Hung Suet-lin 17/10/2005

Discussion Forum on “Combating Poverty – Discussion Forum on “Combating Poverty – Policies and Strategies” Lessons Learnt Policies and Strategies” Lessons Learnt

from Overseas Experiencesfrom Overseas Experiences

Hung Suet-linHung Suet-lin17/10/200517/10/2005

WORK-RELATED SUPPORTWORK-RELATED SUPPORT

Creating Jobs and Enterprises

in Deprived Areas

The ProblemThe ProblemConcentration of worklessConcentration of workless

• Greatest variation in terms of unemployment and economic inactivity rates at the smallest levels of geography – between districts and wards

• “postcode poverty”• Social Exclusion Unit (SEnU) adopted a street-b

y-street approach to analyse the situation• Areas with high concentration of workless, for ex

ample, North West, North East, Yorkshire and the Humber

Concentration of worklessConcentration of workless

• A quarter of concentrations cluster into 3% of England’s 8,005 wards

• In the worst affected 1% areas, more than half of all adults are out of work and on benefits

• Self-employment in concentrations is half the national average (4% compared with 8%)

• Four out of 10 of the concentrations are also concentrations of workless lone parents

Characteristics of the concentrationsCharacteristics of the concentrations

• around half the working-age population have no qualifications

• half the households have at least one person with limiting long-term illness

• proportion of black twice the national average. • multiple disadvantages such as substance misuse

and a disability• many have two or three generations out of work• One fifth of workless households have dependent

children • one third of workless people provide over 50 hours of

caring work per week

Enterprise gapEnterprise gap

• significant disparities in level of enterprise at a regional level

• a wide variation in both business start-up rates and business density

• lack of joint working at local level

Explaining the Problem Explaining the Problem • Changes in the nature and location of jobs • “Residential sorting”• Area effects

– Place effects - the lack of infrastructure, transport, competition for job opportunities and variation in the quality of local services

– People effects - the damaging effect of living with many other workless peoples such as area-based discrimination by some employers

Explaining the problemExplaining the problem

• Barriers to develop local enterprises in deprived areas– Access to finance– Access to business support services– lack of experience, skills or training of

potential employees– a weak enterprise culture– institutional or administrative barriers– a poor business environment

Government approach Government approach

• Basic Value

Nobody should be disadvantaged by where they live.

Local solution for local problems

Government approachGovernment approach

• reducing barriers to employment in the three crucial areas of childcare, skills and transport

• to increase economic performance in every region as well as narrowing the gap in growth rates between regions

• to promote jobs and enterprise in deprived areas

• give greater freedom to local and regional managers and to frontline workers

Local Strategic Partnerships (LSPs) Local Strategic Partnerships (LSPs) and Local Area Agreements (LAAs)and Local Area Agreements (LAAs)• Neighborhood Renewal

– reversing the spiral of decline– Neighbourhood Renewal Unit’s (NRU) work c

uts across all government departments– LSPs are central to the delivery of the Neighb

ourhood Renewal National Strategy Action Plan

– in 88 most deprived local authority areas– receiving additional resources through Neighb

ourhood Renewal Fund (NRF)

LSPsLSPs• a single non-statutory, multi-agency body matching local

authority boundaries • to identify local problems and provide solutions• to develop and deliver a Local Neighbourhood Renewal

Strategy to tackle deprivation• to promote better joining-up of agencies and initiatives in

the public, private, business, community and voluntary sectors

• went through a process of accreditation by Government Offices for the Regions in 2002

• Community Empowerment Fund – involving people in how public services are provided

LSPsLSPs

• Core tasks of LSPs– prepare and implement a Community Strate

gy– explore the scope for bringing together and r

ationalizing exiting plans, partnerships and initiatives

– work with local authorities in working out a Local Public Service Agreements

LAAsLAAs

• all relevant organizations are parties

• specify the targets and funds available to spend in the pursuit of the targets

Local enterprise growth initiatives Local enterprise growth initiatives (LEGI)(LEGI)

• a funding worth ￡ 50 million in 2006-07, rising to 150 million per year by 2008-09

• to provide support to locally developed proposals to promote enterprise in the most deprived areas of England


• The Government has designated 1997 Enterprise Areas in 2002.

• In England and Scotland, the areas selected are the most deprived 15% of wards/areas.

• In Wales and Northern Ireland, they are the most deprived 42% of wards.

• In England, 73% of them lie within the 88 local authorities which receive support from the Neighbourhood Renewal Fund.


• Six Key Principles – effective targeting– effective solutions– significant commitment – strong local partnerships – integration with broader regeneration efforts– evaluation and evidence building


• Three outcomes targeted

–increasing total entrepreneurial activity

–supporting the sustainable growth

–attracting investment and franchising into deprived areas

Neighbourhood Renewal FundNeighbourhood Renewal Fund• ￡ 3 billion to be spent over 10 years • can be spent in any way that will tackle deprivation

– health, education, jobs, housing, local environment, crime

• targeting at job creation• providing support to small and medium size

companies and room for informal economy• some successful cases such as providing special

services, usually personal services• partnership with transport trust to provide free

transport on buses/trains to job-seekers

Phoenix FundPhoenix Fund• launched in Nov 1999, a 30m Fund• to support enterprise in deprived areas

and promote the creation of social enterprises

• provided around 20m to support the Community Development Funding Initiatives (CDFI) sector providing lending and loan guarantee support to enterprises

Small Business Service (SBS)Small Business Service (SBS)• an agency of the Department of Trade and Industr

y • seven strategic themes

– Building an enterprise culture – Encouraging a more dynamic start-up market– Building the capability for small business growth– Improving access to finance for small businesses– Encouraging more enterprise in disadvantaged

communities and under represented groups– Improving small businesses' experience of government

services– Developing better regulation and policy

Social EnterprisesSocial Enterprises

• A Social Enterprise Unit (SEnU) has been set up in Small Business Service of the dti.

• Definition of social enterprise:“A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.” (Department of Trade and Industry, 2002, pp. 8)

Defining features of social enterprisesDefining features of social enterprises • a kind of social economy; to support a social p

urpose• tackle a wide range of social and environment

al issues• using business solutions to achieve public goo

d• a combination of enterprise, social purpose an

d customer focus• social purposes: creating wealth for the disadv

antaged, neighbourhood and urban regeneration, public service delivery, social and financial inclusion

• part of the broader third sector

Defining features of social enterprisesDefining features of social enterprises

• a great diversity in size, strength and operates at many levels including local community enterprises, social firms, cooperatives and large national or international organizations

• some start off as businesses, most are in transition from voluntary sector organizations

• no single legal model for social enterprise, can be companies limited by guarantee, shares, industrial societies, unincorporated, charities

• social enterprises “clustering” together to benefit from support networks and greater economies of scale

Social Enterprise UnitSocial Enterprise Unit• set up within the Department of Trade and Indus

try (dti) in Autumn 2001• 8 major areas of concern:

– legal and regulatory issues– public procurement– business support and training– finance and funding– promotion– research/mapping– impact evaluation/social and economic indicators– learning from experiences

Social Enterprise UnitSocial Enterprise Unit• Seven roles

– help to change the business culture– to ensure that the legal and administrative framework

should not hinder the development and growth of social enterprise by providing a leveling play field

– the local authorities in particular have an important role in opening up public procurement

– working closely with training providers, both public and private

– to ensure appropriate finance and funding is available

– active promotion of social enterprise by recognizing and rewarding success

– to develop minimum standards of behaviour or an accreditation system of social enterprises

development of cooperatives development of cooperatives

• supported under the policy of developing social enterprises

• The cooperative principles:“that the very act of working together can bring social and economic benefits have been recognised. It is believed that through working in this way, people can develop a sense of their own power to change things, recognition of the importance of collective action, and better understanding of wider concepts of citizenship” (dti, 2002, p.25).

development of cooperativesdevelopment of cooperatives

• Cooperative Action is a new foundation established to support the development of new forms of cooperatives and mutual enterprise; giving grants and making loans of between ￡ 5000 and ￡ 200,000.

• Intermediaries, e.g. Cooperative Movement, Social Enterprise London

National Minimum WageNational Minimum Wage

The ProblemThe Problem

• September 2004, around 25.6 million workforce with 17.6 million full time and eight million part-time

• low-paying sectors accounted for some 6.1 million jobs – around 24% of all employee jobs

• 46% of employee jobs in the low paying sector are full time

• April 2004,1.1% of total number of jobs paid below the October 2003 NMW (272,000 jobs)

Concentration of low pay jobsConcentration of low pay jobs

• Women• part-time workers• home workers• some minority ethic groups• young people• those who have a work-limiting health

problem

The Low Pay CommissionThe Low Pay Commission

• set up in 1997• National Minimum Wage introduced in 1999• an independent advisory commission• 10 appointed commissioners, on voluntary basis • to produce a report to the government every two

years• for the discussion of the parliament• become statutory after parliament endorsement

The NMWThe NMW• set two years ahead• taking reference from the average earning gro

wth• to make it as evidenced-based much as possi

ble• also through a process of negotiation with emp

loyers• principle behind - “fair pay fair job”, not meetin

g “needs”• 1.1 million jobs have directly benefited from th

e 2004 upratings

Age 16-17 Age 18-21 Age 22 and over

April 1999- May 2000 ￡ 3 ￡ 3.6

June 2000 – September 2000 ￡ 3.2 ￡ 3.6

October 2000 – September 2001

￡ 3.2 ￡ 3.7


￡ 3.5 ￡ 4.1


￡ 3.6 ￡ 4.2


￡ 3.8 ￡ 4.5

October 2004 - ￡ 3 ￡ 4.1 ￡ 4.85

National Minimum Wage Hourly Rates, National Minimum Wage Hourly Rates, April 1999- October 2004April 1999- October 2004

Impact of the NMWImpact of the NMW

• no significant negative impact on the labour market or inflation

• no evidence that unemployment increases

• not much adverse effect on profitability of firms

• gender pay gap has been narrowed

Impact of the NMWImpact of the NMWNine sectors providing around 6 million jobs, nearly a

quarter of total, have been mostly affected: • retail• hospitality • cleaning• security • childcare• social care• agriculture• textiles, clothing and footwear• hairdressing

Compliance and enforcementCompliance and enforcement

• Self-enforcement is the approach • Inland Revenue’s minimum wage team has

completed over 5500 investigations in 2003-04• arrears are identified in 36% of the cases• no prosecution cases for non-compliance• non-payment of the minimum wage in the

informal sector, e.g. hospitality, business services, hairdressing and horticulture sectors


• Reasons for non-compliance include– low awareness resulting in careless mistakes,– workers crossed age thresholds and became

eligible for the adult minimum wage rate were not identified

– some worked longer hours than they were paid


• Recommendation of the Low pay Commission:

– interest charges payable on arrears arising from minimum wage underpayment

– financial penalties for seriously non-compliant employers

Recommendations for Hong KongRecommendations for Hong Kong

Creating Jobs and Enterprises

Local strategic partnership Local Area Agreement

Developing social enterprises

Setting up Minimum Wage

Recommendations for Hong KongRecommendations for Hong KongLocal Strategic Partnership

Local Area Agreement

• developing indices of deprivation• identifying deprived areas• allocating special funds to tackle deprivation• promoting better joining up of public, private

agencies and NGOs in deprived areas• developing local strategic plans• determining specific targets of change



• Legislation of a new legal form for social enterprise

• to establish a dominant mentality that social enterprise is for social purposes

• cooperatives not to be treated as a form of job-related training expecting members to move on to higher-paid jobs



• opportunities be open to all individuals, groups and organizations of both NGOs and private

• well built-in system of monitoring such as board and management structure

• statutory requirement or other measures are to be explored

• public procurement to be committed



• setting up intermediaries • In the long run, minimum standards of beh

aviour or an accreditation system of social enterprises to be developed

• grants to support start up capital• change of government accounting rules• service to support business development


Setting up minimum wage

• a strong government will • establishing a commission• appointing respectable persons

committed to the course

THANK YOUTHANK YOU

Hung Suet-lin 17/10/2005

Documents

Transcript of Hung Suet-lin 17/10/2005