the areas of; catering, floristry, and printing. Whilst the supply of social enterprise caterers is quite good in Melbourne, there is a noticeable gap in Sydney. In no major city can Social Traders meet the demand for social enterprise floristry.
2. Substantial staples
These are areas of larger spend for businesses and so can be harder for social enterprises to access, but represent sizeable and consistent opportunities. Cleaning, facilities maintenance, landscape maintenance, testing and tagging are categories where social enterprises are already well represented and will likely continue to operate.
Untapped opportunities exist for social enterprises in; security services, fleet management and travel services. These categories of spend are substantial in most corporate organisations, and are likely to remain constant or grow over time. Within each, there are job types that could suit a social enterprise workforce.
Opportunities also exist for social enterprises to supply basic stationery products. Enterprises seeking to supply large corporates may find their greatest opportunities lie in supplying specific product lines within major office supplier catalogues.
3. Growth opportunities
Infrastructure projects in Victoria and NSW (and elsewhere in Australia) represent enormous potential for social enterprises. In Victoria, the Level Crossing Removals, Metro Tunnel and Western Distributer projects alone represent over $25 billion of procurement spend over the next five years. All of these projects are mandated to include social enterprises in their supply chains, and a number of construction companies in the mix for this spend are members of Social Traders’ Connect platform.
The opportunity for social enterprises to become part of corporate Australia’s supply chain is enormous, with sizeable prospects for social enterprises in areas such as; traffic control, civil construction, and landscape construction. This in turn, presents great hope for marginalised Australians who are employed and supported through social enterprises.
Whilst these are just emerging as initial social enterprise procurement supply gaps, corporate demand for social enterprise is only likely to increase as business seeks to integrate more ethical supply chains and to play a more participatory role in strengthening community. The ongoing challenge for Australia’s social enterprise sector is to match this growing corporate demand with social enterprises that are able to fulfil contracts and thereby provide positive social benefits in the form of employment pathways for the marginalised and vulnerable.
Whilst there are currently an estimated 20,000 social enterprises in Australia, of which approximately one third focus on employment generation, the majority of these are relatively early-stage. The next ten years will be critical for employment focussed social enterprises if they are to match the demand from corporate and government buyers.
By 2025, Social Traders’ goal is to have 150 organisational buyer members of ST Connect spending $150 million per annum with 500 certified social enterprises. To realise this goal and steadily increase supply, now is the time to start preparing market with a sustainable pipeline of social enterprises.
Starting (or scaling) an employment generating social enterprise needn’t be without support, help or assistance, until the 31st October Social Traders is looking for enterprises to take into the Crunch Startup Accelerator and to include into its social investment Portfolio.
Building better social enterprises to create more social impact has never looked better.
Written by Lisa Boothby, Head of Enterprise Development, Social Traders