10,700 unemployed people set up their own jobs

And in turn created work for 700 more...

Every working day, an average of 23.4 new jobs are being created through the Government’s main community-level, social inclusion programme.

This is one of the unrivalled achievements of the Local and Community Development Programme (LCDP) as highlighted in a new report by Pobal.

The 108-page ‘Supporting Inclusion Through Self-Employment’ shows that the LCDP offers virtually nationwide, start-to-finish support for unemployed people with good business ideas.

As a result, over the past two years, close to 12,000 new jobs were created in Ireland by unemployed people with small enterprise ideas:

- 10,726 were created by people who set up small businesses;

- a further 717 jobs were created in turn by them for others.

Remarkably, two-thirds of the enterprises have got past the difficult first two years, the research demonstrates. Approximately 8,000 of the jobs remain in existence at the present time, many of the businesses are flourishing and new hopefuls are entering the marketplace every day.

The LCDP acted as the catalyst by uniquely targetting support at long-term unemployed people and those “furthest removed from the labour market”, among others.

Most of the LCDP-supported businesses are small, local operations, often sole-traders. The support is provided as a social inclusion measure by Local Development Companies (LDCs) which is what differentiates their work from that of Enterprise Ireland and City/County Enterprise Boards:

“CEBs generally do not focus on long-term unemployed people with vague or non-existent business ideas, while for the LDCs these clients are their target group.”

AIM IS NOT JOB CREATION, BUT SOCIAL INCLUSION

“The LCDP is not supporting LDCs to operate as job creation agencies,” notes the report.

It provides something that wasn’t there before for the long-term unemployed in previous recessions:

“The LDCs currently occupy a particular niche within the areas of social inclusion and self-employment, which is not covered by other agencies and organisations.”

The LCDP work also saves the country money every time it supports someone, particularly from the second year onwards when the enterprise allowance payments are reduced.

The report was commissioned because “In the context of policy developments, Pobal considered it to be particularly timely to review the self-employment supports being provided through the LCDP.”

FINDING 10,000 PEOPLE WITH GOOD BUSINESS IDEAS

Some of the successful business-people only had foggy notions when they first went to their LDC enquiring about courses, possibilities, advice or out of sheer desperation.

They may have called enquiring about a computer course for instance.

However, after the LDCs weave their magic, people’s outlook can brighten considerably and vague ideas can be developed into solid business propositions.

The freely available advice and support to guide unemployed people from start to finish as they go about setting up small businesses is available in virtually every part of the country through the LCDP.

OVER 30,000 MADE ENQUIRIES

In the past two years, over 30,000 unemployed people sought information from LDCs about starting a business, with under half of them going further with their ideas.

A critical component to the self-starters’ success was the further support provided to them by the Department of Social Protection which allows successful applicants to retain a payment that matches what they were getting on social welfare: 94% of people striving to enter self-employment availed of the Back To Work Enterprise Allowance Scheme or the Short Term Enterprise Allowance Scheme. The BTWEA lasts for two years, the STEA for less than that.

Pobal’s report points out that, “significant saving to the State arises from those who remain in business beyond the first year.”

IMPORTANCE OF BACK TO WORK ALLOWANCE

The report notes: “There are strong indications that the enterprise supports provided by the LDCs have played an important role in enabling businesses to survive beyond the period of the two year BTWEA ‘safety net’.”

However, as LDCs highlighted, “consideration” should be given to doing a cost-benefit analysis on extended the scheme for one more year (it was until recently a 4-year scheme) as this would “make a huge difference” in encouraging more unemployed people to consider the self-employment option.

“On a value for money basis, the combination of LCDP supports and the BTWEA can be seen as providing good value to the State, in assisting individuals to move from being financially dependent to becoming positive contributors to the public purse,” the report noted.

BENEFITS TO FAMILIES “CANNOT BE UNDERESTIMATED”

The other benefits – to families, the unemployed persons themselves and the positive role-models they become in communities also “should not be underestimated”.

Supports are provided generally on a one-to-one tailored basis and they begin when the citizen is seeking general advice and continue through to when the business is trading (or otherwise).

It must be emphasised that the LCDP also supports unemployed people who, more conventionally, are seeking to become employees, who seek re-training in new skills, who need their confidence boosted and who may have personal development needs.

As one person told the researcher, “The LDC gave me great confidence and self-belief that I could make it. I had been unemployed for three years.”

In 2012, the Programme spent €11.7 million supporting unemployed people (Goal 3) and almost €5 million of that went towards guiding long-term unemployed and socially excluded people into self-employment.

The report highlights areas for improvement, calls for a sharing of best practice and notes that delivery standards vary around the country.

Pobal manages or administers 18 programmes for six Government departments and European Union bodies.

The report is available for download as follows: http://bit.ly/19GwIho

Holistic approach suits dealing with people “at a very low ebb”

Pobal’s report noted that many long-term unemployed people “are at a very low ebb, are experiencing significant financial and emotional problems and some are suffering from anxiety and depression with a pessimistic view about their future lives (and) it is clear that they are seeking some hope and solace.”

The LDCs therefore have a responsibility to:

1. Be straight with the client (about whether they have what it takes).

2. Give an honest and dispassionate assessment of the business idea.

3. They may need to give a recommendation as to whether clients should be approved onto the BTWEA.

The report found that enterprise officers “have generally kept the right balance between maintaining some hope and being realistic with the client”.

As Breffni Integrated Development put it, “Enterprise Officers are well rounded in the area of community development, social awareness, outreach and have knowledge in other sectors such as social welfare payments, means testing, employment schemes etc.”

“The capacity to deal with individuals at their own level… is what sets LDCs apart from other agencies and organisations,” said the report, noting that LDCs adopt a holistic and whole person approach to their work.

As Roscommon Integrated Development explained it:

- They may have an enterprise idea which will lead nowhere, or may have a good idea but lack the confidence to pursue it.

- Our role is to signpost them internally in our LDC company or to other agencies that could meet these needs.

- The core of the work undertaken with our clients who are LTU is developmental work. The majority are never ready to walk straight into a business start-up course.

 “It comes back to our experience in looking at the person and not just the business idea,” remarked an interviewee from Southside Partnership in Dublin.

Some recommendations

The following are among the recommendations in the report published by Pobal about the LCDP titled ‘Supporting Inclusion Through Self-Employment’:

·         There is a need to maintain a clear and unambiguous focus on long-term unemployed and other socially excluded target groups of the LCDP in any successor programme.

·         The report stressed the importance of communities retaining local accessibility.

·         Assistance with the BTWEA application and business planning processes is a key dimension

·         On displacement concerns, it says: “Greater consistency could be achieved through the development of national co-ordination and guidelines.”

·         Given ongoing cuts, the report notes: “It is necessary to have a minimum level of resources/staff to make a self-employment support service practicable.”

·         Convening a network of LCDP enterprise officers should also be considered, as a means to sharing information and models/examples of good practice (and providing) support and training for staff.

·         Long-term unemployed people should have a reasonable expectation of receiving a certain level/standard of self-employment support from their closest LDC. (The standard of service varies from place to place).

Costs and value for money

There was a direct LCDP contribution of €1,134 per start-up, in addition to the funds spent by Government on BTWEA costs etc.

Some clients also received additional financial support for example, from the Rural Development Programme and County Enterprise Boards, while others have received technical assistance grants from the Department of Social Protection.

Further training or mentoring supports may come through the VECs and FÁS which obviously increases the average cost per start-up.

However, the BTWEA does not add any additional cost to the exchequer in the first year (it replaces social welfare payments) and it ceases completely after the second year.

LDC’s capacity to lever and to secure additional funding was particularly strong within some of the larger well-resourced LDCs which have a significant tradition and track record in the area of self-employment.