MEMORANDUM FROM JOHN ATKINSON AND NIGEL
MEAGER, INSTITUTE FOR EMPLOYMENT STUDIES (RU 14)
RECRUITING THE UNEMPLOYED: WHAT CAN WE LEARN
FROM THE EXISTING RESEARCH EVIDENCE
INTRODUCTION—THE
IMPORTANCE OF
THE EMPLOYER'S
ROLE
1. The significance of the employer's role
is often under-estimated in the design and evaluation of training,
placement and other active labour market measures targeted at
the unemployed, and in the provision of public job-matching and
broking services for the unemployed. Understandably, perhaps,
the focus of much of the discussion and analysis is the job-seeker
and his or her characteristics, skills, motivation, benefit status
etc. Similarly, it is often the job-seeker who is seen as the
primary client for the Employment Service and other labour market
intermediaries.
2. There is, however, a wealth of research
evidence in the UK and other countries which shows that an understanding
of the attitudes and practices of employers towards the recruitment
of the unemployed is crucial to designing effective public interventions
aimed at integrating the unemployed into the labour market.
3. The Committee's enquiry into this subject
is, therefore, both timely and welcome, and is consistent with
a growing emphasis on this topic. The recent report from the Social
Exclusion Unit's Policy Action Team on Jobs[1],
for example, places strong emphasis on the need: for organisations
providing labour market services in deprived neighbourhoods to
"be on employers' wavelengths"; for employers to be
directly engaged in the design of labour market support; and for
ways to be found of giving employers the confidence to recruit
from the long-term unemployed.
4. The aim of this note is to draw the Committee's
attention to some of the supporting evidence on employer behaviour
towards the unemployed, and its main policy implications.
SOME INTERNATIONAL
EVIDENCE
5. A recent international review of evaluation
findings on labour market measures for the (long-term) unemployed[2]
stressed that although the evidence on this question was limited,
and the examination of employer behaviour has been under-represented
in evaluations, there is sufficient research to suggest that the
role of employers is critical in determining both the job-funding
chances of the (long-term) unemployed and the impact of specific
labour market measures. In particular, the existing research,
drawn from a range of countries suggests that:
— employers, faced with a surplus of
candidates for job vacancies commonly use applicants' unemployment
records as a "cheap hiring screen", ie it is an easily
identifiable proxy for other, harder-to-observe characteristics
which affect candidates' suitability for work, such as motivation
and productivity;
— employers' views on the suitability
or otherwise of unemployed (particularly long-term unemployed)
job candidates are influenced by their perception that the experience
of unemployment itself damages work attitudes and skills; rather
than by a view that such candidates are inherently less "employable".
This provides support to targeted early action approaches to policy
intervention, triggered by increasing duration of unemployment;
— there is considerable benefit in
labour market initiatives which are oriented towards employers
and attempt to influence not only the attitudes and motivations
of job-seekers, but also the attitudes and perceptions (prejudices)
of employers towards the unemployed and other disadvantaged groups;
— employers' views can be influenced
(in a positive direction) by direct experience of the (long-term)
unemployed. This provides support for interventions which provide
opportunities (through work placements or subsidies which enable
employers to "try out" the unemployed), and for attempts
to widen the network for employer contacts of the public Employment
Services to include employers who do not normally use public placement
services or recruit from the (long-term) unemployed. The positive
evaluations of the UK's Work Trials initiatives (see below) are
also consistent with this argument;
— employers are more impressed when
considering unemployed applicants for jobs, by evidence of recent
"real" work experience and by occupationally relevant
qualifications, than they are by participation in "make work"
job creation schemes or general labour market training schemes
for the unemployed. Indeed the evidence from some countries suggests
that mass or compulsory participation in such schemes may further
add to the negative "stigma" which unemployed applicants
have in the eyes of many employers. Again, this evidence supports
interventions which give priority to work experience (preferably
within real businesses) and targeted training; ideally both elements
would be combined within an integrated package.
EMPLOYERS' AND
THE UNEMPLOYED
JOB-SEEKER
6. Turning to the UK evidence, as the high
volume of flows off the unemployment register testifies, many
UK employers regularly recruit from the ranks of the unemployed.
Table 1
CLAIMANT COUNT AND OUTFLOWS BY DURATION OF
UNEMPLOYMENT (NOV-DEC 1999)
| All | up to 13 weeks
| 13-26 weeks | 26-52 weeks
| 52-104 weeks | over 104 weeks
|
| Claimant count 11 November 1999 ('000s) |
1,136.1 | 463.6 | 210.1
| 185.9 | 141.9 | 134.6
|
| Total leaving count 11 November to 8 December 1999
| 249.3 | | |
| | |
| % leaving count | 21.9 |
| | | |
|
| Total leaving count by duration (computerised count only)
| 226.3 | 135.7 | 37.8
| 30 | 14.2 | 8.3
|
| % of claimant stock | 19.9 |
29.3 | 18.0 | 16.1
| 10.0 | 6.2 |
| Total leaving count to known destination |
170.6 | 100.4 | 28.4
| 23.3 | 11.4 | 6.8
|
| Total leaving to jobs | 116.6
| 76.2 | 19.9 | 12.5
| 5.3 | 2.7 |
| Total getting jobs as % of all leavers with known destinations
| 68.3 | 75.9 | 70.1
| 53.6 | 46.5 | 39.7
|
Source: Labour Market Trends, February 2000 (own calculations).
7. As Table 1 shows, some quarter of a million unemployed
claimants, out of the total of 1.1 million, left the register
during the month of November to December 1999. Of these it was
known that nearly a half (or two thirds of those with known destinations)
entered employment, and the actual figure is likely to be somewhat
greater than that as the destinations of around 79 thousand leavers
are not known. The table also shows very clearly the disadvantage
of duration of unemployment—the proportion of claimants
leaving the register declines strongly as duration of unemployment
increases. More significant for the present discussion, however,
is the fact that of those who do leave the register in a given
month, the proportion of long-term unemployed who leave for jobs
is much lower than among the short-term unemployed. The long-term
unemployed are not only much less likely to leave the register,
but they are also much more likely to leave for reasons other
than getting a job (notably to move into a government scheme,
or to move onto Incapacity Benefit or another state benefit).
8. Research conducted for DfEE in 1996[3]
showed that among employers who had recruited at all in the past
year, just over half had recruited at least one person from unemployment.
The likelihood of hiring anybody from unemployment is mainly a
function of the scale and regularity of recruitment (ie is highest
among large organisations and those with high turnover), rather
than any specific employer characteristics, although public sector
employers are three times more likely to take on the unemployed
than are private ones. Furthermore, job entrants who are recruited
out of unemployment generally prove to be no less suitable as
employees than do those from other sources; in the research cited
above, four out of five employers hiring unemployed people found
them to be just as satisfactory, or more so, as other recruits.
INCREASING THE
"NATURAL" RECRUITMENT
OF THE
UNEMPLOYED
9. The first priority for public policy thus ought properly
to be to encourage and increase this "natural" flow
off the register, by making it more likely that employers will
encounter unemployed job applicants in the natural course of their
recruitment activities. Active labour market policies in the UK
have moved significantly in this direction during the past 15
years, through the widespread use of "activation" programmes,
designed to promote more effective (actually often just, more)
jobsearch efforts on the part of the unemployed. That there might
be merit in approaching this issue from the other side, by encouraging
employers to adopt recruitment strategies and procedures which
do not disadvantage the unemployed, has been significantly less
common.
10. There is plenty of evidence that UK employers inadvertently
and routinely screen out potentially suitable, but unemployed,
recruits in at least three ways:
— By restricting vacancies to the internal labour
market: filling vacancies from within is most common among larger
organisations, and at times of stagnant or falling employment.
Our research[4] suggests
that in reasonably buoyant labour market conditions this practice
cuts only slightly into the flow of vacancies to which the unemployed
have access, and still less so among the least skilled jobs.
— By not advertising vacancies formally: Our research[5]
suggests that about one in five vacancies is wholly restricted
to informal methods of advertising such as "word of mouth"
or personal contact. However, a common shortcoming among unemployed
jobseekers is the undue narrowness of the channels which they
use to identify vacancies. Of central importance here is the relatively
low weight which unemployed jobseekers lend to informal methods
of jobsearch. Furthermore, we know that as the duration of unemployment
rises jobseekers tend to abandon such informal methods prematurely,
on the grounds that they cannot find a job this way, falling back
on the newspapers and the Jobcentre, where self-evidently vacancies
exist (even if they are difficult to win).
— By advertising vacancies in the "wrong"
place: Jobcentres routinely capture no more than a third of all
vacancies, in contrast to (theoretically) all unemployed jobseekers.
The main reason which employers give for not recruiting through
Jobcentres[6] is that they
are content with their preferred other method(s). In other words,
they have little or nothing against the service provided, or the
recruits available, there. They simply prefer to stick with what
they are used to. While for some occupations, notably managerial,
technical and skilled manual jobs, they also say that Jobcentre
applicants can be under-qualified, this reason is much less important
for the less skilled, manual, clerical, and sales jobs, with only
a quarter of these employers citing this reason.
11. What this suggests is that while unemployed jobseekers
naturally cluster around the Jobcentres, most vacancies for which
they might be suitable never appear there. In the UK there is
neither a legal requirement, nor any significant public encouragement
or expectation, for employers to notify Jobcentres of their vacancies.
If we are seriously interested in asking employers to "reach
out" to the unemployed, then the easiest and least burdensome
way of doing this is to encourage them to notify Jobcentres of
their vacancies. This would not preclude their using other methods,
and would be cost free, on their part. We propose two measures:
— There are numerous initiatives to encourage good
human resource practices (IIP, the double tick symbol, etc), and
they could usefully be supplemented by a scheme to promote Jobcentre
use in this way as a public badge of community-mindedness among
employers.
— The Employment Service should be formally and
consistently directed to regard employers as their main customer.
The marketing image of the Jobcentre has been greatly degraded
through decades during which the Service was encouraged to regard
benefit claimants as their customer, and by inference, to treat
employers simply as a means to an end. In a competitive market
for recruitment services, this has served the Jobcentres ill.
It is a weakness which the forthcoming merger with the Benefits
Agency is likely only to enhance.
WHAT FACTORS
PUT EMPLOYERS
OFF FROM
RECRUITING THE
UNEMPLOYED?
12. We accept that many employers choose not to hire
people who are unemployed, either on an individual basis, or as
a general (though usually implicit) preference. Our research shows
that the mere fact of being unemployed is not something which
employers say they hold against applicants.[7]
However, they generally want to know an applicant's present status,
and it seems fair to say that the fact of being unemployed is
likely to be taken into account by many employers, but not as
a critical feature of their selection, unless the duration of
the spell is long. Nevertheless, if there is strong competition
for vacancies, even a modest demur on the recruiters' part means
that the unemployed jobseeker will be disadvantaged.
13. In their general experiences of assessing
unemployed applicants, UK employers are most sensitive to:
— any perceived shortcomings in the motivation
of unemployed jobseekers;
— shortcomings in the human capital of unemployed
applicants, in terms of their work experience, qualifications/education,
and basic skills; and
— worries about possible deterioration of
their value as employees during an extended spell of unemployment.
This sensitivity to the duration of applicants' unemployment spells
is reflected in the poor chances of the long-term unemployed entering
employment, as shown in Table 1 above.
14. The same research found that the three shortcomings
most frequently cited by employers who had rejected an unemployed
applicant for their most recent vacancy; were:
— motivational: 44 per cent of these respondents
had rejected unemployed applicant(s), citing shortcomings in motivation,
attitude or keenness;
— previous job experience: a similar proportion,
43 per cent, believed that their rejected unemployed applicant(s)
lacked sufficient experience in a job similar to the one they
were then filling;
— basic skills: one-third (32 per cent) cited
shortcomings in basic skills as perceived shortcoming of the rejected
unemployed applicant(s).
HOW CAN
THESE CONSTRAINTS
BEST BE
OVERCOME?
15. To the extent that such choices are rooted in assumption,
legend, or simple prejudice, and are without significant basis
in fact, then the best way to reduce or eradicate them is simply
to encourage employers to gain greater familiarity with unemployed
recruits as a potential feedstock.
Experience of recruiting the unemployed can moderate employer
attitudes
16. There is ample evidence that previous successful
experience of recruiting the unemployed in general and the long-term
unemployed in particular can be effective in moderating employer
attitudes and concerns about the abilities, skills and motivation
of the unemployed. In policy terms, this suggests that the more
the Employment Service and other labour market intermediaries
can widen their placement net beyond the "usual suspects"
(large and public sector employers known to recruit from the unemployed),
and the more they can persuade other employers to "try out"
a recruit from the unemployment register (if necessary, through
participation in a government programme such as one of the New
Deals, with support or subsidy), the wider the pool of employers
who are likely to recruit from the unemployed in the future (without
such subsidy or support). Thus the IES study of employer attitudes[8]
showed clearly that employers who had participated in government
programmes in the past were more likely to recruit unemployed
people to vacancies. This finding is statistically significant,
and does not simply reflect the possibility that firms of certain
types are more likely both to participate in programmes and to
recruit unemployed people. The finding persists when firms participating
in schemes are compared with otherwise similar firms which have
not participated.
17. In this context, the use of private employment agencies
might be useful, as they generally offer a wider, or at least
different pool of employer clients, than do the Jobcentres. However,
the fact that they also tend to be more occupationally specialised
than Jobcentres, means that they may only be able to offer such
a placement service on a relatively restricted range of claimant
jobseekers. We discuss this further below.
Move to earlier, but diversified, intervention with unemployed
clients
18. There is considerable evaluation evidence[9],
now becoming available which points to the pivotal role of enhanced
assessment and guidance (provided as the Gateway in the New Deal)
in directing unemployed people towards the most appropriate activities
for their circumstances and aspirations. This provides a potential
basis for distinguishing within the unemployed flow, essentially
on the basis of job-readiness, and pointing them variously towards:
— help with jobsearch and related techniques;
— medium term "remedial" help, with motivation,
presentation, etc;
— pre-vocational preparation;
— longer term vocational training/education; or
— longer term personal support.
19. This tiered approach provides the potential for early
intervention with unemployed people, while reducing the risk of
deadweight[10], as it
is made on the basis of an individual assessment, rather than
of statistical modelling, which has not proved a very compelling
basis for differentiation. Not only therefore would it meet the
individual's objection ("why do I have to wait on the dole
for six months before I get the kind of help I need?"), but
it would also address employers' concerns about deterioration
of valuable attributes (particularly motivation and self-confidence)
as spells of unemployment lengthen.
20. The essential point here is to identify the "nearly
job ready" claimants as early as possible, and to provide
them with the (sometimes unbelievably modest) help which will
lift them off the shortlist, into the job[11].
It should be noted also that this kind of marginal intervention
also has an indirect, positive effect. By encouraging unprepared
clients to engage in more active jobsearch, the Employment Service
makes a rod for its own back by encouraging the negative image
which employers may have of unemployed jobseekers. In this way,
far from increasing the receptivity of employers, they may well
be blunting it.
Introduce widespread job placements with benefit top-up
21. Employers faced with the prospect of recruiting an
evidently suitable unemployed individual frequently nevertheless
choose someone already in employment (or with a shorter unemployment
spell) as the least risky option. Unemployed job-seekers may be
no less nervous about their capacity to cope with the demands
of the job. Both would benefit from a no-risk trial run.
22. Experience with Work Trials[12],
and subsequently with job placements under the New Deal, shows
that bringing suitable employers and clients together is far easier
on a low/no commitment basis of a finite work experience period
than it is to place clients directly into vacancies. Employers
generally regard the cost of a new recruit, and of bringing them
up to scratch, as quite substantial, and a placement of this kind
can help both to mitigate such costs, and to prove the value of
the individual for recruitment. Client objections to "working
for nothing" can effectively be overcome through the use
of a benefit top-up payment. So too, their concerns about getting
back on to benefits if things do not work out can more easily
be mitigated under these circumstances than if they are required
to take the plunge.
23. No actual vacancy need exist at the time; there is
no competition from other jobseekers, etc. But if the employer
has been chosen well (ie is frequently recruiting in this occupation)
and so has the client (ie is interested in this kind of work,
and can quickly develop the skills needed) then the prospects
for eventual recruitment are quite strong. Furthermore, placements
of this kind are relatively cheap to introduce, and offer the
prospect of using available recruitment subsidies subsequently
(and only if necessary at the margin) to effect a transfer to
employed status.
WHAT ABOUT
THE HARD
TO HELP
JOBSEEKER?
24. Thus far we have considered means of improving the
recruitment of unemployed people who either have no significant
shortcomings, or fairly readily repairable ones. But we have also
to recognise that some unemployed people present the most profound
problems, which render them more or less unrecruitable. Such problems,
be they behavioural ones, or derived from the lack of even basic
workplace skills or experience, ought also to be recognised early
in any claim. Evidence from the New Deal for the adult long term
unemployed indicates that a substantial proportion of those entering
the programme are assessed as not job ready, after two years in
which they have been forced to present themselves to employers
as precisely the opposite. Certainly, for some of them, the problem
is one of deterioration during the spell, rather than intrinsic
lack of employability, but for others it is precisely a persistent
and long term deficiency, which could as readily have been spotted
on day one, as day 730. While the Budget reduction to 18 months
of the threshold for New Deal entry for adults is to be welcomed,
it is surely only a small step in the right direction. Meanwhile,
forcing individuals to seek work, when they present (or would
if anyone looked) obvious shortcomings which are likely to make
them unsuccessful in this, is rarely an appropriate solution,
either for them individually, or (as indicated above) for those
who follow in their footsteps.
25. Introducing a more discriminating assessment and
tiered range of provision for unemployed jobseekers would surely
provide the basis for directing those who are not job-ready to
forms of support intended to make them so. It is not our intention
to discuss such forms here, as they have little relevance for
the employer focus of this paper. The point is that the system
should sort out sheep from goats, and keep the goats well away
from employers, in the medium term, so that they do not queer
the pitch for the sheep.
WHAT ABOUT
EMPLOYMENT SUBSIDIES?
26. Employment subsidies are generally regarded as having
a positive substitution effect (ie they will increase the recruitment
of eligibles relative to ineligibles), allied to only a modest
job creation effect. While we know that the appeal of a (subsidised)
real job is generally far greater for claimants than other options,
the take up of New Deal subsidies by employers has not been massive,
accounting for only about a quarter of option placements under
NDYP; furthermore, this proportion has been falling since the
programme was introduced.
27. Research suggests that the attractiveness of a subsidy
per se is restricted to small businesses, for whom the
payments represent a serious contribution to the cost of supporting
the job. Among other employers, it is the suitability of the candidate
which is the paramount concern, with the subsidy contributing
usefully to adjustment and "fitting in" costs, but not
greatly to underlying ones. [13]
28. Consequently, employment subsidies ought properly
to be seen as applicable only to jobseekers who are close to job
ready, or very close to it. It is no surprise that the main reasons
given by employers for not taking part in NDYP[14]
are the lack of suitable vacancies for young people, adverse views
about the competence/suitability of young recruits, and their
unsuitability to meet immediate and pressing recruitment needs.
29. Allied to this perspective of a recruitment subsidy
as a lubricant to help acclimatise the new recruit, employers
have also made it quite clear[15]
that they would value and expect a more supportive role from the
Employment Service in finding suitable recruits and in supporting
the placement during the period of the subsidy. In effect, they
want an NDPA-type of on-going, supportive and advisory intervention
to help them manage the placement, rather than just a cheque.
WHAT CAN
PRIVATE EMPLOYMENT
AGENCIES CONTRIBUTE?
30. Employers recruit through private employment agencies
because[16] they believe
that some combination of the agency's (occupational or sectoral)
specialisation, plus their pre-screening activities, and the calibre
of the jobseekers' they attract, provides them with the best choice
of the most suitable candidates. Unless and until employers are
convinced that such candidates are to be found among the unemployed,
there seems little prospect for agencies to improve on the placement
rates of the Jobcentres, other than at the cost of their own market
profile.
31. We believe that private agencies can provide relatively
little for the generality of unemployed jobseekers without specific
skills or occupational decidedness. However, where such jobseekers
have come through some form of vocational training (say WBLA,
or a New Deal option) which is geared to local labour market demand,
then the appropriate private agency could usefully contribute
in three ways:
— their insight into skill needs would make them
valuable advisors in deciding exactly what training to offer;
— their contacts with employers would make them
good conduits for arranging work experience placements during
the training; and
— their vacancy-filling role would provide direct
access to suitable job openings for course graduates.
32. Thus, rather than having private employment agencies
provide a generalised jobseeking help to unemployed people, their
role would be more useful in helping to organise customised training,
which would lead to targeted job entry.
CONCLUSION
33. While it is undoubtedly possible to encourage employers
to "reach out" to unemployed people through active labour
market programmes, it will be more effective if they are encouraged
not to hold them at arms length in the first place. To achieve
this requires systematic encouragement of overlap between employers'
everyday recruitment practices, and the behaviour encouraged of
unemployed people. This means that:
— employers should be encouraged to take their vacancies
to Jobcentres more often than they do, as a routine which demonstrates
good community citizenship, and provides useful bridges onto work
specifically designed for the unemployed to take advantage of;
— the Employment Service should be encouraged to
treat employers more overtly as their prime customers, in just
the same way as their private sector counterparts do; and
— early assessment of claimants should lead to more
discriminating routing of their activities, with
— only the most job ready being encouraged actively
to seek work;
— immediate access to the full range of ES support and
advice for those who are close to job readiness; and
— immediate access to longer term interventions designed
to promote employability for those facing more profound problems.
Institute for Employment Studies
March 2000
1 Jobs for All, DfEE, 2000. Back
2 Meager N and Evans C, "The evaluation of active labour market
measures for the long-term unemployed", Employment and Training
Papers No 16, International Labour Office, Geneva, 1998. Back
3 Atkinson J, Giles L and Meager N, Employers, Recruitment and
the Unemployed, IES Report No 325, Brighton, Institute for
Employment Studies, 1996. Nearly a third of recruiters believed
that they usually or fairly often took on short term unemployed.
This contrasts with about one-fifth for the long term unemployed.
At the other end of the spectrum, about 20 per cent said that
they rarely or never took on short term unemployed, and this rises
to 29 per cent for the long term. Back
4 In Atkinson, Giles and Meager, op cit, about a fifth of
recruiters had filled vacancies internally, with 18 per cent restricting
advertising to existing employees only. Among larger organisations
the internal labour market soaked up one-fifth of vacancies, but
across the board, external applicants still had access to nine
out of 10 of all the vacancies in these establishments. Back
5 Atkinson J, Dolan M, Pettigrew N and Hyndley K Jobsearch: Modelling
Behaviour and Improving Practice, IES Report No 260, Brighton,
Institute for Employment Studies, 1994. Back
6 Atkinson J, Kersley B and Kodz J Employers as Customers
Employment Service, Research and Development Report, ESR 28, November
1999. Back
7 Atkinson, Giles and Meager op cit, found that 50 per cent
of recruiters thought that a history of unemployment was a relevant
selection criterion, but only 9 per cent thought that it was a
very important one. Back
8 Atkinson, Giles and Meager, op cit. Back
9 Summarised in Hasluck C, The New Deal for Young People: Two
Years On, Employment Service 2000; but see also Atkinson J,
Barry J, Dewson S and Walsh K, Case Studies to Evaluate the
New Deal 25+ November Pilots, Employment Service, 2000 (forthcoming). Back
10 Deadweight arises in cases where the intervention involves providing
support for unemployed people who would have entered work anyway
without support during a similar period. Back
11 Such interventions may be either practical (ie help with jobsearch
and techniques) or financial. Experience with the so-called "pilot
funds", under the November Pilots for the adult long-term
unemployed, showed clearly how quite small amounts of cash (to
buy a suit and tie, fund a haircut, provide tools, etc).
See Atkinson, Barry, Dewson and Walsh, op cit. Back
12 See Atkinson, J Barber L, Kodz J, O'Regan S and Tackney N, Work
Trials: Employer Survey, Employment Service, 1998. Similarly
a study which examined Work Trials, along with a range of other
placement initiatives in the UK, concluded: "A striking feature
of the results has been the size of the employment effects net
of deadweight. The typical participants in Work Trials increased
their employment rate by 35 to 40 percentage points, a result
which (to the best of our knowledge) has no parallel in previous
studies of national labour market programmes" White M, Lissenburgh
S, and Bryson A, The Impact of Public Job Placing Programmes,
London, Policy Studies Institute, 1997 (p 123). Back
13 Elam G and Snape D, New Deal for Young People: Striking a Deal
with Employers, draft version, NCSR, 1999. Back
14 Hasluck C, op cit. Back
15 Elam and Snape, op cit. Back
16 Atkinson, Kersley and Kodz, op cit. Back
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