Prime example for reintegration of the long-term unemployed: Federal Labor Minister visited Online Manufacturer FACTUREE

Online Manufacturer taps into government funding and helps the long-term unemployed return to the primary labor market

Prime example for reintegration of the long-term unemployed: Federal Labor Minister visited Online Manufacturer FACTUREE

Berlin, 21 November 2022 – Someone who has been unemployed for five years or more is considered difficult to place – the Participation Opportunities Act was passed to change this. Federal Labor Minister Hubertus Heil visited the Online Manufacturer FACTUREE (www.facturee.de) and witnessed firsthand how people can be effectively reintegrated into working life after many years of unemployment. The Berlin-based company uses government funding and very successfully employs five people who were previously unemployed for many years. Having gained a foothold in the primary labor market again, they have already assumed important roles in various divisions of the company. Therefore, after the funding ends, they will be offered permanent positions. Hubertus Heil cited this example in his speech to the Bundestag on 10 November 2022: https://bit.ly/3O59hoe

Getting the long-term unemployed back to work was a great challenge for many years. In this context, the Participation Opportunities Act of the Federal Ministry of Labor and Social Affairs, which has been in force since 1 January 2019 (§ 16i SGB II), is intended to improve the employment opportunities of people on the margins of the labor market and facilitate their social participation. The objective of the model is to motivate employers to fill open positions with long-term unemployed persons. Federal Labor Minister Hubertus Heil learned how this works in practice during talks with staff at FACTUREE who are employed via the Participation Opportunities Act.

Benjamin Schwab, co-founder and CMO of FACTUREE, explains: “We are very pleased that we took this step. The instrument gives people whose careers have been derailed a real chance to enter the labor market again. By effectively integrating people who were chronically unemployed, we would like to encourage other companies to follow our example.”

Social labor market offers prospects – initial skepticism vanished

The goal of the Participation Opportunities Act is to support all parties involved. When a long-term unemployed person is hired, the state pays their full wages in the first two years. Then the state pays 90 percent of their wages in the third year, 80 percent in the fourth year, and 70 percent in the fifth year. 

Prior to implementation, there were also skeptics at FACTUREE. Moritz König, CEO of FACTUREE, says: “Initially, I had major concerns when I was approached about this issue. I thought that if someone is unemployed for so long, there must be a reason. But I agreed to go ahead because there is practically no risk for the employer. Looking back, I have to say I was actually mistaken … and I’m very happy about that.”

Benjamin Schwab emphasizes: “The model does not guarantee success. Both sides have to be ‘willing’ for the public program to work – employees who are willing to perform, and employers who are willing to be patient and understanding of the very different backgrounds people bring with them.”

The five female and male long-term unemployed persons working at FACTUREE have different career histories. Andreas, storage logistics employee at FACTUREE, was unemployed for a long time and had already given up hope of ever working again. He says: “Thanks to the Participation Opportunities Act, I have now found work in the primary, regular labor market – not in an association or other organization that operates in the secondary labor market. This was important for me. Now my life is structured and I feel optimally integrated.” 

Christian, who was unemployed for 15 years, explains: “The Participation Opportunities Act and my employer’s willingness to take a chance restored my quality of life.”

Employers and taxpayers also benefit

All parties benefit from the Participation Opportunities Act – the long-term unemployed, the employers and also taxpayers. Long-term unemployed people get a real opportunity to return to the primary labor market, while companies receive generous wage subsidies that help create new jobs with little to no risk. Taxpayers also benefit because in the long term, fewer people need government assistance.

Rapid growth through public funding instead of venture capital

One distinguishing feature of FACTUREE is that the company has been fully self-financed since it was founded and thus, unlike the usual practice in the sector, operates without investor funds. Five years after it was founded, the company generates 8-figure sales volumes and annual growth rates around 100 percent. Contributing to this positive business development is the fact that from the start, FACTUREE has used public funding programs such as the Participation Opportunities Act that offers pre-financing of jobs.

FACTUREE plans to offer permanent employment

Benjamin Schwab says: “The model works so well for us that we want to offer permanent jobs to all those concerned even after the end of the funding period – i.e. when we no longer receive wage subsidies from the government. We also encourage other companies to make use of the instruments of the social labor market so that even more people can return to permanent employment. We would like to thank the Federal Ministry of Labor and Hubertus Heil for giving us this platform to share our success story with the public.”

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