The impact of social enterprise on labor market structure: A case study of social enterprises in Nairobi

Magister Artium (Development Studies) - MA(DVS)Social entrepreneurship has spread worldwide, as social entrepreneurs seek the solutions to developmental challenges. This is especially true in Nairobi, Kenya, as social entrepreneurship has established itself in the labor market. However, there is limited knowledge regarding the impact of social enterprises in African countries, especially with regards to the labor market. It is for this reason that this study aims at highlighting the impact of social enterprises on the labor market in Nairobi, Kenya. It also provides an outline of the labor market structure in Nairobi. The study employed a mixed methods approach, using both qualitative and quantitative approaches, collected concurrently as part of a concurrent triangulation design. Five social enterprises located in Nairobi were involved in the study, and were chosen through snowball sampling. These social enterprises offered direct employment, training programmes or support for beneficiaries to start their own businesses. The research instruments used in this study were as follows; 10 interviews (5 interviews with beneficiaries and 5 with social entrepreneurs), 50 questionnaires distributed to beneficiaries through random sampling, field work observations and a literature review. The results of this study were that social enterprises in Nairobi have a significant impact on the livelihoods of beneficiaries by directly employing them, providing necessary skills for later employment or supporting them to start their own businesses. However, these increases in income are often either inadequate or inconsistent as most beneficiaries are forced to diversify their livelihoods. Social enterprises also fail to reduce the gender wage gap among their beneficiaries. Social enterprises also increase market access among their beneficiaries by providing them with advice and training, as well as, direct access to customers. In the same vein, they increase the level of training of beneficiaries. This helps beneficiaries improve their relations with customers, produce high quality goods, hone their skills, gain employment, gain experience, build a repertoire, earn profits and start businesses. The subject of training also affects the income levels of beneficiaries, as many of those who study entrepreneurship, quality training and customer service earn above minimum wage. Additionally, social enterprises impact formalization among their beneficiaries. However, once beneficiaries leave, they often return to the informal sector. Therefore, the impact on formalization is only significant while beneficiaries are participating in the social enterprise. Social enterprises also influence the attitudes of beneficiaries, creating a more positive outlook on their contribution to the labor market. Likewise, social enterprises shift perceptions about formal qualifications as beneficiaries feel that they can still secure employment by showing their level of experience or body of work. Lastly, social enterprises have limited impact on fair trade ideals as majority of the social enterprises in Nairobi are not knowledgeable about fair trade, and therefore do not aim towards it. For those that do adopt the fair trade model, it is unclear if they have influenced their beneficiaries to actually believe in these ideals or just simply require them to comply with fair trade regulations. In conclusion, the study determined that social enterprises do have significant impact in the labor market structure, increasing livelihoods, improving educational qualifications, and influencing formalization and attitudinal structures in Nairobi. However, social enterprises must also focus on improving their impact with regards to strengthening livelihoods, especially among their female beneficiaries and creating permanent change in formalization among their beneficiaries even after they leave the enterprise. Likewise, social enterprises should consider the importance of fair trade ideals in their daily practice, and the value of imparting these to their beneficiaries