Rotterdam, the Netherlands—
Since 2008, the Municipality of Rotterdam, the Netherlands, has used social clauses in public procurement, which requires that city contractors employ people far from the labour market.
In the Netherlands, this arrangement is known as “the Social Return” which is a reference to the percentage of total contract value that contractors spend on achieving an agreed social outcome.
The key objective of the Social Return Policy is to address challenges related to increasing unemployment, poverty and social exclusion in the city. In the context of the 2008 financial crisis, these problems were more pressing than before. By including obligatory social targets in public procurement contracts, the city has managed to get employers to hire long-term unemployed individuals, which lowered the costs of social benefits and increased social inclusion in the city.
Under Rotterdam’s social return policy, a social return expert reviews every public sector contract worth more than EUR 50 000, for social return opportunities. These contracts must allocate up to 50% of the contract value by providing employment opportunities for Rotterdam’s residents. The allocation on average is about 5% per contract. The programme was first implemented to address the impacts of the 2008 financial crisis, which led to increasing unemployment, poverty and social exclusion in cities. The programme was built on strong relationships with companies in the city.
In the first years following the policy, Rotterdam leveraged about EUR 800 million in spending power for public contracts. This led to annual savings between EUR 10 million and EUR 25 million, depending on the type of job people find and how much social funds can be saved on welfare benefits. Moreover, by building relationships with companies like these, the city has enabled thousands of residents to find a job, placement or training with the potential to transform their lives.
Despite successes, in 2019 the city decided to make some improvements to the policy to adapt to the changing labour market circumstances and increased labour and skills shortages. The programme therefore now includes more guidance for employers on how to handle and support individuals who face multiple challenges, including those individuals far from the labour market. In 2019 alone, 2 654 people found sustainable jobs through the programme.
Using public procurement contracts for social and sustainability policy targets is a common approach used in many cities. Complaints from employers have led to the alteration of the policy to improve communication between newly employed and managers. This showcases that strong cooperation between stakeholders can lead to policy improvements, allowing the policy to adapt to new circumstances instead of ageing out of relevance.
OECD (2022), "Future-proofing adult learning systems in cities and regions: A policy manual for local governments", OECD Local Economic and Employment Development (LEED) Papers, No. 2022/03, OECD Publishing, Paris, https://doi.org/10.1787/11fa26cc-en.
