Labour Market Integration for Immigrants using a Social Impact Bond - Case Ministry of Economic Affairs and Employment

BACKGROUND

Procurer

Ministry of Economic Affairs and Employment, Finland

Object of procurement

Koto SIB - Labour market Integration for Immigrants using a Social Impact Bond

Value of procurement

The contract had an estimated value of €8,625,000. However, the total contract value will be determined based on performance as per the contract terms. The total value of the investment fund under the SIB is €14.2 million.

Objective of procurement

The main social policy objective of the procurement was to provide employment opportunities and encourage integration of immigrants within the Finnish job market. The project was also seen as an opportunity to test the SIB model in Finland and to determine its replication potential.

Parties and operators participating in procurement

  • Procuring body: Ministry of Economic Affairs and Employment, Finland
  • Strategic partners: Hansel (Central Purchasing Body); SITRA (Finnish innovation fund)
  • Project manager: Epicus Oy
  • Other investors: European Investment Fund
  • Service providers
  • Programme participants

Procurement – background

During 2015, Finland experienced a rapid increase in the number of people arriving in the country. As part of the response, the Ministry of Economic Affairs and Employment undertook a project to help recently arrived immigrants to access the labour market. The unemployment rate for migrants was about twice that for Finns.

Following research and market consultation, theMinistry decided to run the project as a social impact bond (SIB) — a form of social outcomes contracting in which a private partner provides financing and takes on the performance risk. With SIB contracting, the public body pays only when certain performance outcomes are achieved. In this case, the performance indicators were based on reduced need for unemployment payments and increased tax revenue from the employment of participants in the programme.

This project, called the Koto SIB, was one of the first to be implemented in Europe and was co-financed by the European Investment Fund and the European Commission along with a number of other private and institutional investors

Read the full case description from “Making socially responsible public procurement work - 71 good practice cases(link is external)” on pages 113-115 published by the European Commission.

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