A. Social Enterprises

Social enterprises are a fairly new phenomenon, which have not yet been defined in a universally accepted way.Footnote ¹⁴ Essentially, they are businesses but with an underlying drive to create social value as the motivation for their economic activities.Footnote ¹⁵ They often fill gaps of services or goods that neither the private market nor the public sector can sufficiently cater for. In times of creation of welfare markets as a consequence of states withdrawing from their role as a service provider, the space for social enterprises is increasing.Footnote ¹⁶

While there are numerous attempts to conceptualize and define social enterprises,Footnote ¹⁷ this article uses the EMES Research Network’s working criteria for guidance.Footnote ¹⁸ The EMES approach is preferred for two reasons. First, it focuses on the institutional and organizational features of social enterprises and their interdependence, thereby providing a useful first guidance for any attempt to codify the phenomenon. Second, the EMES criteria have been tested, re-adjusted and confirmed repeatedly by research in different jurisdictions over the last twenty years.Footnote ¹⁹ Defourny and Nyssens categorize the nine criteria in three main groups: the economic and entrepreneurial dimension, the social dimension and the participatory governance dimension.

The economic dimension includes (a) a continuous activity producing goods and/or selling services, (b) a significant level of economic risk, and (c) a minimum amount of paid work. This dimension clearly outlines the distinctiveness of social enterprises from the traditional third sector, which would not have this amount of direct involvement in the market and usually relies more on voluntary work.Footnote ²⁰

The social dimension entails (a) an explicit aim of benefiting the community, (b) an initiative launched by a group of citizens, and (c) limited profit distribution. This dimension highlights how social enterprises differ from both traditional for-profit businesses and the public sector. As opposed to traditional enterprises, they were not set up for primarily their own benefit, and as opposed to the public sector, they were founded by individuals in their private capacity.Footnote ²¹

The participatory dimension consists of (a) a high degree of autonomy, (b) a decision-making power not based on capital ownership, and (c) a participatory nature, which involves the persons affected by the activity. This dimension builds on the specific values of the third sector, distinguishing it once again from both public sector services, which would not have autonomy, and the private business sector, which would be more based on capital ownership and less on user involvement in the decision-making process.Footnote ²²

These criteria define an ideal type of social enterprise generally, although the importance given to the different criteria varies from enterprise to enterprise and also depends on the specific national context. For instance, the national conditions for funding would especially impact WISEs, which usually rely more on funding than other types of social enterprises.Footnote ²³ Generally speaking, the boundaries between social enterprise and other forms of organizations are fluid and there is no consensus whether or not all the aforementioned criteria are constitutional for social enterprises.Footnote ²⁴

Social enterprises find themselves at the intersections of the private, public and third sector, showing hybridity in terms of their origins, resources and methods.Footnote ²⁵ This hybrid nature comes with its own challenges, as Battiliana et al have explored.Footnote ²⁶ Social enterprises, such as WISEs, where customers (those purchasing services or goods) are not also the beneficiaries (here employees at risk of exclusion from the labour market), have to weigh the interests of both groups and frequently end up prioritizing one over the other. Where resources are scarce, paying customers are frequently given priority, whereas a founding team grounded in social work might neglect economic considerations.Footnote ²⁷ Finally, some social enterprises, especially WISEs, find themselves closely aligned to the public sector, especially when receiving subsidies, thereby risking their autonomy.Footnote ²⁸ This will have to be discussed in more detail.

B. WISEs

WISEs have been described as one specific sub-set of social enterprises, providing employment for those at the risk of (permanent) exclusion from the labour market. While other types of social enterprises are gaining importance, including social services social enterprises, WISEs are often seen as synonymous with social enterprises, due to their dominance.Footnote ²⁹ They are usually set up as a reaction to the rising rate of unemployment, especially in low skill work, based on the realization that many labour market policies fail to create the necessary links between training and employment. Another reason is the need to break the cycle of moving from a training scheme into temporary employment and again back to unemployment followed by training. In many cases, WISEs offer employment combined with on-the-job training, as opposed to formal training.Footnote ³⁰

Literature describes WISEs as tools of redistribution of both income and work opportunities, correcting market imperfections and tackling the barriers that marginalized groups face when trying to access employment, such as perceptions of the potential of these groups to work and the institutional constraints of predominant forms of employment.Footnote ³¹ While there is a wide range of WISEs in terms of funding, target groups (ranging from being for anybody who is unemployed, to specific groups such as persons with disabilities, recovering addicts, migrants, etc.), size, and duration of employment, one important categorization for a human rights approach derives from the modes of integration.Footnote ³²

The first category, ‘transitional occupation’, aims at providing work and on-the-job training to facilitate (re-)entry into employment for those far from the labour market by increasing their ‘employability’. Across Europe, these WISEs have been found to rely on very different resources, with some being mostly dependent on public subsidies and others not availing of them. Beneficiaries work based on formal work contracts, covered by labour law.Footnote ³³ One example of WISEs following this approach are the so-called ‘Sozioöknomische Betriebe’ (Socioeconomic Enterprises) in Austria, which are funded to a large extent by the Austrian Labour Market Service and provide temporary employment opportunities alongside training and counselling for up to a year.Footnote ³⁴ These WISEs are an example of the type being largely dependent on public subsidies, which are granted based on a one-year basis and with strict criteria, costing the WISEs most of their autonomy.Footnote ³⁵

The second category, entitled ‘Creation of permanent self-financed jobs’, aims to provide stable jobs for people who might otherwise face exclusion from employment opportunities.Footnote ³⁶ One such example is AfB Social and Green IT, a multinational social enterprise, which operates in the sector of IT refurbishing and whose workforce consists of 45 per cent of people with disabilities, while not receiving any systemic funding by the public sector.Footnote ³⁷ The idea behind these enterprises is to enable workers to ‘thrive as economic agents’. Due to their independence from subsidies, these WISEs face the highest pressure to be profitable and market-oriented, coming across as professional businesses.Footnote ³⁸ This results in many cases in increased selectivity and higher productivity requirements for workers.Footnote ³⁹

WISEs focusing on ‘professional integration with permanent subsidies’ follow the same aim, but are not fully self-sustainable and rely partially on public funding.Footnote ⁴⁰ This includes, for example, the German model of ‘Werkstatt für behinderte Menschen’, which is a form of sheltered employment, providing work and remuneration for people with disabilities who are said to not be able to work in the open labour market, while still being able to carry out some economically productive work.Footnote ⁴¹ These WISEs are based on the understanding that in the medium term it is difficult or nearly impossible for some people to find stable employment in the open labour market, instead offering them secure, sheltered employment and the opportunity to create a social identity.Footnote ⁴² From a human rights angle, this is already looking close to segregation, requiring a closer scrutiny of the individual settings and discussion in more detail. Furthermore, while the current labour market might in fact be excluding these employees, it appears that WISEs falling into this category do not aim to redress these inequalities.

Finally, enterprises captured under ‘socialization through a productive activity’ do not provide formal work but a daily routine and focus on social skills. In many cases, participants do not receive a salary but rely on welfare payments.Footnote ⁴³ This category includes what is commonly known as day care or sheltered workshops for people with disabilities. They are problematic insofar as they result in exclusion from the benefits of labour law and employment opportunities as well as segregation from society.Footnote ⁴⁴ The following sections will highlight in more detail the incompatibility of this type of setting with human rights standards.

This typology, which was developed as part of one of two large-scale research projects, has since its development been applied and tested in various research projects. These have generally upheld it, but also emphasized further the idiosyncratic nature of WISEs in terms of their financial sustainability, size, and types of employment offered.Footnote ⁴⁵ As the brief discussion of the different types has shown, from a human rights angle the last two types have to be seen critically, which will become clearer in the following sections.

A. Social Enterprise in International Law

International legal instruments specifically on social enterprises do not exist yet. However, the International Labour Organization has passed two recommendations on cooperatives. While the first recommendation focused on cooperatives in developing countries,Footnote ⁴⁶ Recommendation 193 from 2002 deals with the promotion of the concept globally.Footnote ⁴⁷ Recommendation 193 emphasizes the drive of cooperatives to fulfil social justice and to achieve full employment. It calls upon states to promote them and to level the playing field into the broader economy. However, it also emphasizes that cooperatives should not be over-regulated and turned into just another public policy tool, and instead be guaranteed the freedom to be innovative mutual care spaces of civil society.Footnote ⁴⁸

While both regulations do not apply to all social enterprises, as has been highlighted, their importance should not be under-estimated, as they are the closest to an international regulation of the phenomenon. However, they do not link to a human rights framework and are also soft law, therefore not legally binding. At a regional level, the European Union (EU) has increasingly focused on social enterprises, most importantly in its Social Business Initiative.Footnote ⁴⁹ Within its 11 key actions, the Social Business Initiative focuses on improving access to funding (both mainstream and tailored to the needs of social enterprises), ensuring visibility, and making legal frameworks more responsive to the unique nature of social enterprises.Footnote ⁵⁰ While the Initiative looks at social enterprises specifically and provides practical guidelines for the EU member states, it again does not connect them to a human rights framework.

Academic literature on international law and the regulation of social enterprises, on the other hand, is critical of regulation and legislation in the first place. Utting fears that the sector’s transformative potential, arising from its participatory and democratic dimension, would be restricted in favour of an increased focus on poverty reduction and employment creation. The Social and Solidarity Economy, including social enterprises, might thereby end up being just another tool of the public sector.Footnote ⁵¹ Salustri acknowledges these concerns and their legitimacy, highlighting however how this leads to maintaining the ‘institutional gap’, that is, the under-development of the sector.Footnote ⁵² Instead of avoiding utilization and regulation altogether, he therefore suggests that ‘instead, when solidarity and social actions can foster the implementation of the SDGs, distortions should be punctually assessed and corrected through appropriate policies and openness should be promoted to gain benefits of mutual institutional recognition without incurring unsustainable costs of isolation’.Footnote ⁵³

In summary, while there is no international law that regulates or even explicitly mentions social enterprises, there is increasing awareness of the phenomenon, as part of the broader category of the Social and Solidarity Economy. The European Union has recognized the importance of the sector’s contributions and is trying to utilize it for their purposes.

B. Social Enterprise and Business and Human Rights

When trying to locate social enterprises more generally in the human rights framework, one would intuitively look first at the field of business and human rights. Business and human rights is a fairly young field of international law, breaking with the traditional conception of international law as only binding state-actors, and not applying directly to the private sector, including enterprises. This is of concern insofar as globalization and multinational corporations can have negative impacts on human rights.Footnote ⁵⁴ For the purpose of this article, there are two instruments to be considered: the Guiding Principles on Business and Human Rights, and the United Nations Global Compact.

The Guiding Principles are a legally non-binding instrument adopted by the Human Rights Council in 2011, considered ‘the most authoritative statement of the human rights duties or responsibilities of states and corporations adopted at the UN level’.Footnote ⁵⁵ They have been described as a tool to increase the level of human rights compliance by enterprises,Footnote ⁵⁶ as well as a ‘point of reference for corporate social policy’. Their strengths lie in them being unequivocally accepted and their ability to combine competing stakeholder interests.Footnote ⁵⁷ They must be seen as a practical tool guiding companies towards knowing, understanding and respecting human rights.Footnote ⁵⁸

The focus of the Guiding Principles is on: (a) the State’s duty to protect human rights, and (b) the responsibility of businesses to respect them. Both of these aspects are strengthened in the third part of the Principles, addressing the question of remedies. The Guiding Principles expressly refer to the need for non-discriminatory implementation, taking into account the needs of vulnerable social groups.Footnote ⁵⁹ They also highlight the role of laws and policies in shaping business behaviour (thereby not taking the economy as a force above the law), and the need to advise on appropriate methods to effectively take issues of vulnerability and marginalization into account.Footnote ⁶⁰ However, at no point do the Guiding Principles provide guidance on how to motivate businesses to act as transformative drivers for sustainable change; instead, they focus on businesses taking responsibility for their actions and establishing boundaries. This approach is also mirrored by academic literature on the topic, which generally focuses on accountability, the prevention of human rights violations, and potential codifications of these duties.Footnote ⁶¹ Considering enterprises as active agents and positive drivers of realizing human rights would however have to be included in order to fully address the tripartite structure inherent to socio-economic rights. As Craven outlines, this includes not only the duty to respect (refraining from interfering with the right), and to protect (preventing third parties from interfering), but also to fulfil rights (taking the necessary steps to ensure that an individual’s claim is met).Footnote ⁶² Wettstein discusses this neglect of the ‘fulfil’, or as he calls it, ’realize’ aspect of human rights under the need for a broader interpretation of businesses’ duties. Currently, the Guiding Principles build on an understanding of obligations being clearly distributed between states and businesses, without overlaps. Businesses are not supposed to get involved in the state’s duty (the fulfilment of socio-economic rights), as their role is understood to be purely economic. However, such an understanding of enterprises falls short of reality for several reasons. Firstly, as Wettstein points out, it does not capture the overlaps between respecting, protecting and fulfilling human rights, which is especially inherent to social and economic rights, as encapsulated by the Guiding Principles themselves.Footnote ⁶³ It also seems to ignore corporate social responsibility approaches, which can and do address issues external to the organization without doing social enterprises justice. This is due to the Guiding Principles focusing on a mere ‘responsibility to respect’ instead of wider ranging duties of protecting and fulfilling (which would require more active steps). These aspects are beyond their scope and mandate. While the Principles therefore apply to social enterprises, like any other business regarding the responsibility to respect human rights, a wider approach is needed to be able to fully capture and support the nature of social enterprises.

The United Nations Global Compact predates the Guiding Principles and originated from Kofi Annan’s initiative to form a voluntary coalition of enterprises to address questions of labour market fairness, the environment and transparency.Footnote ⁶⁴ The Global Compact has been described as providing broad guidelines of how to act responsibly as a business,Footnote ⁶⁵ as a strategic policy initiative for businesses, and ‘an advocacy-based initiative promoting a broad concept of corporate sustainability with a particular emphasis on concrete action by businesses’.Footnote ⁶⁶ Building on the principle of voluntary accession, it requires enterprises to provide annual reports on the progress made in realizing the goals set out by the Global Compact. However, research has shown that, in reality, enterprises are in a position to select which areas they prioritize at the neglect of others, and that many are merely interested in adding their name to the list for good publicity, thereby not leading to overall compliance with the standards set out.Footnote ⁶⁷ Of special importance are the various regional and local networks which facilitate mutual learning between members.Footnote ⁶⁸ Numerous manuals and guidance on various topics have been created by these networks and for their purposes. These include guidance by the International Labour Organization on the implementation of the Labour Principles entailed by the Global Compact. This guide entails for instance the recommendation to ‘establish programs to promote access to skills development training and to particular occupations’ in the context of eliminating discrimination,Footnote ⁶⁹ an approach core to WISEs, as described before. While initially the Global Compact was criticized for neglecting certain social groups, such as women,Footnote ⁷⁰ these topics have been addressed by the networks and manuals and other materials have been published on how to include women – amongst other marginalized groups within the business world – in businesses’ work on the Global Compact’s principles.Footnote ⁷¹ Finally, the Global Compact has engaged with the concept of social enterprises, considering them a necessary addition to governmental and philanthropical approaches towards addressing societal challenges. However, a closer look shows that the guidelines are not set out for social enterprises but instead for traditional businesses on how to nurture social enterprises and on questions of impact investment. They also repeatedly refer to the potential of social enterprises to create profits, further deepening the impression that the interest in the sector is more about the business opportunities than their social missions.Footnote ⁷²

It can therefore be said that while the Global Compact is aware of social enterprises and their potential, it has yet to fully embrace their unique and hybrid nature and provide regulatory and policy guidance for them. In the meantime, social enterprises could still profit from joining the Global Compact, not only in terms of creating beneficial contacts and networks, but also in terms of contributing to learning on aspects of their social mission, and gaining knowledge and experience on other aspects that are not core to their mission and therefore not necessarily on their agenda yet. As Cornelius et al have explored, corporate social responsibility approaches are often needed for the internal aspects of social enterprises whose mission does not primarily relate to their employees.Footnote ⁷³ Here the Global Compact’s aforementioned experience on gender issues could, for instance, be useful. Nevertheless, there is still some work to be done before the Global Compact is ready to fully include social enterprises.

C. Social Enterprise in International Human Rights Law

When looking at sources of human rights law more generally, a good starting point are the sustainable development goals (SDGs). Their aim is to eradicate poverty, ensure dignified lives in peace and sustainable resource management to protect the environment. To do this, governments have to balance the ‘three dimensions of sustainable development: the economic, social and environmental.’Footnote ⁷⁴ Focusing on empowering people and societies, the SDGs include a shift away from direct funding, towards measures that enable them to achieve the goals as active agents.Footnote ⁷⁵

They therefore have to combine, similar to social enterprises, social and economic aspects, potentially leading to a high compatibility of the two concepts. Just like social enterprises, the SDGs focus on a wide, comprehensive range of societal issues to address, including not only poverty and inequality, but also questions regarding climate action.Footnote ⁷⁶ This comprehensive approach, targeting the most pressing societal issues in a combined effort, mirrors the approach of social enterprises. For WISEs more specifically, Goal 8 on decent work and economic growth is of special importance, particularly 8.5, which tells states: ‘By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value’.Footnote ⁷⁷ This goal is arguably furthered by the work of WISEs, as described in Section II of this article.

Unfortunately, social enterprises have been largely ignored during the development of the SDGs, despite their potentially important role for the realization of the SDGs.Footnote ⁷⁸ The International Labour Organization sees the reason for the sector being overlooked – in the context of cooperatives – as a lack of understanding at an international level, as social enterprises operate primarily at the local level and are therefore often missing at international fora.Footnote ⁷⁹ Similarly, Littlewood and Holt explain the fact that social enterprises were not taken into account, with the SDGs’ focus on traditional enterprises, as well as with the SDGs generally not having focused enough on the role that businesses, including small ones, will have to play in the realization of the goals.Footnote ⁸⁰ However, Utting points out that the SDGs still have the potential to increase the visibility of the sector and consequently the support it receives. However, this must not affect its transformative potential, which has to be protected when regulating social enterprises.Footnote ⁸¹

A. The Human Right to Work

As the main focus of WISEs is to ensure access to employment for those at risk of exclusion from the labour market, they arguably fall within the remit of the right to work. Sarkin and Koenig highlight that the right to work captures what is really a set of inter-related rights, which cover both quantitative aspects (providing enough jobs for everyone looking for employment) and qualitative aspects (ensuring that work is meaningful and dignified).Footnote ⁹⁹ These two aspects are supplemented by the liberty dimension, referring to the right to refuse to take certain jobs, to be free from forced labour.Footnote ¹⁰⁰ The qualitative dimension is also referred to as the ‘rights at work’, or in other words labour law, which has to be considered when designing labour market policies to promote the right to work.Footnote ¹⁰¹

The exact meaning and content of the core right to work is, however, highly disputed. A subjective right to employment, manifested in an enforceable claim to be given a job, has mostly been rejected, based on the realization that full employment is not sustainable in a market-based economy.Footnote ¹⁰² Other concerns include who would have to provide and guarantee these jobs, given that the private sector, as the supplier of most jobs, is not usually bound by international law. In general, the right to work is interpreted as a policy goal and principle, guiding legislative and budgetary decisions.Footnote ¹⁰³ The measures taken can therefore be tested in court against the duties contained in a human right to work.Footnote ¹⁰⁴

While there are several codifications of the right to work in specific contexts,Footnote ¹⁰⁵ the International Covenant on Economic Social and Cultural Rights addresses the general right to work.Footnote ¹⁰⁶ Its Article 6 on the right to work in the aforementioned narrow sense, states:

1. 1. The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts and will take appropriate steps to safeguard this right.

2. 2. The steps to be taken by a State Party to the present Covenant to achieve the full realization of this right shall include technical and vocational guidance and training programmes, policies and techniques to achieve steady economic, social and cultural development and full and productive employment under conditions safeguarding fundamental political and economic freedoms to the individual.Footnote ¹⁰⁷

In its General Comment number 18, the Committee on Economic Social and Cultural Rights set out the four essential elements of Article 6, which have to be realized. Firstly, ‘availability’ includes offering specialized employment services for job seekers, while ‘accessibility’ refers to ensuring that the labour market is open to everyone. The employment options have to be acceptable for the job seeker in question, and be of decent quality, so that one can be truly free in choosing which work to accept.Footnote ¹⁰⁸

Some conventions on specific minority groups expand on what is required to ensure the right to work for everyone on an equal basis. Equality is in this context to be understood as an underlying legal principleFootnote ¹⁰⁹ that informs the content and interpretation of the substantive human right in question, the right to work. This is framed as equality of opportunity by the Convention on the Rights of Persons with Disabilities.Footnote ¹¹⁰ Article 27 of the Convention on the Rights of Persons with Disabilities explicitly mentions the tool of affirmative action programmes along with incentives and other measures as a way of promoting the employment of people with disabilities.Footnote ¹¹¹ Similarly, Article 11 of the Convention on the Elimination of All Forms of Discrimination against Women explicitly outlines the concept of a right to access to (re)training, (advanced) vocational training and promotions as an aspect of the right to work,Footnote ¹¹² thereby highlighting that some people have interruptions in their professional careers, as well as the importance of advancing women’s careers, and ensuring opportunities for promotion.

Arguably, WISEs further both the quantitative and qualitative elements of the right to work, the former by providing additional jobs, and the latter by focusing on empowerment and enhancing the person’s competitiveness in the labour market so that they can obtain the jobs they want. They are also compatible with all four of the essential elements outlined by General Comment number 18. With regard to availability, they have been set up for the unemployed, so are fully in line with the requirement. WISEs work to ensure an accessible labour market, offering acceptable and high-quality jobs for their beneficiaries, while providing these jobs themselves in the meantime. They can therefore be seen as fully in line with the requirements set out by the right to work in the International Covenant. Insofar as many WISEs focus on specific or all socially marginalized groups, aiming to ensure equality of opportunity in employment for them by providing work experience and targeted training, they also fall within the remit of the other conventions mentioned above. Accordingly, as will be discussed in Section III, WISEs could be seen as a form of affirmative action, which is found in various conventions. It is therefore important to consider what international law says regarding this concept, before reaching a definitive answer.

Summing up, this section has shown that while WISEs are starting to gain more attention on an international platform, this process is only just starting. WISEs and social enterprise more generally have not been codified in international law and international human rights law, both binding and soft law. It is yet to explicitly embrace and include them in their work as active agents on an equal basis with other businesses. In the meantime, general human rights law provides some guidance for WISEs not only on how to ensure they are fully human rights compliant by avoiding violations of rights, but also on how to contribute to the development and realization of equality of opportunity in employment for everyone as well as to a move from integration to inclusion within a human rights framework generally. However, these provisions are primarily applying to certain aspects of WISEs and social enterprises, leaving the need for a general international framework, accommodating them from a human rights perspective. In the meantime, affirmative action is the measure with the potential to provide the most comprehensive support and guidance.

B. Substantive (Transformative) Equality

Equality holds a prominent position in international human rights law. It is to be understood as a core principle – like dignity – underlying the understanding and implementation of all the rights, as well as a right in itself. It has to be understood as a right in itself, according to Nikolaidis, as it entails correlating duties for states.Footnote ¹¹³ To be effective, such a right to equality has to entail affirmative measures.Footnote ¹¹⁴ The exact meaning and contents of such a right to equality are, however, not always clear.

Equality may be described as a qualitative relationship between two subjects that have the same qualities with regard to a relevant aspect, in a specific context, although not in every aspect.Footnote ¹¹⁵ The details of what aspects are considered relevant and what equality contains are a topic of continuous debate.Footnote ¹¹⁶ In a human rights context, this question was answered to a certain extent by the Committee on the Rights of Persons with Disabilities, in its General Comment No. 6 on Equality.Footnote ¹¹⁷ The Convention on the Rights of Persons with Disabilities is one of the most recent human rights conventionsFootnote ¹¹⁸ and can therefore be considered as framing the current understanding of equality in a comprehensive manner. General Comment No. 6 builds essentially on Fredman’s concept of substantive equality, although under the new terminology of inclusive or transformative equality.Footnote ¹¹⁹

Substantive equality, acknowledging the disadvantage attached to certain characteristics, aims to overcome the shortcomings of a system by acknowledging that different treatments can be required to achieve actual equality. However, its core contents and exact meaning are still the subject of considerable disagreement. MacKinnon argues that substantive equality focuses on lived realities and the way these are determined by historical and prevailing disadvantage. Inequalities must therefore to be addressed in a systematic, asymmetrical way, not based on identical treatment, that challenges existing power structures.Footnote ¹²⁰

However, it is important to note that there is not just one approach of substantive equality, but several. MacKinnon and Fredman, often referred to as the founders of substantive equality, disagree on whether substantive equality is to focus solely on redressing power inequalities and resulting hierarchies of dominationFootnote ¹²¹ or has to be understood as a multifaceted approach, focusing not just on power but also on questions of redressing stigma, accommodating difference and participation. Fredman sees hierarchies of domination as part of the bigger, interlinked challenge.Footnote ¹²² She acknowledges the ambiguous nature of substantive equality but identifies consensus between the different proponents of the model. These include an understanding of the group aspects of discrimination, and the need for states to respond to inequalities actively by providing measures to combat disadvantage. However, this active aspect entails questions of resource allocation, situating equality uneasily between policy and law.Footnote ¹²³ Others, including Degener, have suggested that substantive equality was a step towards other models, such as transformative equality.Footnote ¹²⁴ She refers to MacKinnon and her discussion of power or the use of affirmative action, and Fredman’s concept respectively, as a means to redress disadvantage and power imbalances, to give her model content. Transformative equality thereby appears more like a variation of the existing substantive equality concept. One version of substantive equality that is frequently referred to, including in the United Nations Convention on the Rights of Persons with Disabilities, is equality of opportunity.Footnote ¹²⁵ Equality of opportunity has been described as aiming to equalize the starting point, so that everyone within society can compete on equal terms and under fair conditions. Factors beyond the person’s control have to be eliminated in order to ensure that everyone can compete on an equal basis.Footnote ¹²⁶

Affirmative action is one ‘active’ tool used to realize substantive equality.Footnote ¹²⁷ It is sometimes referred to as ‘positive measures’, ‘positive action’ or ‘positive discrimination’, although the last term has been increasingly rejected, as affirmative action does not constitute discrimination but on the contrary aims to eliminate its occurrence.Footnote ¹²⁸ It is defined in different conventions as steps taken to ensure the advancement of the human rights of a specific social group (including racial minorities, people with disabilities, women and girls) which faces systemic disadvantages, taking into account power relations.Footnote ¹²⁹ As the Committee on the Elimination of Racial Discrimination clarifies in its General Comment on affirmative action, these measures are situated within a substantive equality framework, which does not expect equal treatment when there are ‘significant differences in situation’. On the contrary, treating everyone the same in a situation like this would amount to discrimination. To make this clear and avoid misunderstandings, affirmative action, which can include the full span of legislative, budgetary, policy and preferential measures, should have the sole purpose of ensuring equal enjoyment of a specific right made apparent in its design.Footnote ¹³⁰ While the Committee on the Elimination of All Forms of Discrimination against Women emphasizes that affirmative action must not lead to the maintenance of separate rights and therefore has to be discontinued once the goals have been achieved,Footnote ¹³¹ the Committee on the Rights of Persons with Disabilities – while in general agreeing – points out that, in a disability context, permanent measures might sometimes be required based on the specific impairment or societal barriers. It also mentions targeted recruitment as one example of affirmative action. However, it reiterates that affirmative action must not result in a perpetuation of isolation and segregation.Footnote ¹³²

Looking at academia, Fredman describes affirmative action as entailing the duty of whoever is best suited to address inequalities to identify and address it proactively.Footnote ¹³³ O’Cinneide defines positive action broadly as ‘all measures which seek by means of positive steps to alter existing social practices so as to eliminate patterns of group exclusion and disadvantage’.Footnote ¹³⁴ Unlike anti-discrimination laws, which provide remedies in situations where discrimination has occurred, affirmative action aims to prevent discrimination from being repeated in the first place.Footnote ¹³⁵ To achieve this goal, social change has to happen and discriminatory attitudes overcome. An individual system, such as anti-discrimination legislation, can only achieve this goal to a limited extent.Footnote ¹³⁶

Affirmative action can include a variety of policies and measures, which McCrudden has categorized in five basic groups in the context of employment.Footnote ¹³⁷ Firstly, positive measures to combat discrimination entail steps taken to end any policies that result in discrimination. Secondly, there are inclusive policies, which are neutral on the surface but benefit certain minorities disproportionally. Thirdly, outreach programmes aim to attract qualified members of minority groups for specific employment or training opportunities. Fourthly, preferential treatment measures explicitly adopt criteria that give preference to members of a certain minority group, by reserving certain positions or establishing tie-breaker rules, for instance. Finally, the fifth category aims at redefining what we understand by ‘merit’. Here, the criteria employees have to fulfil are re-evaluated for their necessity and adjusted to make the jobs more accommodating.Footnote ¹³⁸ Reskin outlined in the American context various origins and types of affirmative action in employment, such as in the public sector or court ordered measures as a response to past discrimination cases. Most importantly for the context of WISEs is the category of voluntary affirmative action, which entails affirmative action developed and implemented by private actors, employers, based on their own initiative and interest in contributing to equality of opportunity in employment.Footnote ¹³⁹

Under McCrudden’s categories of affirmative action,Footnote ¹⁴⁰ WISEs that offer jobs to the (long-term) unemployed generally fall under the second category of inclusive policies, while those that target a specific group of people at risk of exclusion from the labour market or reserve a certain percentage of jobs for them, fall under the third or fourth category. However, they also redefine the job requirements and the concept of merit in a way that caters for the situations of their employees, therefore also falling under the fifth category. This brief overview leads therefore to the initial observation that WISEs could potentially be called a form of affirmative action, a point which will be picked up again in the following section.

A. WISEs and Affirmative Action

The question arising from the overview of the human right to work and under a substantive equality lens is whether WISEs can be framed under the concept of affirmative action. The concepts of substantive equality and WISEs interrelate quite well at a theoretical level, even though this seems to happen unconsciously. WISEs consciously hire unemployed people facing specific obstacles, rather than taking a merely meritocratic approach, which would ignore the underlying power imbalances. It thereby contributes to an attempt to equalize opportunities within the labour market. Young describes social enterprises as promoting a rights-based approach, and bringing about systemic change, which ‘transform(s) the architecture of how things work’.Footnote ¹⁴¹ She thereby links social enterprises not only to substantive equality but also to a human rights perspective, an idea of entitlement to the services or goods social enterprises provide. Similarly, Teasdale et al build their analysis of changemakers on Wright’s so-called utopian thinking of transforming the market’s power relations, which would bring more democracy to the market sector.Footnote ¹⁴² This idea of transforming power relations largely mirrors MacKinnon’s understanding of substantive equality but also recalls Holloway’s suggestion of creating small alternative spaces of other-doing, defying the dominant logic of the market, thereby creating what he calls ‘cracks’ in the system with the potential to create impact and transformation beyond their own, small systems.Footnote ^{143 ,} Footnote ¹⁴⁴

However, given that WISEs as social enterprises are generally initiatives launched by civil society with a high degree of autonomy, the answer has to differentiate between affirmative measures taken by the state and those undertaken by private actors. Affirmative action, as previously described, is a tool to ensure the realization of human rights, and specifically of equality of opportunity, for all members of society, including marginalized groups. WISEs are third sector initiatives, which give preference – and thereby implement affirmative action measures – to certain groups of society especially at risk from exclusion from the open labour market. They can therefore not be claimed by the state as part of their public sector measures. In this context, it is also important to note the statement of the Committee on Economic, Social and Cultural Rights in its General Comment Number 5, that citizen initiatives do not exempt the state parties from their duties to guarantee human rights.Footnote ¹⁴⁵

However, the General Comment does also acknowledge the role private initiatives play in a neoliberal world, where services are increasingly market-based. It is then the state’s duty to provide appropriate regulations to guarantee compliance with human rights standards.Footnote ¹⁴⁶ Despite the aim of this article to promote the potential and contributions of WISEs and social enterprises generally, it is important to avoid the potential risk of businesses becoming ‘private governments’ – in other words, taking over the role of the state in addressing welfare issues, without the legitimacy of states.Footnote ¹⁴⁷

Where states do regulate WISEs, they often also provide funding and other forms of support, to promote their contribution to labour market policies. WISEs thereby lose a certain amount of their autonomy and move closer to the public sector.Footnote ¹⁴⁸ At the same time, the government is taking initiative, as part of their duties under international law, and furthering the rights of certain groups of the population (the target groups of the funded WISEs, which can be very specific as mentioned before) by allocating resources and promoting social enterprises. These steps then, as opposed to the WISEs themselves, are an affirmative measure taken by the state. However, as outlined by Davister et al and discussed in Section II, the degree of autonomy as well as the economic independence and inclusion of WISEs in the business sector varies greatly, with only category 2, ‘Creation of permanent self-financed jobs’, being explicitly independent from systemic funding.Footnote ¹⁴⁹ In some countries with an established funding scheme for WISEs, sometimes requiring specific legal forms and business models, these enterprises are set up in response to the funding.Footnote ¹⁵⁰ It could be argued that in this case, the WISEs themselves – which are moving ever closer to the public sector and are losing some of the features of an ideal-type social enterprise – are to be understood directly as affirmative action measures by the state and less as parts of the economy.

These cases, particularly the last example of enterprises set up in response to funding, seem to confirm the concerns of Utting amongst others: that the innovative and autonomous potential of social enterprises is reduced in favour of promoting certain policies, which are considered important by government. Furthermore, when funding is available, social enterprises can be seen adjusting their services to fit into a scheme, thereby potentially abandoning their business orientation as well as their original mission.Footnote ¹⁵¹ In line with Salustri, however, this article argues that such developments need to be monitored, evaluated and corrected – for instance, in the context of funding, by ensuring there is a more generic funding stream for social enterprises generally, alongside one that favours WISEs. It is exactly the international legal system and its analysis by academia that can provide the guidance and awareness needed for states to do this.

Having established that the promotion and funding of WISEs is a form of affirmative action, what practical implications follow from this? As previously discussed, affirmative action measures are generally supposed to be temporary. They are therefore subject to regular evaluation and must be discontinued once the desired goal has been achieved.Footnote ¹⁵² Consequently, governments must tailor their supports in a way that can achieve their desired goal – in this case fulfilling the right to work for those at risk of exclusion from the labour market without these supports becoming a permanent alternative. They are also limited in which target groups they support, as these measures are intended to achieve substantive equality for social groups that have been systematically advantaged. Consequently, the beneficiaries of affirmative action are specific groups protected by non-discrimination legislation.

WISEs then face a situation where they can receive (financial) support from the public sector, but cannot count on this as a permanent source of resources, as the government might periodically reallocate resources to more promising measures or discontinue them when they consider the goal achieved. From the perspective of trying to maintain their autonomy and economic viability, this can be seen as the necessary incentive to strive for economic independence from subsidies. This, however, is only possible where the regulatory framework accompanying the financial supports allows for long-term financial planning. For instance, the aforementioned Austrian ‘Soziökonomische Betriebe’ have no option to create reserves, operate on one-year plans, and can only work in so-called ‘niche’ professions.Footnote ¹⁵³ It is therefore almost impossible for them to reach economic viability and gain further autonomy from the public sector. They are therefore an example of overbearing regulation, resulting in the WISEs being effectively not a business any more but a labour market policy and has to be viewed with concern.

From a right to work perspective, such restrictive regulations limiting the entrepreneurial nature of WISEs are unnecessary. On the contrary, having to work in a niche profession to obtain work experience and training is not helpful for subsequently finding employment on the open labour market. It is questionable if the qualitative element of the right to work and its accessibility criterion are complied with in these situations. While financial supports by the state must be monitored to ensure they are used appropriately and evaluated in terms of their potential to achieve their purpose, any further regulations limiting the autonomy of WISEs would have to be critically analysed. As previously outlined, human rights compliance is a legitimate concern, and WISEs, as a form of social enterprise with a social mission, can be expected to do more in terms of setting active steps to realize human rights. Regulations targeting entrepreneurial freedom are based on a different logic and are usually based on the idea of non-interference with the free economy. Such regulations lead, however, not only to an increased dependence on subsidies and lack of autonomy of the WISEs, but potentially also to a work environment that does not mirror the work environment of the open labour market for beneficiaries. Such regulations are not required from a human rights perspective and, considering the interest of WISEs as a form of social enterprise, should be rejected based on the need to maintain maximum autonomy for WISEs.

Human rights requirements should result in ending certain approaches, such as what is called by Davister et al ‘Socialisation through a productive activity’,Footnote ¹⁵⁴ as they entail human rights violations and consequently must not be supported by states.Footnote ¹⁵⁵ From a human rights perspective, such a limitation of the otherwise very productive innovative freedom of social enterprises is actually very welcome. Inclusion of people with disabilities has to be the rule in every sector of society, and social enterprises as innovators should be at the forefront of this development and not maintain outdated practices.

If international law were to embrace social enterprises as tools to be promoted as a form of affirmative action, it could provide the clarity needed for social enterprises to position themselves as best practices in terms of inclusivity and accommodating diversity, thereby raising awareness within the market economy and potentially starting a snowball effect.

B. WISEs and Business and Human Rights

The previous sections have shown that WISEs and social enterprises have generally been largely overlooked in the context of business and human rights. Where they have been discussed, this was from the angle of corporate social responsibility investments. This article suggests that this should change for several reasons.

Firstly, social enterprises, including WISEs, could benefit greatly from networks such as the Global Compact, and the resources it offers. As discussed, many find it hard at times to combine the social and the business side and consequently lack certain business skills or neglect governance aspects.Footnote ¹⁵⁶ In addition, it has to be pointed out that even WISEs, as socially and sustainably responsible enterprises, are in need of regulation or oversight regarding their human rights compliance, especially when it comes to people with disabilities and the right to work, to guarantee they are not segregated and denied their labour rights. Like any other businesses, WISEs should therefore incorporate corporate social responsibility practices, ensure they are complying with labour law and generally respect human rights beyond their core mission, which aims at promoting and fulfilling the right to work, sometimes alongside other human rights. Finally, being included in the field of business and human rights will further strengthen the view of WISEs as businesses, which can potentially strengthen their position against economically restrictive regulations. On the other hand, traditional enterprises could learn from social enterprises, in how to address societal concerns proactively as part of a financially sustainable business approach. By including social enterprises as their members, these networks would also gain further legitimacy in a human rights context. It would arguably be an opportunity for them to shift the narrative from its currently predominant focus of corporations as a threat to human rights, towards a more nuanced image. WISEs can therefore be seen as both contributing to learning and being in need of a business network, in their quest to become a comprehensive driver for human rights promotion and compliance within the market.

Given that the hybrid nature of social enterprises and WISEs, combining elements of the third, public and private sector, has so far often led to confusion regarding their status as professional, trading and income-creating actors on the market, an explicit inclusion in international law would contribute to resolving these issues, in addition to adding visibility to the sector and its contribution at an international level. This is to be seen in addition to an engagement of the field of business and human rights with social enterprises. As this article has shown, international law is well able to include WISEs in their framework, as suggested via the principle and right to equality and specifically in the form of affirmative action. An explicit acknowledgement is therefore required for reasons of clarification primarily and with the hope of adding visibility to the contributions the sector already makes. This acknowledgment might even address the social and solidarity economy generally. It might also lead to further dedicated regulations as a consequence.

In summary, it can therefore be said that while the social and solidarity economy, with social enterprises as part of them, are to be embraced by international human rights law in the context of business and human rights, the focus should arguably be on social enterprises. This would bring mutual learning and opportunities both for social enterprises and traditional businesses.