Heidi Knake-Werner

A publicly-supported employment sector (ÖBS *)
An attempt to get away from dead-end employment practices
* In German: öffentlich gefördeter Beschäftigungssektor

The dominant practice of the employment market is to promote precarious forms of employment such as fixed-term contracts, minimum wages and part-time work. This is because policy is motivated exclusively by economic factors in relation to the market. As such, only two ways of dealing with unemployment are acknowledged: either an acceptance of long-term mass unemployment, which can't be financially sustained, or the creation of sectors in which the unemployed function as a kind of modern-day 'casual labour', though this will in the long-term destroy the fabric of society.

But totally new perspectives open up if one steps back from the sphere of market-controlled options, takes an overview, and sees the absurdity of the simultaneous existence of a surplus and a shortage of employment. At a time when production is becoming less labour-intensive, activities outside of market structures are on the increase, and these can't be measured in monetary terms. They are the activities which build and sustain communities, increase society's creativity, and secure social bonds that are otherwise undermined by increasing market forces.
The answer to this work-issue has long been 'socio-ecological re-structuring', though it has been understood as an ecological re-structuring which should then be followed up with social change. But we think that social change, placing a different emphasis on the distribution of the potential work-force in society, is at least as important as the former. To overcome problems of both social and natural regeneration, there should be a transfer of the workforce from the production of goods to the regeneration of nature and society. This is both necessary and possible, since increasing productivity makes regeneration not only essential but also financeable. There is, of course, one snag: regeneration work is a precondition for production but has to be paid for by production, and therefore is considered 'unproductive'; a simple outlay of capital with no prospect of becoming profitable. The reconstruction of the employment system in favour of an improved social and natural environment will not be possible without a change in thinking regarding the distribution of the workforce.

'The public sector' means more than 'public services'
On the issue of extending state welfare, the question is often asked, why do we need a publicly-funded employment service? Public services themselves are so inefficient (which, incidentally, could be solved by the creation of more employment in local, regional and nationwide public services). This is a valid question, since the public sector is one of the areas with the highest rate of so-called 'streamlining' - to the extent that it can no longer even fulfil its task. An improvement in state welfare would inevitably lead to more employment in the public sector.

The concept of a publicly-supported employment service does not set out to be an alternative concept to the existing public services; indeed it is based on the effectiveness of the latter. But we think it wrong to equate public services with the public sector. The public sector is as distinct an area of society as the state sector is from the private sector, and it is of course far greater. Its domain encompasses all not-for-profit organisations such as charities, church organisations and foundations, and a number of independent projects. All of these are founded on public funding and serve public needs.

In Germany, the establishment of this style of public sector was accelerated through state subsidies with which church organisations, in particular, laid claim to the area between the private and state sectors. The churches' social organisations, then independent co-operative organisations, followed by labour movement organisations and civil charities and finally, social insurance providers, all came together to become what is today the public sector.

This so-called 'sector' between the state and the private sectors is not only an economic sector but also a manifestation of civil society organising itself independently. The state is not released from its responsibilities, but doesn't have to fulfil its responsibilities entirely alone (as Dahrendorf pointed out). Considering all this, there can be no hiding the fact that the public sector was set up with a variety of contradictory political motives. Quite a number of the big providers are on conservative lines, have internal power struggles, or are far-removed from democratic and civil rights principles. Christian providers usually deny democratic participation to their employees and some of the non-profit organisations resemble feudal hierarchies.

The 'non-profit' label doesn't always spell 'community spirit'
The term 'state-funded employment sector' causes so many misunderstandings that some prefer to call it the non-profit sector. More and more experts on employment are discovering this sector, especially since it has established itself, along with the private service-sector, as a job-creator. Research carried out in twenty-two selected countries came to the surprising conclusion that this sector has a turnover of 1.9 billion German marks world-wide and provides full-time employment for 18.8 million workers.1
Despite the impressiveness of these statistics, the organisational structures behind them are so diverse that it is difficult to talk about one clearly-definable sector. The research defined five characteristics of non-profit organisations:
'They are 'organisations', i.e. have an institutional structure and are publicly recognised.

  • They are 'private', i.e. institutionally independent of the state.

  • They are independent, i.e. they control all their own business.

  • They are non-profit, i.e. they don't give out profit to managers or shareholders.

  • They are voluntary, i.e. membership is not compulsory, and they rely at least in part on volunteer work and private donations.'2

While these characteristics clearly differentiate non-profit organisations from the state sector, their single difference from the private sector is in the fact that they should not seek to make any profit. The last of the listed characteristics - having volunteer workers and receiving private donations - is not a hard-and-fast condition for non-profit organisations. Under the umbrella of the 'third sector', there is to be found a variety of widely differing organisations with sometimes contradictory objectives. The spectrum is so broad that it embraces organisations ranging from a Texan millionaire's golf club to a charity soup kitchen in the slums of Rio de Janeiro. At the one end of the spectrum one finds charitable and social organisations motivated by social justice, and at the other end, organisations for the privileged which have quite often been founded either for tax reasons or for an elite to indulge in some luxury leisure activity.

Two contrary tendencies can be presumed to be responsible for the massive expansion of the non-profit sector. On the one hand, social divisions lead to an increase in social charities, above all in Western European societies. On the other hand, either the failure of the state sector or a reduction in public services will cause the middle classes to organize their own service-structures. According to the researchers, 'one possible interpretation is that a decrease in the non-profit sector will be proportionate to an increase in the state's social welfare system.'3 The overall picture may be more complex, but privatisation and the reduction of state services could be a decisive factor in an increasing 'third sector'. So, we should be sceptical when the non-profit sector is described as paving the way for a socio-ecological restructuring of work. On the contrary, the increase in the non-profit sector could just as easily be interpreted as the consequence of privatisation and of the 'slimming-down' of the state sector. Therefore, an equation between the publicly-supported employment sector and the non-profit sector is totally unusable as a description of the former.

ÖBS - more than just an employment sector
The label publicly-supported employment sector has connotations of the days of the famous 'Second Labour Market', or of the kind of employment whose only value is to prepare people for 'useful' work. Having said that, we all know that publicly-supported employment is not uncommon: agriculture and mining have relied on public funding for decades. Basically, all civil service employment can be counted as publicly-supported. In recent years, the publicly-supported employment sector has survived several conferences, without this broad interpretation having been modified.

A problem arises from the paradox that the ÖBS will not be a 'new' entity, since it will develop within existing structures, and yet these social enterprises and employment organisations are meant, themselves, to develop into a new and clearly-defined sector. The diversity of providers and organisational structures is not necessarily going to be the biggest problem, because this can become an opportunity for a creative learning process. The real problem will be the development of shared objectives, common development principles and supportive structures. A public sector, which should provide more than just employment and prioritises its commitment to socio-political aims, must have a reliably comprehensive perception of social problems, comprehensive development strategies and some kind of all-embracing organisational structure. Apart from effective support structures, the OeBS needs a new legal framework. We are, in effect, dealing with a sector which is positioned between, and has a relationship with, the state and private sectors, but cannot function according to the legislation which applies to either of them.

Besides the material conditions that are necessary for the development of a publicly-supported employment sector, one should also consider the social psychology by which any planned project or new arrangement would be viewed as merely a temporary provision. We think it important to end the irritating discussion of the difference between the First and Second Labour Markets. The constant erosion of employment in the so-called First Labour Market also erodes the differences between the two markets. At best the two markets can only be described as subdivisions of what they were, distinguishable from one another only by their providers - be they private, public or charitable (hence offering differing employment conditions). What is needed is a differentiation between labour markets according to which economic sector they fall into rather than types of employment. Since private and public providers have both been relying on state support in order to access the employment market, the First and Second Markets can hardly be differentiated from one another any more. Unfortunately it has to be admitted that the Second Labour Market has disappeared - not through becoming a normal labour market, but due to the absorption of its unconventional employment structures into the First Labour Market.
For us, the most important emphasis within the term publicly supported employment sector should be on 'public sector' rather than 'public support', emphasising the social implications rather than the effect on employment rates. Looking at the diversity of employment receiving public funding, it's not the concept of public funding itself which is new, but the function which this sector now has. It is required to deal with the shortfall in social regeneration resulting from accelerating modernisation. It is also required to improve social and cultural welfare to counteract the breakdown of social relationships, and create new social structures. At the same time, it should support ecological restructuring by promoting local ecological projects or providing advice, in order to facilitate the change to a new way of life. Job-creation is a valued by-product but not the main objective. The important thing is the creation of a charitable sector which applies different thinking to modernisation, valuing the creative forces in society above short-term market fluctuations or short-term employment favoured by companies. The neo-liberals, faced with social and economic change, are relying solely on market developments, whilst the new social democrats are focussed on their political encouragement of competitiveness. We can take, from this, that the development of a new charitable public sector makes sense. Its purpose is the realisation of a new type of social regeneration and, as such, reaches far beyond the politics of employment and the realms of traditional social politics.

The difficulty of merging the existing structures of independent projects and charitable organisations will be, first, to make the afore-mentioned purpose a shared goal; second, to develop the necessary structures; and third, to raise public consciousness about this far-reaching mission and have it adopted in party manifestos. Public acceptance and political support will be as hard to achieve as the necessary change in thinking among providers. Their activity in the employment scene is currently so focussed on after-care politics, in other words, the employment of 'problem cases', plus companies' exploitation of their support mechanisms, that social idealism is marginalized.

The five previously-cited characteristics of the Third Sector (formulated by the 'Johns Hopkins Comparative Non-profit Sector Project'), provide a basis from which principles can be developed for the realisation of a publicly-supported employment sector (OeBS). Most of these characteristics taken from the study of the Third Sector should be applied to an OeBS, such as the requirement of a constitution, independence, and the refusal to pay out profits. But in addition to these, further characteristics need to be formulated in order to precisely define the OeBS's charitable nature and to emphasise its social objectives. Projects of the OeBS should:

  • contribute to the social, cultural and ecological reconstruction of society.

  • help to overcome social exclusion and concentrate on those areas wher the most severe social problems are seen.

  • help to develop grass-roots democratic structures in local contexts, and aim for more voluntary involvement.

  • be intrinsically democratic, and willing to face public discussion and accountability.

  • be willing to be audited by nationwide networks, and to seek, with others, ways of working professionally; also to focus on co-operatively agreed objectives.

  • pay wages according to wage agreements and offer agreed working conditions; also, guarantee participation of the workforce. 


1. Lester M. Salomon, Helmut K. Anheier and colleagues, Der Dritte Sektor - Aktuelle internationale Trends (Johns Hopkins Comparative Nonprofit Sector Project, Guetersloh, 1999) page 4
2. ditto, page 9
3. ditto, page 16

Excerpt from the paper 'Die Sackgassen der Arbeitsmarktpolitik und ein Ausbruchsversuch' in Katrin Andruschow (ed.) Ganze Arbeit. Feministische Spurensuche in der Non-Profit-Oekonomie (Edition Sigma, Berlin, 2001)


Email: Heidi Knake-Werner
Dr Heidi Knake-Werner is an MP for the PDS (German Socialist Party) and also a substitute member of the Working Group on Employment and Social Legislation of the German Parliament.