More support needed for ‘social firms’

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European governments should do more to encourage disabled and disadvantaged people into the workforce, says Sally Reynolds, founder of Social Firms UK, but she warns that too much subsidisation can “kill the entrepreneurial spirit”.

Social firms create paid employment for people who might otherwise struggle to access the labour market, but the concept is relatively new in some quarters of Europe. According to Reynolds, there is currently no agreed definition of the term in Europe and support structures vary widely across the EU. 

In the UK, 25% of an enterprise’s labour force must be people with severe disadvantages, while several other European countries require 30% of staff to be drawn from that section of society. 

Reynolds wants broader support for social firms, including help in accessing potentially lucrative public procurement contracts and education initiatives, to encourage the public to buy from such enterprises. 

“I think social firms deserve more attention. We need more education about social firms, more publicity, and we also need to encourage national governments to intervene help the sector to grow,” she said. 

Financial support for social firms can be useful, but Reynolds is also conscious of the need to encourage a businesslike approach. 

“I think what we need is support and encouragement to develop social firms at national level but also to enable purchasing from social firms – to promote the fact that these are businesses, but businesses with social objectives,” she said. 

Too much subsidisation kills the entrepreneurial flare which is vital to the sustainability of those businesses. “If they get too complacent with subsidies, they are not really businesses,” Reynolds said. 

A broad range of support mechanisms are in place across Europe, with Finland offering salary subsidies for workers, the Czech Republic operating a quota system and the UK currently providing no such support. 

Financial backing for social firms, which could include the European Commission’s microfinance initiative, should be complemented by mentoring systems, according to the Social Firms UK founder. 

“Our experience over the years has been that good mentoring and support is essential in order to get the best value for public money and for the individuals involved,” she said. 

Reynolds was speaking to Jan Vitásek of EURACTIV.cz. 

To read the interview in full, please click here

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