This evidence review, drawing on secondary analysis of existing evidence from academic and grey literature, addresses whether and how employment redresses disadvantage; the current costs and future implications of unemployment and underemployment; and the potential and impacts of employment-focused social enterprises on employment creation and reducing disadvantage. A secondary goal of the review is to identify where there are significant gaps in evidence that may be limiting policy, practice and effective philanthropy.

The document is organised as follows: first, we consider the available evidence on whether and how employment acts as a pathway out of disadvantage for individuals and communities in Section 2; then Section 3 presents and discusses current macro-economic and labour market conditions and their implications for access to employment for people who experience disadvantage; following this, the evidence available on the employment outcomes of employment-focused social, their effectiveness, challenges and opportunities is reviewed in Section 4;  after discussing the implications for effective philanthropy in Section 5, the review concludes with a consideration of impact measurement and employment outcome indicators for employment-focused social enterprises.

Highlights:

1. Employment has been found to benefit individuals, specifically via: access to income and social capital; increased participation and inclusion in society; and promotion of mental and physical health and wellbeing.
2. Australian government approaches to employment services are characterised by a work first approach within a residual welfare regime. In line with this, basic employment services are offered to Australian jobseekers, but they are insufficient both in practice and outcome, particularly for Australians experiencing severe and/or multiple barriers to employment.
3. The Australian labour market has experienced recent rising labour force participation paired with a falling unemployment rate, but underutilisation remains persistently high, which indicates unmet demand for employment. In other words, Australia is not making the most of its productivity potential and the burden of exclusion over-proportionally falls to certain groups (women, young people, people with disability, Indigenous Australians and people seeking asylum) because of system failures.
4. As an alternative to mainstream employment supports, employment-focused social enterprises are a form of social enterprise with the social mission to create employment or employment pathways for people with barriers to mainstream employment. Evidence reviewed suggests that employment-focused social enterprises are able to create significant employment outcomes at the individual and community levels, though comprehensive research is needed to better understand community outcomes.
5. Empirical studies suggest that employment-focused social enterprises are relatively high upfront cost interventions with high return/value. However, there is a lack of comparative research that considers the social value and financial efficiencies of social enterprises relative to other approaches and the available research focuses on small sample studies, which limits the reliability and ability to generalise outcomes to all employment-focused social enterprises.
6. Research exploring the long-term effectiveness of employment-focused social enterprises and the specific mechanisms that produce their outcomes is also limited.
7. Employment-focused social enterprises face various challenges both internally and in response to the operating environment, and supports in the form of financial and non-financial capacity building could help grow and scale the social impacts of employment-focused social enterprises.
8. Philanthropy has been an important source of ‘risk capital’ to generate and trial new responses to social problems, and philanthropic support for social enterprise in Australia has been increasing, but rural and regional social enterprises report low access to philanthropic support. There is considerable scope to share learning and shape collaborative philanthropic practice in the Australian context.
9. Impact measurement has been a challenge for many social enterprises, with approximately one in three social enterprises not measuring their social impacts. For those who have measurements in place, their frameworks are typically enterprise/program-specific, and employment-related impact measures are not standardised across the sector.