“Impact investing as a vital tool in tackling long-term unemployment: Social Venture Fund publishes a new report”
Today almost 3.2m people are long-term unemployed (i.e. out of work for more than 1 year) across France, Germany, Switzerland and the UK. Long-term unemployment has significant negative effects not only on income but also on health and social exclusion.
Long term unemployment causes both economic and social negative effects: prolonged alienation from the job market bears the risk of poverty and social exclusion also the longer a person is out of work the more difficult it is to find work.
Social Venture Fund, with contributions of other EVPA members (Bridges Venture, le Comptoir de l’Innovation, Esmée Fairbairn Foundation, Impetus – Private Equity Foundation and Phitrust Partenaires), assesses in its new report, how impact investing is being used to tackle long-term unemployment.
The study covers four selected countries – France, Germany, Switzerland and the UK – all within the Social Venture Fund’s investment scope, and where they see interesting impact investing opportunities in the medium-term.
Governments in these four countries spend on average 0.6% of GDP on active labour market policies in order to tackle long-term unemployment, but fiscal consolidation is seriously squeezing resources.
Due to their entrepreneurial approaches, the role of social enterprises has been reinforced in all four countries. The report identifies four distinct but successful business models: work integrators, hidden work integrators, entrepreneurial coaches and skill developers. Social enterprises across all business models have proven their effectiveness in tackling long-term unemployment by demonstrating their social impact through measurable output and, in more and more cases, outcome indicators.
The report affirms that there is a favourable investment climate due to:
- A real need of interventions tackling long-term unemployment, given the size and the relevance of the problem in the focus countries.
- A growing number of innovative social enterprises that successfully tackle (in terms of efficiency and social impact of interventions) the problem in spite of the climate of austerity.
- Some social enterprises having developed resilient income models that are capable of generating revenues and profits.
- Several examples of investable targets and successful impact investments in this field.
It is to be noted, however, that some of these investment opportunities may only be realised in the medium-term since there are a number of interesting social enterprises that appear not to be investable just yet. However the report ends on a positive note, identifying different investment opportunities in the 4 countries.
The report combines a comprehensive overview with concrete examples of investment opportunities in the sector and a must read for any European impact investor.
Read the full report here