Keywords

Introduction

Labour market employment is a central pillar in the creation of a socially inclusive EU, where low unemployment goes hand-in-hand with citizens’ democratic involvement in society (Hedin et al., 2015). However, challenges are manifold. Since the 1970s and 1980s, European labour policy has shifted from actively assuring the availability of employment for “everyone” (Spear et al., 2001) to the individual’s responsibility for ensuring one’s own employability (Peck, 1996). This is especially demanding for unemployed individuals who, for a variety of reasons, lack competences that easily match labour market demands.

Here I focus on one such marginalised group in the labour market: lower educated and local language weak immigrant women. Besides lacking basic skills related to even limited technical proficiency, formal training, and interpersonal skills (Kazlou & Wennberg, 2023), employers and labour agencies encounter a culturally and ethnically diverse group with socio-economic poverty and a general feeling of exclusion (Liebig & Tronstad, 2018; Kraff & Jernsand, 2021). Thus, job creation for marginalised immigrant women can be seen as a societal challenge with multiple and contradictory underlying reasons, a so-called wicked problem (Churchman, 1967; Nicholls et al., 2015). There is also a real risk that this group of women will be further marginalised. Even before the Covid-19 pandemic and Russia’s invasion of Ukraine, refugee immigration was expected to grow (Massey, 2020), further augmenting the challenges facing European Commission President Ursula von der Leyen’s goal for a green transition “where no one is left behind” (von der Leyen, 2020).

Sweden is especially exposed to this wicked problem, having seen a large proportional influx of immigrants since the 1990s. As a Nordic welfare state, the public labour policy programme expects, and is dependent on, high labour market involvement. Additionally, the Swedish labour market is both skewed towards more highly skilled workers and has among the highest employment participation of women in the EU.

One way to handle a complex challenge like this is to open the job market for experimentation with new ideas. Here I explore one such solution, the so-called work integrating social enterprises (henceforth WISE). Often structured as cooperatives, WISE focus on democratic involvement (Pestoff, 2012; Pestoff & Hulgard, 2016). They belong to a new and growing category of businesses, social enterprises, that have both economic and social goals in common. Many focus on work integration, often combining public financing and market-based income, thus pursuing a hybrid business model (Defourny & Nyssens, 2008; Defourny et al., 2014; Borzaga et al., 2020). European social enterprises come in a variety of associational forms and there is no standard definition. They often belong to civil society or the so-called third sector, organised as non-profits and cooperatives with social goals but can also be for-profit companies or foundation-owned companies. Research describes WISE, with their special feature of democratic involvement, as a viable tool related to empowerment, inclusion and economic mobility for excluded and marginalised groups in the labour market (Levander, 2016; Lundgaard Andersen et al., 2016).

However, the societal support for WISE or other third-sector social enterprises offering work integration is limited (Lundström & Wijkström, 1997; Defourny et al., 2014). Research describes the commitment from policy-setters, public sector actors, private sector actors, politicians, financial institutions and regulators as contradictory, unpredictable and varying across European countries (Nicholls et al., 2015; Borzaga et al., 2020). Sweden is often described as harbouring a particularly difficult and complicated institutional climate for WISE to exist in (Gawell, 2019).

In this research, I explore why WISE have not yet succeeded as an instrument for Swedish labour integration. Given continuous high political ambitions for job creation for unemployed, local language weak, immigrant women, one might also argue that WISE should get another chance to show their capabilities.

The research is embedded in the existing literature on social enterprises and WISE, public documentation of Swedish social enterprises and literature on the Swedish institutional context. It comprises 23 semi-structured interviews, carried out between October 2021 and January 2022; four interviews with representatives of municipalities; 13 with representatives of seven different WISE organisations; three with representatives from networks of WISE and social enterprises offering labour integration; two with representatives of public agencies; and one with an academic researcher. The WISE were chosen from a list of WISE mentioned in existing literature, news articles and conferences, which were then asked to name women-inclusive WISE, of which seven were chosen as illustrative empirical examples.

New institutional theory (Meyer & Rowan, 1977; Scott, 2008) is used as a lens to view and analyse the empirical data. This allows me to structure and categorise the central components needed to develop markets, for instance, regulations, norms and expectations in society. The market referred to is the market for work integration of marginalised groups in the labour market. In this market, WISE take a collaborative position between the private for-profit sector and the tax-financed public sector (Defourny et al., 2014). As such, WISE can be characterised as an institutional change agent, its hybrid and complex organisational structure not fitting into the current order (Suddaby & Greenwood, 2005; Pache & Santos, 2012). The concept of legitimacy stands at the centre of this discussion, here defined as a change agent’s ability to develop a collaborative relationship between the organisation and its audience in a way that fits with the norms and expectations in society (Suchman, 1995).

My exploration indicates that a more resilient labour policy may be emerging, one that opens new opportunities for both Swedish WISE and marginalised immigrant women. I find emerging support structures in three areas: (1) public and private sectors’ increased commitment to empower and promote inclusion of all (e.g. Sustainable Development Goal 10.2, UN, 2022); (2) the development of collaborative networks with other WISE; and (3) the work to deploy resources to enable systematic use of social impact metrics. The Swedish experience, here summed up as a legitimisation process in three phases, can thus serve as an illustration of the ability for WISE to survive and adapt, despite a particularly harsh climate for WISE’s hybrid structure (Laurelii et al., 2014; Gawell, 2019).

The sections that follow start with a background of the changing labour market and the special situation for unemployed, low-skilled immigrant women and the role WISE can play. The third section covers the institutional context. This is followed by the section Examples and Results with the empirical data and findings to show how WISE works. Analysis and conclusions are presented in final section.

Background

The Labour Market for the Less Skilled Women in Sweden

In 2018, the employment rate for women (aged between 20–64) in the European Union (EU) stood at 67% (Eurostat, 2022). Among EU member states, Sweden had the highest employment rate for women (80%), whereas Greece (49%) and Italy (53%) reported the lowest rates. The large overall participation of women in the labour force reveals a gap between native and foreign-born, with Sweden showing the largest gap among the EU member states (Eurostat, 2022). Overall, 85% of Swedish-born women work compared to 80% of EU-born and 55% of non-EU-born.

However, statistics are always nuanced. The employment statistics of many European countries include people in the workforce who cannot earn a living income, whereas they are categorised as unemployed in Sweden. Additionally, in many countries, people far from the labour market, defined by the EU as registered unemployed for longer than 12 months, are missing from the labour statistics.

Looking at Sweden, according to Arbetsförmedlingen (AF—Swedish Public Employment Service), in May 2022, there were 164,000 registered as openly unemployed for more than 12 months (AF, 2022). Of these 100,000 had been unemployed for over two years. Looking specifically at lower-educated foreign-born women (defined as below lower secondary school), in a separate report for AF a total of 118,000 unemployed women are noted, half of whom were born in the Middle East and Africa (Jansson, 2020). Various reports show the difficulties in addressing training programmes targeting this group. Measures specifically targeting lower-skilled women are extremely rare (Nordiska ministerrådet, 2018) and those sectors that are currently women dominated often require post-secondary education, which is not the case for male-dominated sectors (Frydebo & Kaufmann, 2019).

Civil servants at AF estimate that around 10,000 of these long-term unemployed foreign-born women are weak in the Swedish language. Further, lower educated immigrant women need personal coaching and tailor-made supervision in order to be able to adapt to labour market requirements. A 2018 report from Statskontoret (Swedish Agency for Public Management) describes the challenges encountered as both structural and individual, covering discrimination, parental insurance and the social security system, as well as cultural and ethnic heritage. Liebig and Tronstad (2018) note that many immigrant women do not come to the host country for work, but rather for family reunification and that these women often peak in child births in the year after arrival. An AF study shows that many of the unemployed women belong to the group of socio-economically weak women born in countries like Eritrea, Iraq, Somalia and Syria (Jansson, 2020).Footnote 1 This is also a societal problem, as many of these women are either on parental leave or single women with children who live in relative poverty. The group of older foreign-born women who are economically vulnerable is increasing. The problem is exacerbated by Swedish housing policy with socio-economically weak immigrant groups often stuck in overcrowded and segregated suburbs (e.g. Valdez, 2023, this volume), many also high crime areas The overall conclusion from these reports is that targeted and differentiated interventions are needed for foreign-born women living in economic vulnerability.

The Emergence of WISE

Since the 1970s, western societies have been faced with serious structural unemployment (Spear et al., 2001). In Sweden, the solution included the initiation of sheltered workshops, run by regions and municipalities. However, the workshops were criticised, especially from user organisations in the 1970s who felt that the workshops did not take enough consideration of the well-being of the unemployed (Hedin et al., 2015). The workshops were merged into a state-owned company, Samhall, in 1980, who in collaboration with AF would offer employment to disabled individuals. However, the critique remained (Riksdagen, 2021b; Torp, 2021).

In the 1990s, after having opened the domestic market for international trade and EU membership in 1995, Sweden also adapted its public labour policy from actively offering jobs to a more liberal market approach. The adaptation involved challenges in that the public sector began to downsize, making it difficult for the AF to offer public sector job opportunities to the lower-educated and, for other reasons, less skilled individuals. At the same time, Swedish industry’s demand for lower-educated workers declined.

To address these challenges—alongside the critique of Samhall—the 1980s and 1990s also saw the welcoming of non-traditional solutions (by Swedish standards), leaving room for civil society, religious institutions and non-profit foundations to contribute by combining work and care for the socially vulnerable, who would otherwise be disadvantaged in the labour market (Stryjan & Wijkström, 2001). One such solution was work integrating social enterprises, the so-called WISE.

WISE originated in Italy after World War II and were introduced in Sweden during the late 1980s by staff and former patients in psychiatry and care. In 2022, Swedish WISE reach unemployed youth, disabled, recent immigrants and the group targeted here, low-skilled and local language weak women by Tillväxtverket (Swedish Agency for Economic and Regional Growth) in 2019 and by Sociala arbetskooperativens intresseorganisation (Skoopi—Swedish Association for WISE). Instead of offering subsidised jobs with limited supervision—as in the sheltered workshops—these cooperatives focus on workplace rehabilitation, where the individual is prepared for the labour market by developing the individual’s own capabilities, with the aim of strengthening competences, self-esteem and empowerment. The jobs are often simple, low-skilled, tasks, such as work in second-hand stores, cleaning, dog walking, gardening and janitorial, but can also require some skills, such as lighter industrial subcontracting work, cooking and sewing.

As there is neither an official definition of WISE as a legal form, nor a responsible association with resources allocated for the task, there are no exact figures on Swedish WISE. Reported numbers include both social enterprises focusing on work integration and WISE that are organised as social cooperatives with democratic involvement. However, Laurelii (2002) refers to estimates of around 45 WISE in Sweden in 1990s and that these grew to 90 by 2000. Gawell (2018) refers to public attempts to estimate the number of WISE by Tillväxtverket in 2012, landing at some 271 WISE, then in 2016 there were some 350 (and by 2018 some 343 organisations, with 3500 employed and another 9500 people participating in activities). According to informants at Skoopi, 25% of WISE had closed down in 2021, reflecting a reform of the AF that limited demand for the WISE offering (Sjögren, 2021).

Furthermore, 65% of the Tillväxtverket-registered social enterprises focusing on work integration use the economic association legal form (thus qualifying as pure WISE with democratic involvement), the rest are non-profit associations and foundations (Gawell, 2018). Approximately 75% of these entities employ fewer than 10 people. A study of 75 civil society efforts for work inclusion, of which some constitute WISE, find that non-Sweden-born individuals made up 36% of the participants (Lindberg et al., 2022).

The Institutional Context

Since the 1970s, WISE is seen as strong innovators of Western economic welfare services (Pestoff, 2012). As such, they belong to a group of social enterprises and entrepreneurship that can be characterised as institutional change agents (Defourny et al.2014; Nicholls & Zeigler, 2019). They often develop collaborative processes (Sorensen & Torfing, 2015), are embedded in their local community (Stryjan, 2004), incorporate local opportunities and needs into their business model (Stryjan, 2004) and innovate in a way that blurs the boundaries between the three sectors: state, market and civil society (cf. Lundgaard Andersen et al. 2016). From a Swedish perspective, their presence constitutes a challenge to the current order with a large public sector, liberal free market private sector and then a civil society playing a marginal role squeezed between the other two and challenging the classic collective bargaining agreement between the private sector and labour unions (Lundström & Wijkström, 1997; Pestoff & Hulgård, 2016; Nachemson-Ekwall, 2021).

Other distinctive features of WISE are the management’s belief that the inclusion of participants attending their labour market integration activities in the overall operation of the enterprise results in transformed and empowered individuals (Pestoff & Hulgård 2016). The Ministry of Enterprise and Innovation (Näringsdepartementet) writes that WISE bring an improvement to the enterprise itself as the employees manage to produce a service or product that can be sold to the market (Regeringskansliet, 2010). According to Levander (2016), WISE serve as an educational instrument for democratisation, thus differing from, for instance, the state-controlled sheltered workshop Samhall, as Samhall’s mission is limited to offering employment to the disabled.

In general, the public sector in European countries views civil society and WISE as legitimate partners as they ensure that taxpayer funds are directed towards work integration and spent for the benefit of citizens (Nicholls et al., 2015). Studies show that the step-wise methods used by WISE work for empowering marginalised immigrant women in the labour market (Bailey et al., 2018; Molnár & Havas, 2019; Rantisi & Leslie, 2021). They play a role in integrating language skills and job training (Kraff & Jernsand, 2021). Further, women participating in parallel chains of activities achieve greater progression than women participating in just one activity at a time (Ali et al., 2019).

Studies show that, for social enterprises to prosper, they rely on a supportive ecosystem of regulation, financing, advice on the national norms and the historical political context (Nicholls et al., 2015; Gawell, 2019), as well as, specifically, on WISE collaborations among cooperatives (Laurelii, 2002). These legitimating forces vary across Europe, reflecting different welfare systems (Esping-Andersen, 1990) but also development over time (Borzaga et al., 2020).

In Sweden, challenges that hinder WISE from becoming legitimate actors of work integration are manifested in short-term public contracts, often lasting only a year or two (Edvik & Björk, 2016; Fred, 2018; Segnestam Larsson, 2019) and bureaucracy, as public organisations prioritise dealing with actors that potentially offer efficient administration and generic large-scale solutions (Kraff & Jernesand, 2021). To this can be added WISE’s lack of long-term stable financing to support development (Borzaga et al., 2020; Nachemson-Ekwall, 2021). Finally, a market liberal approach to the EU public procurement rules has fostered competition and financial austerity, resulting in the preference for large associations, with small companies and value-based enterprises opting out of bidding on contracts (Gawell, 2019; Segnestam Larsson, 2019; Nachemson-Ekwall, 2021).

As mentioned before, the lack of a legal form for social enterprises and clear definition of WISE in Sweden (Gawell, 2019), though it exists in many European countries (Defourny & Nyssens, 2008; Palmås, 2013), hampers the ability to direct financial resources and is manifested by a lack of a government-sponsored social financial investment funds (Tillväxtverket, 2018; Nachemson-Ekwall, 2021).

Other challenges include the WISE themselves, with complex business models with businesses in different sectors, multifaceted management and heterogenous employees. Too many small-sized businesses, good for empowerment but difficult for sustaining a long-term stable business due to lack of scale (Hedin et al., 2015). Sharing resources by developing collaborations through networks and closer ties to the public and private sectors is suggested as a solution but risks the role of WISE as an independent third-party actor (Lindberg 2021b).

WISE are also criticised from an empowerment perspective. As described in Hedin et al. (2015), the democratic dimension of the cooperative model of governance is often unclear. There may be inconsistencies in what inclusiveness means and how it is enacted, with many employees disinclined or unable to become involved in governance relative to doing their own work. There might also be mission drift, as the degree of marginalisation of the participants correlates with costs (Molnar & Havas, 2019), and higher marginalisation relates to more training and higher costs (Ebrahim et al., 2014).

In sum, the literature illustrates Sweden as politically torn between being a classic Nordic welfare system and having a liberal market economy (Lundström & Wijkström, 1997; Pestoff & Hulgård, 2016). However, there are signs that in the post-Covid-19 pandemic era a reconsideration of public labour policy might offer an opening for social enterprises. Hybrid organisations such as WISE are customised to challenge the established order (Defourny et al., 2014) and can open new opportunities.

Examples and Results

The empirical part of this study begins with a description of how WISE are structured. As an analytical tool, the institutional complexity of the organisational, societal and business goals of WISE are visualised as two integrated flows joined together by the WISE (Fig. 9.1). At the centre core is the WISE, delivering services like work, language training and supervision. The methods used by WISE are called names like Value chains (värdekedjor) and the Step model (trappstegsmodellen). None are unique methods for work integration per se, it is the systematic approach in itself that is unique. A rehabilitation programme usually involves an individual plan with personal supervision of steps that take between six months and two years to complete.

Fig. 9.1
A flow diagram of the Marginalised Immigrant Women stream begins with registered unemployed and S S O, which results in a return to unemployment, study and language training, job at WISE, and the outside job market. The economic value stream results in second-hand cafes, sewing, cleaning, and lunch restaurants.

The WISE business structure. Source: author

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The vertical flow illustrates the input consisting of unemployed immigrant women who are registered at the AF, in direct contact with a municipal Socialtjänsten (SSO—Social Service Office), or engaged in an employment initiative coordinated by the region. The WISE deliver the intervention. At the end of the vertical flow, the output is illustrated as the target participant either having entered the outside labour market, gotten a job at the WISE, started an apprentice programme, started studying or returned to unemployment. An outcome can also be that a person moves from being on social welfare to registered as unemployed.

The horizontal flow illustrates the economic input with publicly procured pre-work introduction to develop work capability, work integration and training. The services are procured by AF, Socialtjänsten and the municipality’s own labour unit (Hedin et al., 2015). A subsidised labour cost is tied to each participant and paid by AF or the municipality. WISE and similar social enterprises may also receive project funding from organisations, like the European Social Fund (ESF) or the Heritage Fund. As that market is relatively limited in Sweden, purely philanthropic funds are generally not used (Gawell, 2019). There is also a small, but growing, market for public value-based partnerships, so-called Idéburet offentligt partnerskap (IOP—Value-driven Public Partnership).

The output from the horizontal flow consists of goods and services for the market. The customers come from the public sector, companies and the retail segment. It is common that buyers from the public sector and companies contribute in kind through subsidised rent for premises or equipment.

Seven Examples and Major Findings

Examples of seven WISE and networks of WISE are included in this study. The examples are listed in Table 9.1. Interviewees were asked to state their organisations’ achievements, financial positions, opportunities and challenges. The lack of publicly available registers makes the material dependent on the informants’ willingness to share information. Despite this limitation, patterns are detected in the respondents’ answers and are developed below.

Table 9.1 List of seven examples of WISE and networks of WISE
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The Financial Outcome of WISE

The first pattern relates to documentation of the financial effects of WISE’s work with marginalised immigrant women. A report by Nilsson & Wadeskog (2006) shows that 20 women in the social women cooperative Yalla Trappan (Yalla Staircase) generated SEK 80 million in savings for society over a four-year period; the involvement and empowerment of the immigrant women is not included. Another example is BlåVägen (the Blue Way), which publicises socio-economic accounts in 2008 showing savings of SEK 68 million, where the participants fared better and 30% of the participants in job training moved on to work, a high rate considering the target group (Lindberg, 2021a, 2021b). The Blue Way also documents the number of participants who got a job between 2011 and 2018, amounting to around 150 per year, varying between 30% and 40% of those who had terminated a programme. Building on the same accounting methodology, The Way-Out! cooperatives estimate having generated SEK 55 million in societal savings in 2020, both from reduced public expenditure and income (and tax) from the employment they generated.

Interviewees from two municipalities claim to have experienced both lower costs and higher outputs when collaborating and outsourcing work integration to WISE. The labour market unit at Nordanstig, a municipality in the Gävleborg region with 9500 inhabitants, previously employed five supervisors in own premises at a cost of a few million SEK per year. Now the labour market unit has instead a partnership with four WISE employing 30 people at a total cost of half a million SEK per year. There is no documentation of the outcome, but the labour unit head claims there are positive effects.

When we ran the sheltered workshops in-house it sometimes felt as if the workers were there for the supervisors and not the other way around. It happened that workers stayed to keep the supervisors busy. Now I can act more professionally. (Head of labour unit at Nordanstig)

The labour market unit at Karlskoga, a municipality in the Värmland region with 30,000 inhabitants, previously employed 2.5 supervisors at a cost of SEK 2.5 million plus own premises and two cars. The labour market unit supported the development of a WISE, Funkis, that instead offers 25 jobs, mainly to immigrant women. The cost was more than halved to SEK 1 million. According to the civil servant head of the labour unit, Karlskoga is expanding the work to a total of five WISE, with a total of 150 training places.

The second pattern relates to the seven examples highlighting three institutional challenges for WISE related to work integration of marginalised immigrant women. Table 9.2 summarises the challenges in three main aspects that are described following the table.

Table 9.2 Challenging factors at institutional level
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Challenge 1—Policy towards WISE

In 2018, Sweden presented a strategy for social enterprises that included a new definition (Regeringskansliet, 2018). However, it did not address WISE specifically. The definition stated that the purpose of a social enterprise should be to solve a societal challenge, results measured primarily in socially beneficial goals, and most profits reinvested in the enterprise or similar businesses. The strategy’s purpose is to facilitate scalability and access to risk capital, allowing for foundation and faith-based organisational ownership. This definition negatively affected WISE, as their democratic governance principles were perceived to be a challenge for growth and access to risk capital.

When there is no clear distinction between social enterprises and for-profit corporations, it is left to each individual municipality and region to develop its own definition. That is not realistic and many of them just open up all procurement contracts for competition. (Development manager, Region Örebro)

All interviewed WISE informants claim to have experienced difficulties in offering a whole chain of non-standard activities to municipalities or AF, as these are generally perceived as breaking public procurement rules. An example of this is found in the AF offer from 2019 of Förstärkt arbetsträning (FAT—Enhanced Labour Training) (Regeringen, 2017). Language training or computer proficiency were not to be seen as an integrated part of the programme with the consequence that WISE and other civil society actors did not receive economic compensation for this work. Most WISE opted out of FAT.

After 2019, AF no longer paid us for our efforts. After a site inspection, we received a complaint because we had work consultants offering language training, as language training was not included among the 20 procured operations. We were asked to adapt our offer to the procured courses. But our target group, some are even illiterate, is not helped by a lecture lasting a specific length. (Development manager, Blue Way)

Furthermore, the EU (2014) public procurement directive addresses sheltered workshops in Article 20 and reserved contracts for certain social services, including work integration through social cooperatives in Article 77. In 2019, AF introduced reserved contracts for Arbetsintegrerande övningsplatser (AÖP—work-integrating training positions). Only Samhall and WISE could be eligible for this.Footnote 2 This was appealed by faith-based communities that did not qualify as they did not offer work-integration in a separate entity and the overarching goal was instead “soul-searching and humanitarian work”; in other words, not work integration (HFD, 2021, the Supreme Administrative Court). This further increased uncertainty for many public procurement officers.

Lastly, a government commissioned inquiry on the development of value-based, non-profit organisations in health and social services was presented in 2019 (Regeringen, 2019). In the inquiry, value-based actors are defined in congruence with the 2018 definition of social enterprises, thus blurring the democratic role for social cooperatives further. This is scheduled to be implemented in January 2023. Consequently, WISE are having difficulties in both handling the private sectors’ quest for a liberal market-oriented approach to EU’s public procurement policy and handling conflicting business rationales within the civil society community itself.

Challenge 2—Access to Finance

Studies show that most social enterprises rely on multiple sources of funding (Evers et al., 2014). Public financing is often the most important component, but there is usually a degree of (financial) co-responsibility from civil society or the business sector. Funding is often precarious and time-limited, thus preventing long-term market building or R&D activities. Difficulties in accessing finance is compounded by a lack of investment skills and a poor ability to develop adequate business project proposals. The examples support this picture.

The lack of access to finance is addressed by both the European Fund for Strategic Investments (EFSI) and the EU Programme for Employment and Social Innovation (EaSI). Both funds offer grants and microfinancing to social enterprises. Recipients of EU funding and guarantees highlight the positive signalling effect this has had on commitment by other investors (Scheck, 2019).

Studies of the Swedish WISE reveal that more than half of the revenue stream is from the public sector, either through paying for the employees’ wages or purchasing of services/products (Hallström Hjort & Nilsson, 2021). However, public funding tends to be short-term and municipalities, to circumvent public procurement rules, adhered to project financing that was dependent on the municipalities’ yearly budgeting process (Edvik & Björk, 2016).

Most WISE in this study had received project funding from ESF. Despite signalling legitimacy, the outcome was limited and ESF funding followed the same trajectory as other public project funding mechanisms, that is, time-limited and lacking necessary support for long-lasting employment results (Lindberg 2021b; Lindberg et al., 2022).

Sweden’s infrastructure for supporting social economy organisations with advisors and financing is limited compared to many other EU countries (Nachemson-Ekwall, 2018, 2021; Tillväxtverket, 2018). Studies and reports indicate limited capacity to enable scaling up (Tillväxtverket, 2018; Nachemson-Ekwall, 2021). Companion, a publicly supported corporate development agency with 20 offices around Sweden, and the Mikrofonden Sweden, a social investment fund, are both hampered by a lack of long-term public financing. The Chairperson of the board of Ekobanken, a cooperative social bank highlights, in an interview for this study, that the bank could support many more customers if the Government followed the lead of other EU countries and offered access to supportive social credit guarantees.

All WISE in this study present examples of the negative impact that lack of access to stable financing has caused. Vägen ut! Kopperativen (The Way Out! Cooperatives) consist of a network of 20 WISE situated in the Västra Götaland region. The combined turnover is SEK 40 million, of which 70% originates from sales (private and public) and 30% from work training. The network receives cashflow support credit from Mikrofonden Sweden, loans from Ekobanken, and project grants from ESF. The HR manager explains the dilemma with a lack of long-term financing.

The Way Out! Cooperatives need 5 million kronor. We run a café but lack the capital to invest in a new grill. We can apply for project grants, but do not receive a structural grant to be able to build up a buffer for investments. If we had known that we would have repeat business from the municipality or the private sector we could have grown. (HR manager, Way Out! Cooperatives)

Challenge 3—Labour Programmes

In general, there are three established public programmes for work training targeting low-skilled, local language weak immigrant women:

  1. 1.

    enhanced work-training (FAT). Offered by AF, this includes simple jobs, like subcontracting work, cleaning, janitorial and coffee. In general, only social enterprises, like WISE and faith communities, and the government-sponsored Samhall, are eligible for this service;

  2. 2.

    general work training, the so-called Stöd och matchning (STOM—Support and Matching Service) and Customer-choice—Kundval Rusta och matcha (KROM—Prepare and Match Service) are regulated through the EU public procurement rules and can last up to 12 months;

  3. 3.

    work-integrating training positions (Arbetsintegrerande övningsplatser, AÖP). This programme is administrated by the municipality labour unit. It provides more secure basic funding for social enterprises but also exposes them to short-term contracts, individual civil servants and the risk of being subject to public procurement regulation.

A report from Tillväxtverket in 2018 quotes reports, regulation letters, government notes and academic papers that describes the lack of coordination and collaboration between different job-supportive offerings directed to marginalised women. Statistics from AF, publicised in 2019 and 2020, reveal a lack of success in the labour programme offering related to foreign-born women compared to other groups of long-term unemployed, even when activities are designed to prioritise this group (Frydebo & Kaufmann, 2019; AF, 2020a, 2020b). Additionally, participants in the established public programmes find it difficult to attend activities organised by WISE, as they might be scheduled for Swedish-language classes, known as Svenska för invandrare (SFI—Swedish for Immigrants) at the same time or at locations far away (Kraff & Jernsand, 2021).

In interviews, it is reported that the FAT programme is financially ill-suited for WISE as they often receive 20% lower compensation than the sheltered workshop, Samhall. This led many WISE, as well as other social enterprises, to opt out of the programme. At the same time, the private sector experienced competition in, for example, the cleaning sector. The EU Commission claims that Samhall leveraged subsidised wages to offer lower prices for cleaning contracts, thus a clear violation of state aid rules (EC, 2017). The Swedish Competition Authority has condemned Samhall’s activities (Konkurrensverket, 2020), and Samhall is subject to public debate (Riksdagen, 2021b; Torp, 2021).

The second offer involves STOM and KROM. The programmes were revised and developed at a time when AF was restructured and downsized following decisions by both left and right-centred governments. The programmes are open for public procurement, free choice by the customer and earn performance-based compensation. Suppliers must meet financial and organisational requirements, have relevant experience, offer supervision and language support/interpreters, be able to receive at least 50 simultaneous participants and act nationally. This automatically excludes many WISE as most WISE employ less than 10 people each. Few collaborate nationally and performance-based compensation does not consider that social cooperatives or civil society actors more often lack a capital buffer. Thus, the system favours for-profit corporates and large entities, while also enticing suppliers to work with those unemployed who only need standard training programmes that are less costly, thus excluding those with the greatest need for out of work training.

A study conducted by Institutet för arbetsmarknads-och utbildningspolitisk utvärdering (IFAU—the Institute for Evaluation of Labour Market and Education Policy) concludes that the KROM search engine did not adequately address that job seekers’ job chances decrease the longer they had been unemployed or that low-skilled job seekers were not able to register correctly due to a lack of local language skills or for health reasons (Bennmarker et al., 2021). Thus, many WISE and faith-based institutions have abstained from participating in KROM. Further, AF has applied procurement rules in such a way that it has stopped sending unemployed individuals directly to WISE.

The Blue Way could do more if we were commissioned. The City of Stockholm has 300–350 job seekers registered but they are not allowed to send them to us because they must first be matched via KROM, even though the city knows that they are not suitable. (Manager, Blue Way)

Representatives from civil society claim that a lack of assignments on work rehabilitation and work placement to WISE caused many to go bankrupt (Wallenius et al., 2020).

We have lost 20% of the members who were WISE. Half of the Companion offices have stopped recommending the start of a WISE. To be able to succeed, we require a long-term strategic cooperation with Arbetsförmedlingen. (Chair, Companion)

The third option for WISE is signing collaborative agreements with municipality SSO. An example of this is Yalla Staircase which signed a project partnership with the municipality of Malmö using the IOP framework. It works with a step-wise programme, Yallas väg till arbete 2.0 (Yalla’s path to work). The offer targets 50–60 women for a six month-period. According to the CEO of Yalla Staircase, the participants go on to internships, SFI and obtain jobs at Yalla or in private companies. No one is left behind. However, IOPs are few and interviewees explain that many municipalities find that they are too difficult to design and might conflict with public procurement regulation.

Going Forward

The third and last pattern in the seven examples relate to expectations of changes in Swedish society. The role of the public employment service, AF, is again under government review. In a Ministry of Employment publication (Regeringskansliet, 2021), third sector actors, including cooperatives and work integrating social enterprises, are mentioned.

The added value that idea-based actors bring to the labour market policy activities also need to be utilised in the reformed activities. The Swedish Public Employment Service therefore needs to have as a starting point that there should also be good prerequisites for collaboration with such actors, e.g., non-profit associations, registered faith communities and foundations, cooperative organisations and work-integrating and social enterprise. (Regeringskansliet, 2021, p. 42)

In autumn 2021, the Supreme Administrative Court ruled against the faith communities and allowed reserved contracts for labour integration (using Article 77 for associations focused on work integration) through WISE (HFD, 2021).

There are also initiatives to build collaborative networks among smaller WISE. The Yalla Staircase comprises a network of a diverse set of WISE at eight locations around Sweden. The Way Out! Cooperatives is a network of 12 WISE. It helps WISE to collectively submit tenders for public procurements but also to leverage on the increased interest for social sustainability in the private sector. An HR manager at Way Out! explains:

[o]ur next step is to develop our joint business offer to companies that want to support our group of social enterprises financially, so we can invest to grow and become stable. We sell little to the business community today, but we meet a greater understanding for our social contribution, which we believe we can use to increase our business. (HR manager, Way Out! Cooperatives)

Örebro region collaborates with 15 WISE. There is an action plan on the political agenda. The municipality, Nordanstig, meeting with the four WISE in its region, enticing them to collaborate and share resources. Skoopi, representing Swedish WISE, runs the project ASF lyfter with the aim of developing collaborations when bidding for public procurement. All initiatives have received project funding from ESF.

Skoopi has developed a certification system for WISE following a standard set-up by the Svenska insitutet för standarder (SIS—Swedish Institute for Standards). The standard is expected to work as a template for public sector procurement with social clauses. The focus is on evaluation of work progression. There is also work done to develop socio-economic accounts. All WISE in this study mention a growing interest in social clauses in public procurement.

There are also signs that the business sector is increasing their interest in collaborating with WISE. An example of this is Trianon, a property company that owns apartment blocks in run-down and suburbs with low socio-economic status in the Malmö region. Trianon is teamed up with Yalla Staircase, offering both a venue for a café and cleaning service by immigrant women. The partnership is part of Trianon’s engagement with the UN Sustainable Development Goals and included in the company’s sustainability bond programme. Yalla Staircase in Malmö has also signed partnerships with other property companies. Yalla also collaborates with the furniture company Ikea and retail store H&M.

It’s a bit ironic. At the same time the private sector is reaching out and wishes that we support them in their aim to deliver on the social SDGs, the public sector has taken a step back. (CEO, Yalla Staircase)

Discussion

Organised as a hybrid non-traditional business model, WISE interact with the public and private sectors in new ways with work integration of local language weak and lower educated immigrant women. A new organisation’s ability to create constructive collaborations (Suchman, 1995; Suddaby & Greenwood, 2005; Pache & Santos, 2012) leans on its capability to be respected as a legitimate partner. This process is two-fold. On the one hand, new organisational constructs—such as WISE—must conform to the requirements of external environments for legitimacy (Meyer & Rowan, 1977). It is often possible to find compromises in order for social innovation to gain legitimacy (at both normative and cognitive levels: cf. Suchman, 1995). On the other hand, social enterprises are also seen as challenging the Western organisational order as they privatise the social, dismantle the state or undermine civil society (Nicholls & Cho, 2006). As explored in this chapter, WISE work to gain status as a legitimate partner has had difficulties handling these contradictions within the Swedish context.

The legitimisation process of Swedish WISE can be seen as emerging through three phases of embeddedness. In the first phase, roughly 1990–2009, the role that WISE play as a labour integration provider in the Swedish welfare state differs from more liberal market economies such as Canada, the United Kingdom and the United States, as well as in countries with more social conservative traditions, such as Belgium, France and Germany (cf. Esping-Andersen, 1990; Sivesind, 2016). In the second phase, roughly 2010–2020, the institutional context acted in a contradictory way. WISE and related social enterprises received support, for example, through project funding, while other policies worked in the opposite direction. WISE were not recognised for their multifaceted capability for labour market integration, empowerment and fostering of democratic citizens. Neither the private nor the public sector have stepped forward to support the development of a supportive financial infrastructure (Nachemson-Ekwall, 2018, 2021) present in various degrees in other countries (Defourny & Nyssens, 2008; Pache & Santos, 2012; Nicholls et al., 2015).

In the third phase, starting in the early years of 2020s, post-Covid-19, there are signs that a changing and more resilient public labour policy might free both public and private resources to support WISE working with low-skilled and local language weak immigrant women. Politicians, both left and right, highlight paid work to handle the socio-economic challenges in the suburbs, where inhabitants (especially marginalised low-skilled immigrant women) were hit hardest by Covid-19, both from a health and labour market aspect (Riksdagen, 2021a; Regeringskansliet, 2022).

Conclusion

In this research, I focus on the Swedish challenge of labour integration of lower educated and local language weak immigrant women. As a societal challenge, characterised by many interdependent factors, this so-called wicked problem (Nicholls et al., 2015) of unemployed immigrant women does not easily fit into standardised labour policy programmes. This is shown to be especially challenging for welfare states like Sweden, which assumes that social integration is primarily achieved through paid work (Erhel et al., 1996).

Signs of a rebalancing of the Swedish societal contract are threefold. First, the post-Covid-19 push for the S in the Sustainable Development Goals highlights the necessity for both the private and public sectors, along with investors, to take a more active role in tackling the socio-economic gap. Secondly, the forming of organisational maturity within the WISE invite a professional approach to collaborations and networks, which can strengthen WISE joint offers to the public and private sectors. Lastly, there is increased societal understanding of the necessity to both value and deploy resources to enable systematic use of impact metrics. This will increase resilience and readiness for cross-sectorial partnerships during the coming period of more socially labelled public procurement rules. The three changes are all necessary ingredients in the work to develop a supportive social financial infrastructure, framed here as the emergence of financial legitimacy.

Finally, a more resilient institutional environment, where changing expectations rebalance the societal contract of the public and private in favour of a clearer focus on the social SDGs, might free resources for experimentation with social enterprises like WISE going forward. Such a development may support the acceptance of new models to handle complex societal challenges. This will increase readiness for partnerships between WISE and actors in the public and private sectors—if, and when, Sweden develops a supportive social financial infrastructure and public procurement rules.