Tracing the evolution from sheltered workshops to competitive integrated employment, covering Employment First policies in the US, supported internships in the UK, Germany's Inklusionsbetriebe, the Netherlands' transition from sociale werkvoorziening to the Participatiewet, and the evidence base for inclusive employment.
From Sheltered Workshops to Competitive Employment: How the Model Is Changing
For decades, sheltered workshops were the primary employment model for people with significant disabilities. Workers were grouped in segregated facilities, often performing repetitive tasks for sub-minimum wages, with little pathway to mainstream employment. That model is now being challenged and, in many countries, replaced. This article traces the history, examines the alternatives, and presents the evidence for competitive integrated employment.
The Sheltered Workshop Model: A Brief History
Sheltered workshops emerged in the early twentieth century, originally as charitable enterprises offering occupational activity to disabled veterans and civilians. By the mid-century, they had become the default employment option for people with intellectual, developmental, and psychiatric disabilities in the US, UK, Germany, the Netherlands, and Australia.
How They Worked
Workers were employed in a segregated setting, separate from non-disabled workers.
Tasks typically included packaging, assembly, sorting, recycling, and simple manufacturing.
Wages were often piece-rate, calculated based on productivity relative to a non-disabled standard. In the US, Section 14(c) of the Fair Labor Standards Act authorized sub-minimum wages for disabled workers, sometimes as low as a few cents per hour.
Workshops were usually operated by nonprofit disability service providers.
The Critique
By the 1980s and 1990s, disability rights advocates began challenging sheltered workshops on several grounds:
Segregation. Workshops kept people with disabilities out of mainstream society and reinforced the idea that they could not work alongside non-disabled colleagues.
Exploitation. Sub-minimum wages meant that workers with disabilities were paid a fraction of what non-disabled workers earned for comparable tasks.
Low expectations. Workshops rarely offered skill development, career progression, or pathways to competitive employment. Many workers stayed for decades.
Self-determination. The model left workers with little choice about where, how, or with whom they worked.
The Shift to Competitive Integrated Employment
What Is Competitive Integrated Employment?
Competitive integrated employment (CIE) means working in a typical workplace, alongside non-disabled colleagues, earning at least minimum wage, and having the same opportunities for advancement. The worker may receive supported employment services such as job coaching, but the setting is mainstream.
United States: Employment First
The Employment First movement has reshaped disability employment policy in the US. Employment First is a framework declaring that competitive integrated employment is the preferred outcome for people with disabilities receiving publicly funded services.
Key developments:
Over 40 states have adopted Employment First policies, either through legislation, executive orders, or agency directives.
The Workforce Innovation and Opportunity Act (WIOA) of 2014 strengthened the emphasis on CIE. It requires state vocational rehabilitation agencies to prioritize competitive integrated employment and restricts the use of sub-minimum wage certificates for youth.
Section 14(c) phase-out. Several states have eliminated sub-minimum wages entirely, including Alaska, California, Colorado, Hawaii, Maine, Maryland, Nevada, New Hampshire, Oregon, and others. Federal legislation to abolish Section 14(c) nationwide (the Transformation to Competitive Integrated Employment Act) has been introduced repeatedly and gained growing support.
Olmstead v. L.C. (1999). This landmark Supreme Court decision established that unnecessary segregation of people with disabilities in institutional settings, including employment, constitutes discrimination under the ADA. Department of Justice guidance has applied Olmstead principles to sheltered workshops.
Results: States that have transitioned to Employment First report increases in the number of people with significant disabilities in competitive employment, higher average wages, and improved quality of life outcomes. Vermont, which eliminated sheltered workshops in 2003, has among the highest competitive employment rates for people with intellectual disabilities in the nation.
United Kingdom: Supported Internships and Supported Employment
The UK has taken a different but parallel path.
Key developments:
Supported internships. Introduced in 2012, these structured study programs are aimed at young people (16 to 24) with an Education, Health and Care (EHC) plan. Students spend most of their time in a workplace placement with the support of a job coach. The goal is a permanent paid job at the end.
Supported employment model. Based on the Individual Placement and Support (IPS) model originally developed for people with mental health conditions, supported employment provides rapid job placement followed by ongoing in-work support rather than the "train then place" approach of traditional day services.
Valuing Employment Now. The UK government's strategy for increasing employment for people with learning disabilities shifted policy focus toward competitive employment.
National Development Team for Inclusion (NDTi). This organization has been instrumental in promoting the transition from day centers to supported employment across England and Wales.
Results: Supported internship pilots have shown conversion rates to paid employment of 36% or higher, compared to the general employment rate of approximately 6% for people with learning disabilities in the UK.
Germany: Inklusionsbetriebe
Germany's approach reflects its dual system of sheltered workshops (Werkstatten fur behinderte Menschen) and an emerging inclusive alternative.
Key developments:
Werkstatten remain widespread in Germany, employing approximately 310,000 people with disabilities. Workers receive a modest allowance rather than a standard wage and have employee-like status with social insurance coverage.
Inklusionsbetriebe (Inclusion Enterprises). These are companies operating in the regular market where 30 to 50 percent of employees are people with significant disabilities. Unlike sheltered workshops, Inklusionsbetriebe pay standard wages and operate under regular employment law. They receive public subsidies and support from Integrationsaemter (integration offices).
Budget fur Arbeit (Budget for Work). Introduced in 2018, this program allows individuals who are entitled to sheltered workshop placement to instead receive a wage subsidy (up to 75% of labor costs) to work with a regular employer in the open labor market.
Results: The number of Inklusionsbetriebe has grown steadily, and the Budget fur Arbeit has enabled thousands of transitions from sheltered workshops to competitive employment. However, the sheltered workshop system remains deeply entrenched, and most people who enter a Werkstatt do not transition to the open labor market.
Netherlands: From Sociale Werkvoorziening to the Participatiewet
The Netherlands underwent a dramatic policy shift in 2015.
Key developments:
Sociale Werkvoorziening (Sheltered Employment Act). Until 2015, the Netherlands operated an extensive system of sheltered workshops (sociale werkplaatsen) employing over 100,000 people with disabilities. These were relatively well-funded compared to international counterparts.
The Participatiewet (Participation Act) of 2015. This law closed entry to new sheltered workshop placements and transferred responsibility for disability employment to municipalities. The goal was to shift toward "participation jobs" with regular employers, supported by wage subsidies and job coaching.
Banenafspraak (Jobs Agreement). A tripartite agreement between government, employers, and unions to create 125,000 jobs for people with disabilities in the regular labor market by 2025 (later extended). The target is divided between private sector (100,000) and public sector (25,000).
Quotewet (Quota Act). Legislation enabling the government to impose hiring quotas on employers if voluntary targets are not met.
Results: The transition has been uneven. While thousands of new "participation jobs" have been created, many are part-time, temporary, or low-wage. Critics argue that the closure of sheltered workshops without adequate investment in supported employment has left some people without meaningful options. The Banenafspraak targets have been partially met, with the private sector performing better than the public sector.
Australia: Disability Employment Services and the NDIS
Australia's transition has been influenced by the introduction of the National Disability Insurance Scheme (NDIS) and reforms to Disability Employment Services (DES).
Key developments:
Australian Disability Enterprises (ADEs). Australia's equivalent of sheltered workshops, employing approximately 20,000 people with disabilities. Like their international counterparts, ADEs face growing criticism for low pay, limited career development, and segregation.
NDIS and employment. The NDIS, launched in 2013, funds individualized support packages that can include employment support, opening pathways to competitive employment for people who previously only had access to ADEs.
DES reform. The Australian Government has been reforming Disability Employment Services to improve employment outcomes, with a new model focused on person-centered support and outcome-based provider payments.
Results: Employment rates for people with disabilities in Australia remain below international benchmarks, but the NDIS has created new possibilities. The Australian Government has signaled a policy direction toward competitive integrated employment, and several inquiries have recommended accelerating the transition away from ADEs.
The Evidence for Competitive Integrated Employment
Research consistently supports the transition to competitive integrated employment:
Higher wages. Workers in competitive employment earn significantly more than workers in sheltered settings. Even part-time competitive employment typically exceeds sheltered workshop income.
Better quality of life. Studies show higher life satisfaction, greater social inclusion, and improved mental health among workers in integrated settings.
Cost-effectiveness. Supported employment services often cost less per person than maintaining sheltered workshop infrastructure, particularly when factoring in the economic benefits of wage-earning and tax contributions.
Capability. With the right support, people with significant disabilities can succeed in a wide range of competitive jobs. The barrier is not capability but the availability of support and the willingness of employers.
Remaining Challenges
Pace of transition. Many countries are moving slowly, and workers in existing sheltered settings need carefully managed transitions, not abrupt closures.
Quality of new jobs. Competitive employment must mean decent work. Part-time, precarious, or minimum-wage jobs without career development are not automatically better than sheltered work.
Support infrastructure. Effective competitive employment requires investment in job coaching, workplace accommodations, and employer engagement.
Family and individual concerns. Some families and individuals value the community and safety of sheltered settings. Transition must center self-determination and genuine choice.
Key Takeaways
The global trend is clear: from segregated sheltered employment toward competitive integrated employment in mainstream workplaces.
Every major jurisdiction is developing pathways, though progress is uneven and the legacy sheltered workshop systems remain large.
The evidence strongly supports competitive integrated employment for better wages, quality of life, and social inclusion.
Successful transition requires investment in support services, employer engagement, and respect for individual choice.