Examination of witnesses (Questions 1
- 19)
WEDNESDAY 24 MAY 2000
MR JOHN
ATKINSON, MR
NIGEL MEAGER
and MR CHRIS
HASLUCK
Chairman
1. Gentlemen, you are very welcome. You will
be pretty well aware why we have embarked upon this study. Thank
you for the submissions you have made already and we are looking
forward to your supplementing them now. I noticed from one of
the submissions that you thought our investigation was quite timely.
You also will know that we are going to the States to have a look
at some of these issues, particularly the intermediaries, I think,
on the 16th July. The Government seem to be rather keen to learn
how to get more unemployed people into jobs for the reasons that
they claim, which I agree with, that that will allow the economy
to be run at a slightly higher rate of growth than otherwise would
be the case and it may well have a slightly downward push on wage
inflation at the same time, so that is broadly why we have embarked
upon it. Can I begin by asking you what are the main sources of
information on employers' recruitment practices and are these
sources of information sufficient?
(Mr Hasluck) Perhaps I can start, if I may. I think
that, as with all things probably, it is a question of quantity
and quality. There is a lot of research that has taken place over
recent years relating to employers, but it is not always of the
best quality and it is not always of the most helpful type. Without
criticising training and enterprise councils in the slightest,
they all conduct employers' surveys, but they are very narrowly
focused on their patch, often quite small samples, answering specific
questions about training needs and so on and they tell us very
little about employers' recruitment practices, but it would be
wrong, therefore, to say that there is no research on employers,
but recruitment practices is a different matter. The last major
national survey which has anything to say of significance, in
my view, relating to employers' recruitment practices is the 1992
Employers' Recruitment Practices Survey, which was funded by the
Employment Service. It was a very large national survey and I
think it actually is very timely that we think about whether we
should replicate that in the future. Nineteen-ninety-two is a
long time ago and it was also at the depths of the last recession
and, as we know, employers' recruitment behaviour is almost certainly
cyclical in nature, so it is quite likely that what employers
are doing now is different. I also think that there is a case
for replicating the ERPS, if I can call it that, survey because
of the impact of the New Deal which has placed a large number
of people into unsubsidised employment about whom we know very
little. There is employer-based research in the evaluations of
the New Deal, but the larger quantitative surveys all relate to
participating employers who provided subsidised employment places
and we know, therefore, much less about the process by which the
programme has impacted on other employers, some of whom may not
even be conscious of their involvement in providing employment
for New Deal clients. The third aspect of information on employers
and their recruitment practices which I think perhaps warrants
thinking about this issue again is the growth of private employment
agencies and the like which has really, in my view, as far as
the evidence can tell us this, mushroomed since 1994 when the
Deregulation and Contracting Out Act was passed which lifted most
of the regulations on the agencies. The information is very scanty
and it is precisely because the information is scanty that I think
we need more information from the employers on their use of those
kinds of agencies. Those are my views. There are obviously other
employer-based surveys which have taken place, and there is a
very large employer survey which is in the process of being analysed
at present, the extent, causes and consequences of skills deficiencies,
which the Institute for Employment Research has been conducting
for the Skills Unit. This is a very large national survey, but
it is not focused on recruitment, but it is focused on business
performance and skills deficiencies and skills needs and so to
get at issues to do with recruitment, you need a fairly specifically
designed instrument.
2. If I might just say, please do not all three
feel obliged to answer every question, but if you have got something
to add, then we are really keen to hear it, by all means.
(Mr Atkinson) I think the thing that I would add is
to stress the variety of experience and different ways that different
kinds of employers approach recruitment and, consequently, the
need to do fairly large-scale analytical work to draw that variety
in. Therefore, I think Chris is right, that it is a long time
since we had a large-scale study and one is certainly, I think,
due again. But, nevertheless, there have been a number of smaller
one-off studies more precisely focused since 1992 that have looked
either at particular kinds of employer or at particular aspects
of recruitment and their recruitment practices and policies, or
at their recruitment of particular target groups. Most of these
have been commissioned by the Employment Service or the DfEE.
Although their focus has been smaller, they have been much more
precise and I think they have a value in that sense.
3. Do you think it is fair to say that employers
have been fairly prejudiced against unemployed applicants, preferring
to recruit those who have had recent work experience or are already
in a job?
(Mr Meager) I think there is plenty of evidence that,
other things being equal, faced with two candidates, otherwise
similar, one of whom is currently in employment or has recently
left employment and the other of whom has been out of work for
a very long time, a lot of employers will plump for the former
rather than the latter. That does not automatically make it unfair,
and I think one can argue that there is an element of rationality
in that. So there is lots of evidence from surveys that, other
things being equal, employers tend to prefer people with a recent
relevant employment record. Having said that, it is not in most
of the surveys the dominant factor and there are plenty of examples
of employers in these surveys who, I think, will recruit people
who meet the characteristics of the job, despite a significant
unemployment record, so I do not think it would be simple or valid
to say that employers are universally or unfairly prejudiced against
unemployed people for that reason alone.
(Mr Hasluck) In my view, I do not think employers
are prejudiced against unemployed people per se. I think
what they see is an association between unemployment, on the one
hand, and other characteristics which they regard as undesirable,
so they may see unemployment as being associated with a lack of
motivation or a lack of skills or, alternatively, there may be
groups who, because of their circumstances, let's say they have
criminal records, they may be homeless or they have drug dependency,
are unemployed and if employers see the two things together, they
obviously will prefer to avoid recruiting those people.
Judy Mallaber
4. If employers are considering unemployed people,
are the factors that you have just talked about the most important
ones to consider or can you say in general terms what factors
they would be looking at? Are they looking at different factors
when they have got an unemployed person come to them? Can you
say something about that?
(Mr Atkinson) There are different factors when they
have an unemployed person in front of them. There are things which
come on to the agenda which are not there when it is an employed
person sitting in front of them. The first hurdle of that sort
is, "Why are you unemployed?" and, "In what circumstances
did you lose your job?". Another one is, "Well, what
have you been doing since?". Both of which, I think, are
not terribly high hurdles for unemployed people to get over, but
the third one is. That is, "How long have you been unemployed?"
of course and that is what they are principally interested in,
I think, not just the fact of this individual currently now being
unemployed, but the fact that they may have been in unemployment
for quite some considerable time and that is what they are really
interested in.
5. Would that be the most important factor?
How high a hurdle is that?
(Mr Atkinson) It is a high hurdle, I think, if you
have been unemployed for a long time, but I think it is never
the most important consideration that employers are looking for,
or very, very rarely.
6. And would the most important consideration
be the same as they would have with anybody appearing before them?
(Mr Atkinson) By and large, I think so, yes. In some
research we did a couple of years ago, we looked at those factors
which employers said might put them off recruiting an unemployed
person or an employed one and. Top of the list were motivation
and keenness, they were clearly the dominant ones, with duration
of unemployment or a deterioration of skills and working practices
during a spell of unemployment as the second, and then considerations
about basic skills being the third. Those are factors which I
think would be relevant for an employed person also, but an unemployed
person, particularly one with some length of unemployment, would
have some difficulty, I think, in getting over them.
7. The one thing I was particularly concerned
about, John and Nigel, and your paper, paragraph 5, is that you
said how, when employers have a surplus of candidates for job
vacancies, they commonly use unemployment records as a "cheap
hiring screen". Does that have any validity, that they do
do that? Is it a valid recruitment filter?
(Mr Meager) It is a recruitment filter, I think, if
you have several hundred job applications which have to be sifted
through. I think the problem is that it may not be the dominant
filter, but I think it enters into play along with a lot of other
characteristics and I think because of the volume of applications
in relation to the number of jobs, if an unemployed person gets
screened out at that stage, then obviously, by definition, they
do not have the opportunity to demonstrate that they might have
all of the other characteristics that John just mentioned. So
it is one characteristic, but it is one characteristic which becomes
particularly relevant when there are large numbers of people applying
for a job.
(Mr Hasluck) There is quite a lot of evidence, and
some of which I have heard first-hand, of employers saying that
in times of high unemployment, they prefer not to recruit through
job centres because they are supplied with so many potential recruits
that they cannot handle it, so since they do not have many vacancies
or opportunities, they would prefer to handle it in more informal
ways where they can pick and choose the people who apply. Now,
that in itself is a form of screening out the unemployed since
the most likely way in which unemployed people would get to know
about those job opportunities is through the job centre.
8. So there are three phases here, which are
the way you get to know about it, the short-listing phase in which
you are likely to get chopped out because it is an easier filter,
and then the first question you were answering which is what happens
when you are in front of a potential employer.
(Mr Meager) The informal nature of the recruitment
process can be a double-edged sword because, on the one hand,
what Chris describes may happen, but, on the other hand, if it
is informal you might actually get the opportunity not to be screened
out by some formal paper-sifting process and the small firms who
just look at people as they come in through the door actually
provide more opportunities on ways of doing it for unemployed
people than the big firms with bureaucratic processes.
(Mr Atkinson) I think it is important that we do not
run away with the idea that there is massive, widespread and very
pernicious discrimination against the unemployed. We have to remember
that the flows off the register every month are really very large
and a very large number of unemployed people get hired every week.
Certainly in some work that we did three or four years ago, I
think something close to 60 per cent of employers said that they
had recruited an unemployed person in the last year and only about
20 per cent, if memory serves, said they had never or would never
recruit an unemployed person. So I think if there is acute discrimination
of that sort, it is the minority of employers who are doing it,
and mostly I think they are doing it on the grounds of skill rather
than on the grounds of prejudice about status. Therefore, I think
one has to bear in mind that these constraints that employers
place on unemployed people are really affecting a minority of
the unemployed.
9. If we are told that unemployed candidates
tend to be as suitable as other employees, is that reflected in
employers' perceptions? You have said that there will be variations
between employers obviously, but would their general perception
be surprise at the idea that they were not as suitable as other
employees?
(Mr Meager) When we have done surveys and talked to
employers about this, a lot of them put it slightly differently.
They say, "Well, it is actually what happens to them during
the process of unemployment which is as important as their basic
characteristics, so what we are not saying is the fact that they
are unemployed means that there must have been something wrong
with them in the first place which means they have been filtered
out by all the other employers, so we are not employing them,"
but it is just that if they have been on the dole for two years
or more, employers for obvious reasons are genuinely concerned
that whatever they were like to start with, there will have been
an effect on their motivation, there will have been an effect
on the relevance of their skills and experience and that point,
I think, is made as often as, if not more often than, the more
prejudicial point that we are talking about.
Mr Nicholls
10. I have an experience as an ex-employer which
I would have thought was typical, but I would be interested to
know what you think about it. It seems to me that the fact that
somebody is unemployed raises questions which have to be asked
and if the answer to those questions is that you are given a rational
explanation as to how unemployment came about, it may be a long
period which in a sense raises other questions, or it might be
a short period, that would be one scenario. If, on the other hand,
after probing the facts of unemployment, it turns out that someone
has got a long criminal record or a drug habit to feed, that is
another answer to the question. Certainly my attitude as an employer
was that if somebody was unemployed, there were questions to ask
and indeed if somebody was in employment, there were questions
to ask as well, but it was not a barrier; it was simply that there
were questions which needed to be asked, you took the answers
to those questions and that was it. Now, insofar as one can generalise,
I would have thought that was relatively typical and I think I
am probably right in saying, if I have correctly understood what
Mr Meager was saying, that is about the size of it.
(Mr Meager) I think that is true, but I think where
the disadvantage really cuts in for the unemployed person is that
there are structural reasons which make it less likely that they
are going to get into the position with an employer like yourself
to answer those questions because there may be a filtering process
which—
Chairman
11. For impractical reasons.
(Mr Meager)—which just says, "We can't
possibly interview 200 people, so we are going to interview ten",
and nine times out of ten there are going to be more unemployed
in the pile that you do not interview than the pile that you do
interview, so they might, despite their unemployment, be perfectly
suitable.
Mr Nicholls
12. You say that is what the problem is, but
do you have an answer to that? I never think that people should
always have the answers to their own questions, let me say, but
do you have an answer to that? With quotas and interviewees, it
begins to get surreal, does it not?
(Mr Meager) One of the problems, as Chris said, is
that at times when they do not need to, employers tend not to
use the job centre which is going to be the main filter through
which a lot of long-term unemployed people are going to come into
contact with employers. One option is to look again, I think,
at these kinds of programmes which, at minimal or no cost to the
employer, give them a chance to try out a long-term unemployed
person outwith the normal recruitment processes. If there is one
thing that the research evaluation evidence shows it is actually
that those schemes, although they tend to be quite small in the
UK, have quite a big bang for the buck and there is quite a lot
of evidence that having been introduced to few long-term unemployed
people and seeing that there were some pretty good people amongst
them, some employers look again at the processes by which those
kinds of people would have been filtered out in the recruitment
process, so it is not a simple answer.
(Mr Atkinson) There are two answers. Nigel's is one
answer, and that is for a trial run. The other answer is circumvention,
that the unemployed people themselves get round that difficulty
of not being invited to the interview by turning up speculatively.
This is a line that the Employment Service pushed quite heavily
in the early 1990s, that these people should be encouraged in
their job search just to turn up and see if any vacancies were
going in the hope that they would be hired there and then. This
is a way round that difficulty, but it is very expensive in terms
of an individual's effort, if you like, and I think very discouraging
for them, so it is quite a hard road for them to take. I think
the experiential one is a much better one.
Mr Brady
13. In a time of relatively low unemployment
or in an area of low unemployment, it seems to me that there might
be two sensible responses for employers. One might be to say that
they are not as likely to get 1,000 people applying for a fairly
unsexy job, so do they need not a filter, and maybe they do not
need a filter like not taking unemployed people on. The other
might be to say that at times of low unemployment, those people
who are unemployed, particularly the long-term unemployed, there
is more likely to be a reason why there is a problem with them.
Which are they doing?
(Mr Hasluck) It is probably a bit of both, I suspect.
There is no doubt that there is a filtering process whereby the
most readily employable will leave the register more quickly when
times are good, and that will leave you with the less employable,
those with low employability on the register. Now, employers may
well be aware of that, but I suppose the question is how urgent
is their need to recruit. Certainly some work I did on the 1992
Employers' Recruitment Practices Survey showed that where employers
had recruited unemployed people, they had recruited them much
more quickly than they had recruited other types of recruit and
they were much more likely to have indicated that it was very
important to fill the job quickly, so I do not think it is a question
of urgency. If they feel, "This is a job that must be filled
and we must have somebody. If we can get somebody of an appropriate,
albeit minimal, standard, we will go for that rather than keep
the job vacant", and employers always have the option not
to fill a vacancy and it is a question of why do they choose to
do that rather than to fill it, and I think when they are hard
enough pressed, they will fill vacancies at a faster rate than
they would otherwise have done.
(Mr Atkinson) I think that so far as the long-term
unemployed are concerned, it is the second of your possibilities
that is really the most common and the most pernicious for them.
I have heard dozens of employers saying, "Look, if they are
long-term unemployed around here, there really must be something
wrong with them", and they usually back that judgment by
not hiring, so I think that is the one which is more pernicious
and more widespread.
Mr Twigg
14. You talked about the different methods of
recruitment used by employers. Can you just tell us a little bit
about how recruitment methods have changed over, say, the last
ten years or the last five years and any lessons that might have
for the inquiry we are conducting?
(Mr Atkinson) I do not think there is a simple way
in which the recruitment methods have changed. There has been
a shift towards more formal methods of selection, pre-screening
and recruitment and this is largely to do with equal opportunities
considerations—
15. And less by word of mouth.
(Mr Atkinson)—and, therefore, it is more formal
advertising of vacancies, more formal short-listing against the
known criteria and so forth and altogether more open formal process
driven by a concern for equal opportunities and driven by those
organisations that are most concerned with equal opportunities,
so it is the public sector for the most part and the large organisations
which have been doing that. Against this, because the average
size of employing establishments is falling, therefore, you get
a shift towards more cheap, cheerful, informal methods of recruitment
at the bottom end of the labour market, if you like. So there
are these two different and rather contradictory trends going
on. Overlaying that, there is a cyclical pattern as well, whereby
in a tight labour market employers tend to go up-market with their
recruitment and selection methods, so you see much more a use
of open advertising, more distant advertising in different areas,
more use of headhunters, recruitment consultants, agencies and
so forth. Whereas in slack labour markets it goes down to word
of mouth and a note in the window and things like that, much more
cheap and quick methods of recruitment. So there is a cyclical
pattern overlaying it as well.
16. What does that combination of factors do
in terms of recruiting unemployed people? Does it mean that for
the long-term unemployed it is more difficult to get jobs in smaller
businesses and they have more of a fair crack of the whip with
the public sector and bigger companies or does it not quite work
like that?
(Mr Atkinson) I think it does not work very simply.
I think actually the answer is that we do not know. There is not
a really clear-cut answer to that question. Insofar as recruitment
methods go informally, they tend to be restricted to an in-crowd
of people already in work and, therefore, the unemployed and the
long-term unemployed in particular are cut out of that process
at an early stage and they never get a chance to get in and prove
their worth, so I think that does militate against them. Insofar
as they are moving towards more formal criteria, that can also
disadvantage the unemployed in that the very questions that you
were talking about are very likely to come on the agenda; employers
do want to know, "What is your current status and how did
it come about?" Eighty odd per cent of them think that a
stable work record is an important selection criterion, so they
are not, I think, advantaged by shifts to more formal recruitment
methods.
17. What about the impact of formal equal opportunities
policies on the chances for unemployed workers? Is there evidence
that suggests they help or do they make any difference?
(Mr Hasluck) I think they hinder. I think they are
inversely associated with the probability of recruitment. Perhaps
"hinder" is too strong a form of words because what
I would say is that many employers are worried about having a
practice to recruit unemployed people specifically fearing that
this then cuts across their equal opportunities policies. That
is not quite what I was saying before, so perhaps I will stick
with my second version. Certainly I have found evidence when I
was looking at the 1992 data-set that when employers recruited
an unemployed person, they were much more likely to have formal
selection procedures and a formal equal opportunities policy.
Now, of course that is also associated with being a larger establishment
as well, but I suspect that employers may be reluctant to start
making special cases for particular groups of recruits because
they fear that having gone through all the traumas of getting
equal opportunities policies agreed and so on, this then is going
to look as though it is contravening that. If I can just add something
to the question about how things have changed, I think the other
issue that perhaps needs to be explored, although we have only
sketchy information really, is the extent to which recruitment
is taking place through private employment agencies. I mentioned
earlier that there has been apparently a substantial growth in
the share of the market taken by private agencies. It is very
difficult to tell because the market is only partially covered
by the Federation of Recruitment and Employment Services, FRES,
and there is a kind of fringe of very small businesses, sometimes
very specific to occupations and sometimes specific to local areas
and so on, but certainly across Europe there is a trend for increased
punctuation of the job market by agencies. There is certainly
evidence that the larger players in the field are consolidating
and amalgamating across national borders even and I think that
there are several reasons for that. Firstly, there is the issue
of deregulation which is not such an issue here as it is in the
rest of Europe where there has been monumental deregulation of
the private agency, but it is also to do with the way that many
of the larger organisations have actually contracted out many
of their personnel and recruitment functions, so they may in some
instances actually delegate recruitment and selection to an agency
and they never actually invite applications directly. That of
course does raise issues about how well unemployed people are
able to access that. Now, I think there is no reason why they
should not be able to access it and I think that part of the function
of the Employment Service in some instances is to push people
in that direction, and there certainly is evidence from the Labour
Force Survey that jobseekers themselves are increasingly combining
the use of private agencies with the use of the Employment Service.
Now, you could interpret that association any way you like, but,
in my book, it is the result of the Employment Service saying,
"Well, we can't do the job on our own, so we have got to
work in conjunction with the agencies", and encouraging jobseekers
to sign up. I think if they do not, they actually do risk missing
out on quite a slice of the job market.
18. My next question connects to that. John
and Nigel, in your submission, you suggested a scheme which would
actually reward employers who choose to go through the public
Employment Service. Can you tell us a little bit more about that?
(Mr Atkinson) What we have done in the paper is to
highlight the contradiction between all the efforts made to get
the unemployed individually to use the job centres and the lack
of any consistent effort to get employers to use it. So mainly
it is down then, I suppose, to the commercial activities of the
Employment Service to sell themselves to employers as a good source
of good labour. We think that contradiction is really quite sharp
and ought to be addressed. The most important thing that we would
say is that it should be down to the Employment Service consistently
to regard the employer as their principal customer rather than
the individual jobseeker as their principal customer, and although
they have made efforts in that direction in the past, they have
not been consistently pushed or pulled in that direction. Then
our thoughts turn to whether it would be possible to find ways
to encourage employers to use the Employment Service. We thought
that there might be some possibility for a programme not unlike
Investors in People which would be some kind of public
recognition of an employer that is committed to recruiting from
the local area and from unemployed people. There are several rather
unco-ordinated schemes of that sort around at the moment. There
is the Tick scheme for disabled people, for example, and it might
be possible to blend those altogether into an award for a socially
responsible recruiter. We have not given a great deal of thought
to the details of how such a programme might work out, but we
think that it is important that there could be some pressure brought
to bear on employers to do that. It is a costless activity for
them; it costs them a telephone call and that is about it. We
think some action on that front would be useful. It would fall
short of, say, a requirement to register which has been seen on
the Continent and has had really quite disastrous consequences
on the way in which the internal labour market grows, and the
number of external vacancies just collapses.
Mr Nicholls
19. It may be I have misunderstood this, but,
as I understand it, Mr Hasluck is on record as saying that additional
selection procedures which rely on written applications and formal
interviews might be said to disadvantage many unemployed applicants
and, as I understand it, the proposition is that most employers
rely on a combination of sifting application forms, face-to-face
interviews, following up references, and it has been argued that
these sorts of methods might put unemployed applicants at a disadvantage,
especially where the unemployed person has problems with literacy.
Now, it may be that I am misunderstanding it, so I am just wondering
whether we might put the cart before the horse. Most jobs will
actually require these days, perhaps unfortunately, a degree of
literacy and numeracy and, on the other hand, it seems to me not
unreasonable that employers should, as part of the sift, want
to see something in writing, albeit fairly basically. It just
seemed to me that the emphasis ought to be not so much on saying
that this disadvantages the unemployed as to say that in a sense
before you actually put them up before an employer, you have got
to work on numeracy and literacy and, to be fair, this Government
has a good record on addressing those basic learning difficulties
that some adults have. It may be that I am misunderstanding the
point, but if the proposition is that in some way we ought to
get rid of these selection procedures because they discriminate
against people who cannot read and write properly, indeed they
will, and the point is to make sure that people can read and write
in the first place. It is that general subject area that I found
rather interesting.
(Mr Hasluck) I think the general point you make is
that certainly formal written applications are an indicator as
to the presence of literacy skills and that is a reasonable thing
to explore in some instances. However, in my experience, there
is something called job-specific inflation which is where the
job really requires very basic skills and it may be doling out
hamburgers at McDonald's or whatever and what happens is that
you require a written application from people and then you kind
of work your way up until in the end you are asking for graduates
because they are the best qualified people on the list. Now, in
my view, it might actually be fairer if you put all the names
in a hat and drew them out and that would be really equal opportunities.
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