How governments can use spending and social procurement policy to create positive socio-economic outcomes

socio economic and industry profile 3

How governments can draw on success stories in Australia to support the nation’s population through the COVID recovery phase

That Australia is going through a difficult time is an understatement. Since mid 2019 Australia has been hit by natural disasters and, more recently, by the COVID-19 pandemic.

The government is supporting the population by providing payments like Job Keeper and Job Seeker and investment incentives for affected businesses. These are important short-term approaches, but now is the time to be thinking about long-term strategies.

Long-term strategies that have a proven track record of success in creating employment and inclusion will better position the country for recovery. Government can create jobs and business opportunities through investment and social procurement policy, supporting the groups most affected by the crises.

Marginalised people, including those who are long-term unemployed, underemployed, or under-represented in the workforce, should be top priority. They tend to have less stable employment and potentially fewer skills and qualifications, making them more vulnerable to economic shocks. Furthermore, industries that have been most impacted in Australia, such as retail, hospitality and tourism, include many low-paid jobs, and often employ people that are already disadvantaged, including Aboriginal people, asylum seekers and those from ethnic minorities.

In addition, the job market is now flooded with skilled and experienced people. Being more qualified and ‘job-ready’ than marginalised people, they are therefore more attractive to employers seeking to rebuild their workforces. Highly skilled candidates, affected by unemployment, take up the jobs vulnerable people have lost. This increases the qualification levels for jobs, termed ‘credential creep’ and results in those already marginalised becoming more marginalised.

Using government spending to grow skills and jobs is not a new concept. Governments around the world have increasingly been using social procurement policy and mechanisms to provide wider economic benefits through investment, particularly in infrastructure delivery and operations.

Stimulating economies through government investment

Governments can step in by using their purchasing power to grow skills and jobs. Across Australia, governments are committing to increase, or fast-track investment to stimulate economies. This includes the delivery and maintenance of transport and social infrastructure to directly or indirectly deliver jobs, apprenticeships and business opportunities. 

While workforces are crumbling in a number of industries, infrastructure delivery, operations and maintenance continues to experience nationwide skills shortages and gaps. This is due to the current level of investment, new technologies and aging workforces. Ironically, but fortuitously, opportunities now exist to address the existing skills crisis in infrastructure, with large numbers of people, including many with transferable skills now seeking new employment.

Governments have already begun to fast-track infrastructure development to stimulate the economy and provide job opportunities. 

Social procurement policy and mechanisms

Social procurement is the process by which organisations use their buying power to generate social value above and beyond the value of the goods, services or construction being procured. Governments have recognised the impact of this approach and are increasing the use of procurement mechanisms to drive socio-economic outcomes. 

Examples include NSW Aboriginal Participation in Construction policy (APiC), Victoria’s Social Procurement Framework (SPF) and the Commonwealth’s Indigenous Procurement Policy (IPP). The requirements of these frameworks include minimum spend, as well as targets for delivery of local employment, workforce development and increased diversity.

Success stories

In NSW recent success stories of social procurement include the Sydney Metro project. Since 2014, the Sydney Metro Pre-Employment Program (PEP), which was established by ISA, has delivered fantastic outcomes for marginalised groups: 

  • 48% Aboriginal participation
  • 95% successful completion  
  • 84% job outcomes
  • 40% of the workforce is made up of learning workers 
  • 4% of the workforce are Women in non-traditional trades, whereas the current representation in industry is 1%
  • 2.5% of the workforce identifies as Aboriginal and/or Torres Strait Islander
  • 14% of the workforce are under 25

The program won a NSW Premier’s Award for ‘Making NSW a Better Place to Live’ and has been successfully delivered across all phases of the project.

Recommendations

When considering how to use spending to create positive outcomes for the most vulnerable, governments can: 

Get in touch

We are invested in better positioning Australia’s industries and regions to recover and rebound post COVID. Given our experience delivering jobs and business opportunities through social procurement, we welcome the opportunity to talk to you about your economic recovery strategies.

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claire parry | co-author

claire parry | co-author

Claire is our Managing Director.

CLARA GOMES | CO-AUTHOR

CLARA GOMES | CO-AUTHOR

Clara is our Business Consultant and Marketing Specialist.