28 January 2020

Purchasing power

How one city is turning disadvantaged unemployed citizens into a thriving, motivated workforce through social clauses in public procurement.

Rotterdam

Social inclusion

Mohaned loves his job as a taxi driver in Rotterdam. “The best thing about my work is the many contacts with different people, people with disabilities, children and the elderly. By having a chat with them you get to hear interesting stories,” he says, before adding poignantly, “You are not just a driver. You are human.”

 

Mohaned has his own interesting - and difficult - story to tell of life before securing this permanent employment contract.

“This is entirely mutual”

 

Having fled to the Netherlands when his home country was at war, he learned the Dutch language, worked on temporary contracts and then had medical issues. “Hitting unemployment is very difficult,” he says. “Luckily I ended up in this job and there was a good click between me and the company.”

 

This feeling is clearly reciprocated. “Mo was grateful that he could start working with us and the cooperation with the municipality went smoothly,” says Marielle the company's regional manager. “His gratitude has remained and he still speaks to us regularly. This is entirely mutual because we have a fantastic employee in Mo.”

 

Disappearing jobs

The municipality's role in this heartwarming story is the result of Rotterdam's use of social clauses in public procurement which oblige city contractors to provide employment opportunities to people furthest from the labour market.

 

In the Netherlands this arrangement is known as social return, a reference to the percentage of a total contract value that is spent on achieving the agreed social outcome. Rotterdam's need to use social return was greater than in many other cities.

“many people are losing their connection with the labour market”

“We have a huge port that used to employ a lot of low-skilled people, but automisation and changes in the labour market mean there are no longer jobs for these workers,” explains Sophie Harbers, Rotterdam's social return adviser.

 

“The port has also been relocated further away from the city so any Rotterdammer wanting to work there has to travel for longer and this is problematic for many people. So while we have a beautiful city, many people are losing their connection with the labour market and becoming long-term unemployed.”

 

Double-impact policy

Rotterdam couldn’t escape the impact of the 2008 financial crisis, which pushed unemployment, poverty and social exclusion levels to record highs in many cities. Nor could it avoid cuts in public spending and the pressure to respond to escalating needs with fewer resources. 

“The city has a huge amount of purchasing power”

 

But it could come up with a policy capable of simultaneously addressing both these issues.

 

“The city has a huge amount of purchasing power and attaching social values to this gives a good opportunity to stimulate companies to help with problems like unemployment,” says Harbers. “The city is only spending money where it would have spent it anyway, but it is opening up the possibility of lowering the costs of social benefits and increasing social inclusion.”

 

Through Rotterdam's social return policy, every public sector contract worth over €50.000 is reviewed by a social return expert for social return opportunities. A contract must allocate between 0%-50% of the contract value to providing employment opportunities, with an average of 5% per contract.

 

In the early years of the policy, leveraging the city's €800m purchasing power in this way led to annual savings of €10m to €25m, depending on the number of people provided with a job.

 

Breaking down barriers

Damiaan Winkelman is typical of company owners who see the social return condition in their contracts with the city as an opportunity to do good and feel good - and fulfil their corporate social responsibilities.

 

The founder of local firm SkateOn, which builds skate parks all over the world, Damiaan says, “We have hired people who have barriers to work through social return and via our own network we gave a young homeless man a job and a house. It's really cool that as an employer in Rotterdam we can also give Rotterdammers a chance to work on our projects.”

 

Other companies, where job opportunities are less obvious, invest time in changing perspectives. One large law firm, for example, invited students with low educational attainment into their offices to show them the hospitality, cleaning and reception jobs they can offer alongside those for lawyers.

 

Smart match-making

By building relationships with companies like these, the city has enabled thousands of residents to find a job, placement or training with the potential to transform their lives.

 

Originally from Armenia, graduate Jeva was working in a warehouse when she had a car accident that left her with physical disabilities. Through social return, she became a teaching assistant at the university - which works with her to fit her hours to her health needs.

“she has also found her happy place”

 

Unskilled Jimmy had been out of work for a long time looking after his children before becoming a care worker. He works four days a week and on the fifth studies for a diploma. The city and his employer have agreed that once Jimmy finishes his education he will be given a permanent contract.

 

Amy was on social benefits when she was offered an administrative job in a security company. Not only is she out of unemployment, she has also found her happy place! “I feel at home here,” she says. “The best part is that I can do something like data entry on the computer. I can mean something to the company.”

 

From hesitant to enthusiastic

Despite successes like these, in 2019 the city decided to make some improvements to the policy.

 

“Companies told us that while they were willing to hire people, those wanting that chance had such complicated needs they were having to invest a great deal of time supporting and guiding them,” explains Harbers. “This meant potential contractors were sometimes hesitant to offer a job to a vulnerable person.

“It's no longer just about giving someone a job”

“Now we offer employers more customisation and flexibility, broadening the activities they can undertake to fulfil their social return obligations. It's no longer just about giving someone a job.”

 

Employers can, for example, help with debt problems - which affect 50% of people on social benefits. They can transfer their know-how to a local voluntary organisation. They can even help address a different social problem altogether, such as loneliness. One company organises walks in the park where employees and elderly residents chat and enjoy nature together.

 

Singing praises

Another way Rotterdam has worked to maintain the momentum and impact of social return is to encourage its take-up by other big purchasers in the city.

 

“Our interest is that everyone in Rotterdam has a job and everyone is included in society,” says Harbers. “So we ask big public and private organisations to join us in using their purchasing power to help give people a chance. The Erasmus Hospital and the four biggest city housing corporations in the city have all agreed.

 

“When we really want to push the social aspect in a public procurement process, there is a law that makes it possible to insist contractors can only take part if at least 30% of their employees have previously been at some distance from the labour market.”

 

The sustainability of the city's social return work also benefits from its involvement in  Cities for Active Inclusion, a dynamic partnership of nine European cities dedicated to sharing, researching and learning about active inclusion strategies at the local level.

 

Rotterdam's commitment to the theory and practice of social return is clearly paying off. In 2019 alone it helped 2,654 people start sustainable jobs. And the cohort of highly committed employees now hard at work across the city are doing it proud.

“We have never experienced such a level of eagerness”

Here's what one employer has to say about their new young employee: “Everyone is open to Amy but she is also open to everyone. I receive a lot of positive feedback from colleagues. She is sociable, collegial and has potential.”

This is what two team leaders have to say about Radwan, who was new to the Netherlands when he got a job in the restaurant of a department store. “Radwan is doing his best to keep improving his work, he even wanted to take the recipes home to learn them by heart. We have never experienced such a level of eagerness to learn!”

 

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