Examination of witnesses (Questions 40
- 46)
WEDNESDAY 24 MAY 2000
MR JOHN
ATKINSON, MR
NIGEL MEAGER
and MR CHRIS
HASLUCK
40. Is there evidence that their attitude has
actually changed? Presumably given that they engaged in the process,
they have at least a more open mind than somebody who did not?
(Mr Hasluck) I think there is a mixture of psychological
things going on and practical, financial things here. There is
a risk to employing an unemployed person, as most employers will
tell you. The point about the subsidy is that it makes handy the
possibility of terminating the placement in subsidised employment
after six months and makes it much less of a risk to an employer—things
can go back to square one, and they have been financially compensated
for the deficiencies and shortfalls in recruitment that they might
have. So it is less risky. If you look at it from a purely financial
point of view, that makes it quite attractive to hire this person,
and maybe after the six months they have actually acquired the
skills and so on which were deficient in the first place, which
the employer would not perhaps have been prepared to supply over
the six-month period for free. I suspect that there is also a
psychological process of identifying good candidates from amongst
those people who are recruited in this way.
(Mr Meager) There is evidence from previous schemes
that yes, to some extent, the employers who participate most readily
in the schemes are the ones who are most readily prepared to offer
employment placements and to recruit. There is also evidence that
allowing for that, and looking specifically at employers who participated
in these kinds of programmes but who did not recruit and employ,
there is apparently some effect subsequently on their attitudes
and behaviour towards this—not always a huge effect, and
not always affecting huge numbers of employers. Given the scale
of the New Deal, I think it would be very surprising if there
were not such an effect, but given the size of the programme,
it must be bringing in employers who have not been the usual suspects,
or some employers who have not been the usual suspects, for participating
in these schemes. So I think it would be very surprising if there
were not such an effect. What we do not know is how big it is
yet, or at what cost it has been obtained financially.
41. I am drawing to a close now. An increasing
proportion of the unemployed are multiply disadvantaged, with
a number of different problems which act against their likelihood
of getting a job—if you like, they are the more difficult
client group to get into employment. Will employers engage with
this client group, or is it better to keep them away from employers
until those problems have been tackled? As a follow-on to that,
what are the implications of this increasing proportion of the
unemployed population for the New Deal? How has the New Deal changed
that?
(Mr Meager) It is partly only an increase in proportion,
because total unemployment has fallen. I do not think you should
run away with the idea that there is a massive growth in the number
of multiply-disadvantaged people. Obviously at a time of falling
unemployment, you would get a proportion more, so it is not a
sea change.
42. I meant that to be implicit. I am taking
that as read.
(Mr Meager) I do not know.
Mr Brady: That is a fair answer.
Chairman
43. I think it was Nigel who earlier on touched
on early identification. I think there was a general agreement
that this would be helpful, and yet the Employment Service or
the Government seemed to be rather cautious in moving towards
a greater use of early identification models. Do you think they
are right to be cautious about this?
(Mr Atkinson) Yes, I think they are right to be cautious
about it. All the early work which was done on early identification
tried really to do it statistically, to try to identify those
characteristics which would lead probably to a lengthy spell of
unemployment. They were all failures, because it is the problem
of false positives. Anyway, that approach to it is too crude,
I think, and it does not give good results. If you did it that
way you would end up with very large numbers of people who were
projected to be in danger of having a long spell, who actually
would have got a job quite quickly. There would be a big deadweight
if it was done that way. However, I think that the experience
of the New Deal and the calibre of the New Deal advisers who have
been developed under the New Deal suggests that their skill in
assessing individuals is really quite a way beyond the sorts of
skills, attributes and experiences which a regular Employment
Service adviser would have had in the past. Therefore, it seems
to us that it is quite possible to develop an insight among those
staff which would allow them to form a reasonable basis for directing
people in certain directions, for distinguishing between those
who were pretty much job ready, those who, with a bit of help,
could be job ready, and those who really required much longer-term
intervention. That would be a pretty crude method, but they seem
to me anyway to be the best people to effect it—on a subjective
basis, not a wholly free basis, because there obviously need to
be guidelines drawn up and criteria against which they would assess
it. They do seem to me to have the skills, attributes and insights
to be able to do that effectively. So I think it does open up
a possibility, and I think what needs to be done is to have some
trials of that kind of approach, to see if it can be made operational.
44. Thank you. I have one question on intermediaries
and then another one on the private agencies. The Government seems
to be quite keen on intermediaries that view employers as their
main clients. Again, I think Nigel made reference to that. What
impact do you think these organisations could have on the recruitment
process and on the chances of long-term unemployed people getting
into a job? You may have already touched upon this. Is the Employment
Service sufficiently employer-focused?
(Mr Hasluck) Perhaps I could start on that. There
is clearly a dilemma here, and we are wise to recognise it from
the outset. It is that there are jobseekers who face considerable
difficulties in their jobsearch, and those jobseekers deserve
support. The Employment Service has been one of the main pillars
of that support over the years. The question then is, what is
the relative weight and trade-off to give between the support
to jobseekers on the one hand and employers on the other hand,
and I do not think it is a comfortable or an easy assessment to
make. Clearly, there is a responsibility on the Employment Service
to look to particular groups of jobseekers—people with disabilities,
members of ethnic minorities—and that is part of their performance
plan. How far this is then extended to cover all jobseekers is
a matter of different interpretational values. I think that maybe
the decision is going to be made for the Employment Service, in
the sense that they are faced with intense competition—or
will be, if they are not already—from other organisations.
Therefore, maybe the market will be as effective here as it is
in other places, in that the Employment Service will be forced
to become a provider of a service to employers and make employers
their main customer focus. It is not going to be easy, because
I do not see them abandoning or turning around on the traditional
support that they have provided over many years.
(Mr Atkinson) I think there are intermediaries and
there are intermediaries. There is quite a mixed bag. The type
of intermediary that I think does not work very well is the kind
of alternative Jobcentre, where efforts are made by mostly community
groups to set up alternative job banks of one sort or another,
specifically for unemployed people in the locality. They do this,
as I am sure you are aware, by just chumming up to local employers
and getting them to offer some of their vacancies to the alternative
Jobcentre. They never have very many vacancies, they never have
a wide range of occupations, therefore they do not offer to the
local unemployed a really viable alternative to either private
commercial agencies who have a host of vacancies or the Jobcentres
who also have a host of vacancies. So I think that kind of intermediary
is a bit of a non-starter, although well-intentioned. The type
of intermediary that does work better, though, is the type of
intermediate labour markets which have been tried out in Glasgow
and other places, whereby businesses are set up with the intention
of employing unemployed individuals. These do seem to work rather
well because of their worklike nature; they are very close to
a real working environment, and that is recognised by subsequent
employers who may well find graduates from these intermediate
labour markets. The problem with them, I think, is that they are
rather expensive, funding the activity in the first place is rather
expensive, and their knock-on effect on local employment has been
questioned. For example, if a window-cleaning co-operative is
set up, it might well put out of business other local window cleaners.
There has been a lot of debate about how important that is.
45. Finally, the private agencies. You have
referred to the fact that this is growing apace. Do you think
they are effective job-brokers for unemployed clients?
(Mr Hasluck) I suppose that it has to be recognised
that private employment agencies are businesses, they are there
to make a return for their shareholders. So I think the question
is, can they make a business out of providing a service to unemployed
people? Here I think the answer is in some cases yes, they can,
and in other cases no, they cannot. Where people are job-ready
and close to employment, then it is perfectly feasible for private
agencies to assist them and help them on their way, and many are
already doing that. There are obviously other clients in the jobseeker
client group who are going to be much more difficult. I do have
some doubts as to whether private agencies are really seriously
going to consider taking on very long-term unemployed people,
people with really intractable or almost intractable barriers
to employment, because they have to be very altruistic to do that,
and there is not going to be very much return on that.
46. So you think the Government is right to
encourage private agencies to take on unemployed clients?
(Mr Hasluck) As I have said, I think that some unemployed
clients can be probably quite effectively dealt with through the
private sector, and I guess the argument for that is that that
leaves the Employment Service free to concentrate on those who
face the greatest difficulties. Of course, if that is accepted
as a division of labour, then I think you have to ensure that
the Employment Service is not judged solely on the basis of the
proportion of jobseekers that they are successfully getting into
work, because clearly there is a cherry-picking or a creaming-off
process here which is going to work to the disadvantage of the
Employment Service.
(Mr Meager) I agree with that. I think that a byproduct
of that might be a further segmentation in the marketing sense,
in that the closest to employment of the unemployed would end
up not being served by the Employment Service, and you would see
the Employment Service being seen as, and possibly even becoming,
the sort of supplier of last resort, which would actually make
it much harder for them across the range of their client group,
not just with the most difficult to place people. So I think a
lot more thought needs to be given to what kinds of employment
agencies are being encouraged and why. I think there really needs
to be a case to show that actually they can place this particular
client group more efficiently, more acutely and more quickly than
the Employment Service. I do not think that evidence has actually
been produced yet, so I would be in favour of proceeding with
some caution on that.
(Mr Atkinson) I wanted to add that I agree with both
my companions here. That does not mean that we should rule out
the private agencies. I think they have things to offer. They
have skills to offer, and they have a really good understanding
of the different sectors in which they work. Therefore, they have
in many ways a more superior understanding as to what employers
want than the Employment Service often does. The question really
is on what basis that skill and that expertise can be drawn to
help the unemployed. If you do it on a commercial basis, then
the creaming-off that has been mentioned will take place. Therefore,
I think you have to do it on a non-commercial basis and draw the
agencies in in a different way than just leaving it to their instincts
which are to cream off. We suggested in our paper a couple of
ways in which that might be done.
Chairman: Yes. Can I thank you, on behalf of
my colleagues, for the way in which you have answered our questions.
Some of them, you may have felt, may have been slightly outside
your brief, but I think, as Stephen Twigg said, we talk off the
top of our heads all the time, and fortunately you do not have
to do that. Thank you very much indeed for your evidence, both
written and oral. Right at the beginning of our investigation
you have whetted our appetite for digging further into these matters.
Thank you.
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