Wed | Jul 27, 2016

Social enterprises can fight joblessness, poverty

Published:Wednesday | March 27, 2013 | 12:00 AM
Dr André Haughton

 What is the employment situation?

THE DECREASE in the level of productivity in Jamaica is associated with an increase in the level of unemployment.

Data from the World Bank show that unemployment, as a percentage of the total labour force in Jamaica, fell from 11.7 per cent in 2003 to 9.4 per cent in 2007, but increased to approximately 11.4 per cent in 2009, and further increased to approximately 14 per cent in 2012.

This increase in the number of people who are unemployed will decrease income for families, which will definitely increase the likelihood of these families, or their next generations, becoming poor. Recent World Bank publication on poverty argues that more than one million persons in Jamaica are living on less than US$2.50 a day, placing them below the poverty line. This trend is expected to continue increasing if proper safety nets are not put in place to soften the blow of this economic crisis.

What are social safety nets?

Social safety nets are designed to help the poor escape poverty. In Jamaica, the traditional social safety net, for example, the Programme of Advancement Through Health and Education is in the form of 'handouts', the supply of food, clothing, shelter, or their cash equivalence, by Government organisations and to the perceived poor, which buffers against absolute poverty.

Some of the usual types of social safety nets are; cash transfers, food-based programmes, essential nutrients food supplements, food stamps, school fees and healthcare support. These safety nets can either be formal or informal. Formal is a direct-policy action, whereas informal are networks among the people themselves.

The relevance of such safety nets is to provide a way to survive, for those people without income, or for those people whose incomes are below certain levels. These, however, cannot sustain themselves in the long run since they are just handouts to people, without any intention of developing business ideas to generate income over time.

How much has been spent?

Grosh et al (2008) outlines that spending on social safety nets represents approximately between one and two per cent of total Gross Domestic Product (GDP) of developing and transitional economies.

Jamaica's GDP, based on 2010 estimates, is approximately $24 b, of which two per cent is approximately $480 million. Jamaica Social Investment Fund said it has spent more than J$9 billion, from the mid 90s to date. However, the most recent research on the impact of these intervention strategies (Assessment of Community Security and Transformation Programmes in Jamaica, UNDP 2009) reveals that these and other programmes were not effective and were unsustainable because they were not generating the expected social value and were primarily dependent on grant funding, which is not a reliable and sustainable source.

The country could have received more value for money if these monies were used to provide funding for sustainable social enterprises, which can maintain themselves and be transferred from one generation to the next, reducing the transfer of poverty.

What are social entrepreneurs and social enterprises?

Social entrepreneurs create groundbreaking solutions to the immediate social problems of a community by mobilising ideas, resources and social arrangements to facilitate sustainable social transformations.

Social entrepreneurship is about innovative market-oriented approaches, balanced by a passion to reduce social equality. Social enterprises created by social entrepreneurs are like regular enterprises. The main difference, however, is how profit is measured. Profit for a regular organisation is measured in absolute money terms, while social value created by social enterprises is measured by the ability of the social enterprise to reduce poverty in a particular community and increase the social welfare of the people who depend on the social enterprise.

It addresses more pertinent issues than just monetary profit, which is generally focused on improving the overall welfare of people. Dr Knife, Dr Densil Williams and I have been doing most of the research on social enterprises in Jamaica and other developing countries.

Why social entrepreneurs and enterprises?

Traditional enterprises focus on the creation and sustaining of profit. However, social entrepreneurship and enterprising focus on developing and maintaining businesses from which a community can engage production processes, generate a steady sustainable income and, most important, develop independence over time.

This process empowers community members to empower themselves. According to a report from the Harvard Business School, the number of social entrepreneurs and social enterprises has been increasing considerably worldwide and will continue to increase, as more people are becoming jobless and more will find themselves jobless in the near future.

The enthusiasm to own their own businesses, and possibly create employment for others, arises from the lack of jobs and the need to escape poverty.

Initiatives like the Skoll Foundation in England, the Social Enterprise UK, the Canadian Social Entrepreneurship Foundation and The Social Enterprise Council of Canada are pushing towards increased social entrepreneurship and social enterprises in their respective countries.

The aim of which is not just to provide employment, but also to increase the overall social contribution of these firms. Jamaica, too, must establish organisations designed to promote and facilitate social entrepreneurship and social enterprises, which will help to alleviate poverty in the country.

Dr André Haughton is a lecturer in the Department of Economics on the Mona campus of the University of the West Indies. Follow him on twitter @DrAndreHaughton; or email