Human development and well-being during the great recession. The non-profit sector as a capability enhancing workplace

Abstract

The current financial crisis poses severe challenges to the economic system. Specifically, the increasing unemployment and the contraction of firms’ labor demand induce a higher social vulnerability, leading to capability deprivation of individuals (Sen 1999), new sources of poverty, and social exclusion. Consequently, labor productivity is reduced and, due to the fiscal pressure, labor costs increase. The analysis sheds a light on a perverse adjustment mechanism that might run the economic system into a vicious circle: enterprises during crises tend to reduce labor costs by firing employees; people run the risk of an economic marginalization and tend to abandon the labor force in favor of household production. In this scenario, the non-profit sector can exert a crucial role as, by lowering the monetary costs of labor and capital, it can offer employees a capability developing workplace context, where they can experience a reduction of their vulnerability by finding an alternative source of employment. Specifically, we propose a model aimed at regulating the interaction between the formal and the informal sector (NPOs, third sector, cooperatives). The main innovation regards the existence of n non-profit activities that can lower the monetary costs of labor and capital by paying a share of wages and dividends in real terms. In this perspective there is room for the public sector to assign a value to the economic activities that foster social capital, contribute to reduce inequality and increase individual and collective well-being. A statistical analysis of the Italian economic system based on this framework stresses the importance of citizens and firms’ participation at political, economic and social level in finding an equitable, sustainable and durable way out of the crisis. Specifically, we focus on the importance to restate the assessment measure of poverty: not only income and expenditures figures, but also contextual factors and capability development opportu