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Alternative employment models for persons with disabilities – towards a more inclusive labour market

Together with German NGO Sozialhelden, we conducted a study on behalf of the European Commission. It explores how alternative employment models, i.e., sheltered employment in jobs designated for persons with disability, function across the EU. These models are distinguished from (1) traditional vocational rehabilitation and training and (2) open labour market jobs. We also analysed supported employment and related approaches such as, Individual Placement and Support (IPS) and customised employment because they often act as a bridge between sheltered and open employment.

What the numbers tell us

Across these eight Member States we found strikingly different employment landscapes. Austria and Germany still rely heavily on traditional sheltered workshops (2.6 % and 3 % of all working-age persons with disabilities), which do not provide workers with regular employment contracts, whereas the Netherlands and Sweden have shifted the bulk of protected jobs into work integration enterprises providing regular employment contracts. Supported-employment coverage is patchy: the Netherlands reaches ~1.5 % of its disabled working-age population; Germany reaches just 0.1 %. Despite legal transition mandates, annual flows from sheltered to open employment rarely exceed 1 %; Sweden’s state-owned Samhall (6–7 %) is the lone outlier. Bottom line: protected settings remain a career dead-end for most workers in most of Europe, and supply-side measures alone will not fix that. Systemic reforms are needed.

Defining disability

No single definition of “disability” exists in the EU. Assessment procedures and severity scales vary widely, complicating comparisons. For this study we adopt the UN Convention wording: people “who have long-term physical, mental, intellectual or sensory impairments which, in interaction with barriers, hinder full participation in society on an equal basis with others.”

Alternative employment models

We use the term for any organisational set-up that enables people with disabilities to do productive work in a sheltered environment. The label does not imply these models are better or worse than mainstream jobs. Examples include:

  • Sheltered workshops – separate facilities with their own legal framework, usually providing very low pay.
  • Work-integration enterprises (WISEs and for-profit variants) – offer full employee status and (where applicable) a right to minimum wage, sometimes alongside non-disabled staff.

Why transitions stall

Our fieldwork highlights four systemic barriers as to why transitions into the open labour market stall:

  1. Economic risk and uncertainty for workers – exiting a sheltered setting can mean losing reliable income, simpler systems, support structures, and peer networks.
  2. Employer hesitation – disabilities are perceived as risky; subsidies are poorly understood and feel bureaucratic.
  3. Provider disincentives – some organisations earn revenue by retaining the most productive workers.
  4. Missing data – governments cannot improve what they do not track.

The way forward

In total, we see 16 actionable recommendations across four levers to move forward:

LeverAction
Supply-sideBoost education and skills, create effective transition pathways, raise family and carer awareness, remove welfare disincentives
Demand-sideTackle stigma, simplify incentives, modernise quota systems, direct public procurement towards inclusive firms
Matching of supply and demandExpand supported employment (incl. IPS), better fund supported employment and work integration enterprises, empower Public Employment Services, offer more mainstream work trials
GovernanceAgree on common terms, collect comparable data, review sheltered systems, prepare models for automation & digital work

Key takeaways

In our study, we emphasize the importance of providing real, credible alternatives to sheltered work and ensuring that individuals with disabilities have genuine choice in employment. To achieve this, three strategic shifts are essential:

  • Clarity – Establishing common definitions and measurable indicators across Member States to assess progress and ensure accountability.
  • Continuity – Guaranteeing personalised, long-term support that follows individuals through different stages of employment, rather than ending with program timelines.
  • Clout – Using financial and regulatory levers—such as minimum wage enforcement, targeted subsidies, and inclusive public procurement—to make inclusive hiring the rational business decision.

When these three C’s align, promising pilots can scale – shifting Europe from well-intentioned segregation to genuine inclusion.

Read the full study here

Access the country case studies for Austria, Germany, Ireland, Italy, Lithuania, the Netherlands, Spain and Sweden here

Read the Good Practices from across Europe here