Examination of Witnesses (Questions 200
- 219)
WEDNESDAY 5 JULY 2000
MS CANDY
MUNRO, MR
JONATHAN BALDREY
AND MR
WILLIAM ROE
200. In a slack labour market how do you need
to adjust the demand-led strategy and make it work?
(Mr Roe) Lots of the slack labour market areas in
this country are close to the tight labour market areas, geographically
close. Mentally, in terms of perception, in terms of access and
so on, they may be miles and miles away. I know many cities in
this country, not just cities, where the worst concentration of
unemployment is within a mile or two of the largest concentration
of jobs in that city or that region. One of the issues to be tackled,
and is being gradually, is about people's awareness of the jobs
that exist and how to get hold of them. Another is about people's
willingness to do a journey, to travel to work a distance, that
most people do. I do a lot of work in the field of looking at
people's awareness of the change in the labour market, the nature
of jobs, where the jobs are and what employers are looking for.
There are vast gulfs anywhere you look in the awareness about
the world-work and the jobs that are available. The assumption
by many unemployed people and their advisers very often is that
the job centre and other publicly funded organisations are the
only place to look for jobs. Nothing could be further from the
truth. These places are helpful, of course they are, but to imagine
that these places are the repository of most of the opportunities
just is not true. Most of the turnover, most of the vacancies
that exist in a city in any week never, ever get near a job centre
or a publicly funded intermediary. Many advisers are not even
aware of that. The other thing is, if you ask unemployed people,
as we have had a chance to do and do often, what they know about
the jobs that are available within four or five miles of them,
the level of awareness is very low. In that particular Edinburgh
case we are talking about, we are talking about less than a mile
distance between the big housing estate with serious unemployment
problems and the hottest centre of job creation in the whole of
Scotland. What the unemployed people say to us is how frustrated
they are because many of them have been encouraged and required
to go through publicly funded programmes, which the employment
service and others run, and in many of these programmes they say
to us, "They keep as away from where the jobs are".
These are the words they use to us, "They do it in our community
or they take us off to some college or they take us off to some
place. We never get near where the jobs are", that is what
they say. That was said to us with such power and clarity that
in the centre of excellence we are developing we have absolutely
placed it at the heart of where the jobs are. When we were evaluating
the prototype employment zones around the United Kingdom last
year we came across many examples of services which were okay,
good or very good and which were located in housing estates and
residential communities. Traditionally we all thought that was
very good, me too, we thought it was really good to take services
to the people, make it easy for them to get access to services,
take them to the housing estate on the edge of the city. I have
been part of that argument for many years. The trouble with that
kind of approach is it does nothing to help people get to the
places where most of the jobs are. Take Glasgow, a city that Candy
knows intimately and I know well, the biggest concentration of
jobs in Glasgow, by a mile, is in the city centre. Yet, many of
the services for unemployed people are on the peripheral estates.
They are taken there so that they are close to where they are.
What people say to us is they are not close to where the jobs
are, and they do not help people become familiar with the daily
journey to work at 7.30 in the morning. On its own that is too
simplistic, but surely we must deepen people's appreciation and
connectiveness to what the jobs are and where they are if this
brokerage is really to work.
Chairman
201. I had better just set the record straight
because the Chairman of the Chamber of Commerce told us that many
skills shortages were because of the very poor recruiting practices
of employers. This is the Chairman of the Chamber of Commerce
who actually produced the Skills Report last week. Is it not true
that employers very often have a pretty poor assessment of what
the real kind of skills and qualities are for the jobs which they
have vacancies for?
(Ms Munro) Maybe we are fortunate because we have
a business development team. We have the opportunity to get in
there and influence some of these attitudes that they have. Many
employers have a real negative view of people that have come from
the background of long-term unemployment. If you can build up
that long-term relationship with that employer and invest in that
relationship, then, over time, you can gradually change some of
these practices and challenge some of the perceptions. It is a
long-term process.
(Mr Roe) I just want to give you a couple of examples.
Your question is very, very valid. I see some really grim practice
in recruiting people into private sector jobs as well as some
grim practice in the public sector too but also matched by some
excellent practice. The point I want to make is about the changing
pattern of recruitment. We were working with a major retailer,
whose name I had better not mention, because they are well known,
which is changing everything about itself very fast, including
its recruitment practices. Until about nine months ago they mainly
recruited people through what we would regard as traditional methods,
sit down, be interviewed, answer some questions and fill in some
forms, maybe a bit more than that, but essentially that kind of
basis. These are customer service jobs in retail stores. Since
the beginning of this year they have completely transformed their
recruitment process. As well as some discussion and sitting down
and answering questions, one of the main things they do now is
take the recruit onto the floor of the store, accompanied by someone
from the human resources section, and somebody who is a manager,
and ask them to go and approach customers and introduce themselves
to customers and talk to customers and ask them how they are getting
on and what they like about the store and do not like about the
store. It is the way that the person engages with customers that
they use as the primary criteria for deciding whether to have
them or not. Personality, communication, the ability to get on
with people. That is not known back down the line. People come
to these interviews and they fail them and it is only having gone
through the experience of failing them they realise that employers
are adopting different techniques and approaches. The infrastructure
that helps people get towards the jobs needs to be highly conversant
with how employers are changing their hiring patterns and their
expectations.
202. You would say that what we are doing at
the moment within the system of preparing young people for work
is nowhere near as well informed and well targeted as it needs
to be?
(Mr Roe) I would say that it is one of the greatest
defects that we have. We have not put that in place, yet routinely
the tools and techniques would enable everyone who is coming to
a point of being positioned or placed or whatever to be highly
conversant with that. It is not impossible to do it. I will not
do an advertising slot but it is not impossible to do it. A company
that I work with has developed some multi-media tools, which are
completely world class, to help to do this and they are going
to be available in this country from this month. Getting them
used in every job centre and intermediary is another matter, but
it is not impossible to do it and to empower individuals so they
become familiar with it.
Mr Twig
203. Can I move on to the issue of the quality
of the jobs that we are looking at? In a previous report to this
Committee on Jobs Gaps we noted that one of the barriers to employment
was poor quality jobs. I would be interested to hear from each
of you what you see as the best measures of the quality of jobs.
(Ms Munro) Initially there are two sides. First of
all, there is the entry level salary. I think all of this sort
of research, both qualitatively and quantitatively indicates that
the best indicator for job retention in the longer term is the
quality of that first job, it is critical. Salary level for the
entry level, but that is not to say that jobs that are paying
the minimum wage are bad jobs, the trick there is to turn these
into opportunities and look at how people can progress through
the jobs either entering into that company and progressing through
that company or using that experience as a base line to move on.
We probably have about 20 per cent of our case loads of people
who are in work looking to improve their job prospects so that
service needs to be there for people to come back and either get
further training or support further job seeking. These are the
two factors, opportunities for progression and salary.
(Mr Baldrey) I think to a certain extent you are right
about salary, we have always had a minimum wage and our minimum
wage is much higher than the national minimum wage. Salary is
important and that is what jobseekers look out for. I think the
comment I want to make to the last question, which is kind of
linked to this as well, is that in the public sector or public
funded work we think recruitment is a doddle, we do not understand
that recruitment is actually a multi billion pound market place
in the UK and that actually it is a very professional job. Companies
are not good recruiters, they are not necessarily fantastic at
tax planning either but they use professional tax planners and
professional recruiters. I would say as a recruitment professional
this issue about quality is such a soft issue. I could tell you
that was a good job and this was a bad job and I could tell you
if that was a good match, if that candidate was right for that
job. I would have no problems with placing somebody who did not
speak a word of English as a night shelf stacker in a large supermarket
because they are earning £8.50 an hour and they are prepared
to do the job and they stay there, but if I had a graduate, a
UK national, I might have questions about that. I would say quality
is very much related to the person, the company. I think that
we look also at the issues, the point that was made earlier about
candidates dropping out of jobs and placing people into jobs that
they do not like, we have to look also at whether the employer
is getting quality. If you place the wrong person into the wrong
job and they drop out, all we ever seem to have looked at is what
happens to the unemployed person. What happens to the employer
is also important because the employer will walk away and never
create another opportunity for you to try out again. I think it
is very difficult. I think the more you try and measure things
like quality (a) whatever you measure always seems to come out
100 per cent in anything you are funding, people always pass any
Government measurement, but I think (b) qualitative audits have
to take account of where was the person before, what did they
have, why did you place them in that job. With my staff I constantly
go round and say "This candidate has been placed into this
job, why did you put him forward for that job? Have you not thought
you could get him an extra pound an hour doing the same job in
this place" but that is a recruiting error. There are times
when you look at it and think that is the fit. I think the ultimate
measure is do they stay, do they come back, are they happy and
if they are not happy can you rationalise it? People are never
happy on a Friday afternoon, for example, that is just the rules
of the game. I think you have to look at a whole basket of factors.
Chairman
204. It tends to be Thursday with Members of
Parliament.
(Mr Baldrey) Just to state one final point, I do think
the people that measure these sorts of issues, the people who
have audited us, I have never ever been audited by anyone who
knows the vaguest thing about getting a young person into a job.
We have people who look at quality of service talking to unemployed
people, talking to employers, who have never spoken to an employer
before and who have never spoken to an unemployed person before
and they are measuring service quality. I think if we are going
to start measuring things we have to have people who are equipped
to measure them to measure them.
Mr Twigg
205. That is about the people doing the job.
As I understand it the New Deal Innovation Fund prospectus relies
very much on wages and retention. Do you think it needs to be
more sophisticated than that?
(Mr Baldrey) I think it is quite preposterous, this
idea that we have one salary in there. I read it while I was in
Middlesbrough and I thought 15K in London is easy, 15K in Middlesbrough
is very difficult.
206. Yes.
(Mr Baldrey) I think that is difficult. I also think
we try and find cheap, easy to measure things to measure because
they are cheap and they are easy to measure but if we said "Does
this feel right", get a group of professional recruiters,
get them to come and measure service quality for other recruiters—I
can tell you Candy's operation is good because I have listened
to what Candy says over a great deal of time and she sounds like
she knows what she is talking about—that to me is how you
measure it. It is very difficult to do because you cannot just
say what is the minimum wage, what is the wage level, if it is
above this then it is a good job, if it is not it is a bad job.
(Mr Roe) If you shift the lens a bit. The lens for
years has been on that crossover point when someone moves from
the status of being unemployed and claiming to being employed
and not claiming. That is where we focus the lens, on that point,
that sharp line, if it is accountable and measurable and the Employment
Service knows it. It is all that kind of stuff. Okay, that is
an important lens to keep but we should shift the lens or get
a second lens which is about the person's progression from the
first job to the second job and that second job could be in the
same company or somewhere else. That is the acid test of whether
somebody is employable. Sustainable employable—Gordon Brown's
statement—that is how you measure that, have they got what
it takes, are they able to move from one job to another? If they
are not they become one of the statistics who come this way again.
If they are able to move from entry level job to a second job,
then that is real success. I think you can imagine the things
around that lens and what we need to do to help people make that
progression. Most of our systems, not the best intermediaries
but most of our systems, drop people long before that point arises
when they are moving from job one to job two and most people do
not get help when they are moving from job one to job two. Where
do you go? If you have a really good intermediary who is on your
patch, like Candy's firm is, you go back there because they want
you back, they welcome you back, they regard you as a customer
for life, and your lifelong progression through learning and jobs.
They want your kids back when they want help too. It is a brilliant
kind of service. Most of our services focus on a transition point
in somebody's life and they want to say goodbye to them. Why do
you want to say goodbye to them at that point because I suggest
their ability to succeed is a bit later on? The second reason
I think we should create a second lens is because the cost to
the employer, the cost of recruiting someone or something and
the cost of losing someone is much, much higher. If you speak
to some companies they do not even know what it costs to lose
someone, but the better companies do know what it costs to lose
someone and it is a cost which is enormous. Nike in the States
reckon it is £15,000—the dollar equivalent—every
time someone leaves if you count all the costs. I was working
with a company in Fife last year who have 3,000 employees and,
of these, 1,200 are what you call entry level workers, 1,200,
and the average length of stay of these 1,200 workers in this
company was 17 weeks. They were talking of a rate among entry
level workers of 300 per cent a year. The cost of that was vast.
They were not counting it until someone said to them "Is
that not something you might count because it is of interest to
your business as well as of interest to the employee?" Now
they have started to count it and they understand it they have
put in place measures to get the rate down. I would take a new
lens at the point of transition from job one to job two, both
for the individual and for the employer. I would encourage intermediary
services to want to hang on to their customers and want them to
come back for a further dose of help at the transition point.
It is at the transition point where people are most vulnerable.
(Ms Munro) In terms of quality of job I think there
is an issue about aspirations. A big part of what we do is raising
people's aspirations. If I give a brief example. Glasgow has become
the call centre capital of Britain so there are lots and lots
of call centre jobs. Placing a graduate in a call centre is a
placement, it is not a particularly sustainable placement. The
graduate will perceive that as being a stepping stone and quickly
be off. Placing somebody whose aspiration is to be perhaps a security
guard into a call centre job, that is a big leap for that individual.
Looking where people are coming from, that is the job that they
aspire to and they will really value that job and it will be sustainable
in the longer term. There is an issue about quality there. I think
what is interesting on the Innovation Fund, some of us were involved
in the initial consultation on that document and initially the
measure was to be a step increase in salary after a certain period
of time. I suspect that was lost because I do not know how that
would be measured, it would be very difficult. It is not like
the States where that is an easier trail to follow. I do not think
for areas like Glasgow a £15,000 salary level is achievable
unless you are talking about unemployed graduates. There are ways
to measure progression, some of which are tools at the hands of
Government—there is a tax base or whatever. We do these
because they are usable. There are others which are more sophisticated
and harder to measure, so we do not tend to use them. For example,
what about asking the person themselves how they feel their life
has changed or improved or developed or about their own sense
of self-worth? What about asking them? We tend not to because
these things are not easy for statisticians to get right and count.
Around the United Kingdom very thorough systems for measuring
and helping people measure their own advancement have been developed.
In Scotland a system has been developed, which goes under the
name of the Richter Scale—because it was invented by Richter—it
is the Richter Scale of personal progression and advancement.
It has been used in England in the education world, in the North
and the South-West. It is not instead of other measurements but
it is a means of getting what the individual feels about themselves.
What could be more important than that in the kind of business
we are talking about?
(Mr Baldrey) I take issue with a couple of things
that William said because we do sometimes have a view that people
are totally career minded and they want fantastic careers. We
did some work with one of the major banks—I cannot say this
is across the board—which was about women returning to work,
and they wanted to try and encourage more women returnees to work
on a part-time flexible basis. We did a huge amount of focus work
with 300 or 400 women who had returned to work, and a lot of the
time the comment that was made is they did not want a career,
they saw the key focus of their life as dealing with a young child,
the domestic issues they had to deal with, getting the kid to
school, picking the kid up from school. There was a common feeling
they wanted to go to work to stop being a mum and to be somebody
else, not to have to study, not to have to move forward, but just
to have a job for a few years. At that point in their life they
did not say that they wanted to move forward. I am not saying
that every woman returner wants that, but we have seen candidates
who do say, "I do not want a career job". I had an extremely
articulate, intelligent woman who said, "I want to clean.
I like cleaning and I keep going to people who say I cannot be
a cleaner, that I can do better for myself. Will you help me to
be a cleaner or do I have to go somewhere else?" I said,
"Fine, if you want to clean, clean". We try to make
people better. This measure of, "Are you happy in the job,
are you going to leave this job?" is critical. If a security
guard wants to work in a call centre that is fine. We keep meddling
with this middle-class view of what people should do without asking
the person what they want to be.
Mr Twigg
207. Can I take you back to the issue of the
wage rates. In your experience what sort of wage rates are unemployed
job seekers themselves looking for and how realistic are they?
I presume from your experience there would be a geographical disparity
there?
(Mr Baldrey) It ranges. I can tell you about Middlesbrough,
because we have done a huge amount of survey work there. It is
£200 a week take home, which I think may or may not be realistic.
208. In London?
(Mr Baldrey) It depends on the age. The 18 year olds
who do come in with the Gucci everything and the mobile phones
are usually looking for a fair amount of disposable income. It
depends what we ask them. We ask them what their minimum salary
is and say, "That is a shame because we have a job in Kiss-Fm
and that only pays £12,000, but you are looking for £18,000".
They say, "I will do that for £12,000". The whole
point is you have to talk about salary in the context of the job.
I keep hearing things about benefits traps, and I think if you
are dealing with a certain quality of jobs you are not going to
have massive problems with benefits traps, certainly not in London.
I am sure you would in other areas but not in London. I keep hearing
issues about unemployed people being picky about the jobs they
want to do. I do not see that, necessarily. If you are working
with good quality jobs it is not that difficult to move people
into them.
Mr Twigg: Thank you.
Ms Atherton
209. Perhaps you can talk a bit more about post-placement
services, what proportion that you do is about post-placement
and what are the particular issues, in particular from the women
you survey? I would be interested to hear that. What proportion
of the funds do you put aside? Is it child care, is it transport
issues, what is it? Does the current funding reflect this area
of activity?
(Mr Baldrey) We know that child care is an issue.
There is a whole series of issues. We do not pay for child care.
The post-placement support service that we provide for an individual
is that we call them a few times, depending on how they are doing
in their job. We telephone them at home in the evening and say,
"How is it going?" We monitor their progress through
that way and we also call the employer and say, "How is it
going?" We used to do a lot more, we used to visit, but we
found that the more that we did the more intrusive it was seen
by the employer and we could not perceive the value of it, so
we just call them. With regard to child care and with regard to
those kind of issues, there is a whole raft of issues to do with
women. If we are talking about women returning to work, specifically
women, with the bond between a woman and her child, we found that
that bond is so great that sometimes when a woman gets to the
front door on the day that she is supposed to be returning to
work she cannot take handing the child to somebody else to look
after and she has to give up the job for that reason. We found
the availability of child care, the cost of it and the fact that
it is still taxed is frightening to most women. The cost of paying
for that usually absorbs all of their wages. The quality of local
child care provision is not good in a lot of places. There is
a whole raft of issues to do with child care which we do not involve
ourselves in other than to note that that was the reason this
person could not get a job, and to flag them up to the councils,
who we often work with or work for and to say, "You really
need to do something about child care because it is stopping people
from getting jobs". I think there is a time for anybody who
goes into a job, usually three or four weeks into an appointment,
when the novelty wears off and they want to leave. Our post-placement
support service is designed for that event, to stop people from
when they have a bad day and they have no one to talk to, because
they have not made any real friends in the company, and our post-placement
support service is giving them somebody to talk to about that.
They are really busy on a Friday afternoon, everyone wants to
leave their job on a Friday afternoon. A lot of it is, "Okay,
let us talk about this on Monday, and if you feel the same we
will find you another job". By Monday you do not even get
a call back, everything has sorted itself out. Again, it very
much depends on the candidates. There have been occasions when
we have also picked up employers whom we will not work with again
because of the way they treated our candidates. We are watching
what is happening in post-placement.
(Ms Munro) I would reiterate what I said earlier on,
the match is the most important aspect. In terms of post-placement
it is a very difficult service to fund because it is not recognised
as being a service. There is a perception you get the individual
into the job and that is it, we do not need any more support.
We do offer some post-placement support, but not as much as we
would like to. A lot of it is informal, it is late-night opening,
so people can come back if they want, if they feel they need support
or they want support. Post-placement can be a positive thing as
well as a negative thing, it is not just about resolving problems,
it is very much about moving onwards as well. We also have a very
informal rapid response service, because what we tend to find
with some of the placements is that when they start to unravel
they unravel over minor issues, misunderstandings, and they unravel
very quickly. We are fortunate that we operate in a very small
geographical area, so one of our advisers can get in a car and
be with one of our employers in about ten minutes. That is very
effective when it is needed. For a large proportion of our job
seekers once they have their job they do not want to know about
us any more. That is fine. They have achieved their objective,
they are in the job and they are quite happy. I would reiterate
the fact that it is a difficult service to fund.
(Mr Roe) Can I put another perspective on this? This
is not to contradict or disagree with any of Candy's experience,
which is much deeper and immensely sharper than mine, it is to
look to the future and ask ourselves whether the way we have organised
these kinds of things in the past will be the right way for the
future. Are these services, which we call intermediaries, seeking
long-term relationships with employers and with individuals, or
not? Are they seeing people, essentially, through their hands,
hopefully successfully matched, and saying goodbye, or do they
want to develop long-term relationships both with employers and
with clients? Now if you see the job of an intermediary essentially
just as a matching job, okay you do really good matching and you
probably do say goodbye to individual clients quite quickly, hopefully
successfully, you probably do want to keep nurturing your employers
for quite a long time because they will come back with future
vacancies. But conceptually there is a different way to come at
this which is to say rather than let your clients go through your
hands and disappear, why not make it easier for them to get access
to a range of services which are about their continuing progression
and advancement? We have not tended to do that until now (a) because
public funding has not encouraged it or noticed it and (b) because
we have tended to divide up things which are to do with job search
and job placement from job advancement, life long learning and
support for kids, etc.. If you join a number of these things together
then you create a different mix of services where you probably
would want to hang on to your clients and offer them stunningly
good services for their future. This is not completely pie-eyed,
although it is quite far away from what we do now. If you look
over the hill at what the best of the private sector recruitment
and human resource agencies are doing, many of them used to see
the job as people through their hands, quantity was often what
it was about, quantity and a percentage. That is not the case
with the best of the market any more. The Manpowers of this world
and others now take the view that what they want to do is to hang
on to as many of the people who go through their hands as possible
and have a lifelong relationship with them and to help them advance
and progress in their work, to help them think about how they
can both advance their own career and be more successful for an
employer and stimulated by the Government's change to the legislation
about part-time work and temporary work and these kinds of things.
They know they cannot get away with the kind of quick through
and out relationship and so the best of these agencies are now
offering people all sorts of services which are not really to
do with jobs and training but they are to do with personal financial
services and employee benefit services and technology, home based
technology services and lots and lots of other things. They see
themselves as having a kind of holistic relationship with people
who come through their hands and they will do what it takes to
keep them as clients. They do not see the relationship as a problem.
This is echoing your point. They do not see the relationship,
as it were, as solving a problem and saying "Done. Goodbye".
They see it as a long term service for their clients and others.
This is a different concept of what it is about. I am not saying
it is right or wrong but I think we will not get away in the future
with services which just say goodbye to people at these kinds
of points where we do now. Society does that. The best of joined
up government will have us joining together primary care health
and well being and child care and family support services, which
will not be about just giving you a prescription and hope you
do not come back, it will be about helping people succeed in life.
I think some of the best intermediaries of the future would like
to see themselves offering a more holistic range of services to
clients on a long term basis and not just people through their
hands and gone. It is controversial and difficult and it is not
how we do it now.
(Mr Baldrey) If I can add to that. If you are doing
it right it happens automatically. We have been asked "Do
you ask the candidate to come back", the candidates come
back to us, they would not have it any other way. They would beat
the door down if we tried to keep them out, they see us as their
agency, we will find them their next job irrespective of public
funding or not, they want us to find them a job. I am sure you
have the same thing. The candidates I have personally worked with
over the years, there is a woman who called me last week who I
placed ten years ago and she still sees me as a recruiter and
always will do, I am sure she will. If you are providing the right
level of service, in the same way as you would use one travel
agent if they were good, you would keep going back to them, or
one hairdresser, dentist, doctor, anybody who provides you with
a professional personal service you would go back to them if they
were any good.
(Mr Roe) This has big implications for our country
because the infrastructure we have inherited from the past, the
organisation of the structure for doing this kind of stuff, has
not traditionally been equipped to do these kinds of jobs. The
best of them are doing it because it is a brilliant thing to do
and it repositions you from being a problem solving agency at
a time of crisis into being something much more heart of the fabric
of the community. There are people who say what we need in this
country is really a quite different local infrastructure for labour
market intermediation, for lifelong learning, for career progression,
for school to work transitions, for all these things. Because
programme spending slices these things up like that it is very
hard for people to do these kinds of things. Wildcat is interesting,
and I do not say this to necessarily copy it, Wildcat runs school
systems as well as doing labour market intermediation, it runs
alternative schools for communities and for children that are
in difficulties from ages 10 and 12 onwards. It runs a range of
education, learning and labour market and technology support and
other kinds of services. It is by no means the only place that
does it. Why do we make the divisions where we make them? Historically
we have done it there because the public money wants these divisions
made there. We have tried to do cross casting and the Comptroller
and Auditor General finds that really hard to cope with.
Mr Nicholls
210. Can you explain to us something about the
source of your funding? Are you able to combine public sector
work with private sector work? If so, how do the things mesh together?
(Ms Munro) Our funding is quite complex because we
are an independent company and a registered charity. We are funded
but it is core funding from the local enterprise company and Glasgow
City Council. We use that as a base to try and bid for other sources
of funding whether it be European funding, private trust funding.
We generate commercial income ourselves.
211. When you say you generate commercial income,
who do you send the invoice to? Who pops the cheque in the post?
(Ms Munro) This is through a range of services. I
have an intermediate labour market market research company. They
provide market research on a commercial basis so we generate income.
It supports intermediate labour market activity, it supports the
workers' wages.
212. One obvious possibility might be to say
should intermediaries start billing employers? I just wonder what
effect you think that might have on the relationship you then
have with the employers? I just wonder what their attitude might
be in an area where unemployment is relatively high, do they really
expect to get it for free, they think they are part of the bargain
to take people who may be difficult? What about the idea of billing
employers?
(Mr Baldrey) We do bill employers where we can. About
30 per cent of our revenue is now from the private sector. I have
to make the point that we did not intend it to be that way but
it is the only money we can effectively rely on because public
funding is nothing if not erratic. The private employers we find
we say to them "You pay for candidates who have got skills
and experience and you do not pay for them if they are long term
unemployed and the ones in between we will haggle over" but
the employers know what they are going to pay for. They have a
sheet of vacancies and they will say "This one I know I will
pay for and this one and this one is free". We have a little
bit of a row in the middle occasionally but most of the time employers
are quite happy to pay for private sector candidates, if you like.
As a private company we take our profits from the money the employers
pay us.
213. If the employee brings something to the
firm at a relatively lowly level, something like their past experience
or qualifications or both, in a sense you are saying "this
is a quality person" whereas if, in fact, they are going
there with nothing to offer other than their willingness to be
employed, it is down to square one, they regard the pain as their
willingness to give it a shot?
(Mr Baldrey) Yes, they know what they will pay for
and they know what they will not. It is usually laid down in personnel
that they will pay for chefs anywhere in London. If you have a
qualified chef anywhere in London then there is no reason why
an employer should not pay because all employers will pay for
chefs, qualified chefs, because there is such a shortage of them.
If you have someone who wants to be a barmaid, for example, or
a barman, then very few employers will pay for that person unless
they have got cocktail skills. So employers know and I think we
just push the things very hard with employers and our sales people
get more commission if they get the fee from the employer but
they do not get it 70 per cent of the time, if you like. I think
where you do get a fee you get much more buying in from the employer
because somebody important has to sign the purchase order.
(Mr Roe) It makes it part of the business rather than
something which has a touch of philanthropy about it. This is
not about philanthropy, it should not be about philanthropy. I
think it is really important that the intermediaries appreciate
that what they are selling to employers is at its best a very
good professional service which deserves to be paid for, in the
same way as they pay for people they recruit through private sector
agencies. We also know of employers who pay their employees to
introduce new employees. There is one national retail chain that
pays its existing employees to introduce new employees. Why do
they do that? Because their experience tells them existing employees
are not going to foul the nest by introducing someone they think
is useless, and there is a financial incentive that goes with
it. There is another company that we work with, another retail
chain, but a more specialist company, which pays £300 to
a member of staff who introduces someone who is hired and £3000
if they stay for six months successfully. There is money lubricating
this process.
Mr Nicholls
214. When I was in business and my secretary
was going, I used to try and get them, through their local contacts,
to recruit their own successor. I certainly made sure my own secretary
interviewed a potential candidate out of my hearing, so if her
view was, "You could not possibly work with him, he is nuts",
far better she told them at that point rather than find out afterwards.
(Mr Roe) One of the effects of this process is to
actually make it harder for people in communities where there
is a lot of long-term unemployment to get into the labour market.
For people who are in work, most of their contacts are in work.
What we found in the places in Edinburgh where we were working
was that the employees of this company, who get paid £300
to introduce and £3,000 if they stay for six months, are
extremely interested in working alongside us in the centre of
excellence so they can get contacts with good unemployed people
and help introduce them to their company.
215. Can I go back to one point that Jonathan
made before? If somebody comes in to you in Middlesbrough and
says, "I am prepared to work but it has to be £200 a
week", is that because the general feeling is that if you
are employed for less than £10,000 a year net you are being
exploited or is it some sort of direct correlation that is being
made with benefits, are they making some sort of calculation that
by the time they come off benefits it is going to take £10,000
a year net to get them into work?
(Mr Baldrey) I have not started delivering my service
in Middlesbrough yet.
216. Your hunch?
(Mr Baldrey) My initial feeling in Middlesbrough is
there have been so many people who have been busy telling everyone
in Middlesbrough why they are not going to get a job and how few
jobs there are—this goes back to what you do in a slack
labour market—that I think that there are so many people
so far from the labour market they do not know what the going
rate might be, so £200 is a figure that is bandied around.
If you ask people, "What would you like to be earn per week?"
I notice from the survey the boxes that were ticked were £200,
the highest box. Everyone is going to tick the highest box, I
would have thought.
(Mr Roe) I do not know if you know this, but the Benefits
Agency and the Employment Service have a brilliant piece of software
which allows you to key in the key bits of your circumstances
at the press of a button, to identify what wage you need to achieve
in order to be better off. That piece of software has existed
for years and has been greatly enhanced and it is in the hands
of advisers. It ought to be in every job centre and every kiosk
that is about to be introduced. Everybody in the country who is
unemployed ought to be able to key that in and know week by week
as things change and as tax regimes change and the benefits level
change; they ought to be able to get the precise answer for themselves
immediately. Why would you want to keep that secret? Why would
you want that software only to be in the hands of advisers?
Chairman
217. As a Sub-Committee we are very ambitious
that that kind of service should be available to each job seeker.
(Mr Roe) One million people can have it next week
for nothing.
218. Can I move on to the Innovation Fund for
intermediaries. I know the answer to the first question: is there
going to be enough and what would you spend it on to get the best
value, the best effect from this rather small amount of money?
(Ms Munro) I think it is not a great deal of money.
In some respects I think it is a pity it is going out to competitive
tender, because I think the task force is probably aware of the
effective intermediaries up and down the country and I think there
is a strong case for backing winners and backing winners that
have got the capacity to develop a practice that is transferable.
What has happened, and particularly since the innovation fund,
is it was turned around very, very quickly. It came out at the
beginning of June and it had to be in at the end of June. It gave
very little capacity for areas, cities, or wider areas to develop
a strategic approach to this. What will happen is there will be
a scatter gun approach. There are going to be thousands of applications
up and down the country, some overlapping, and there are going
to be gaps. There is no coherence here whatsoever. There is a
potential missed opportunity there. That may be able to be turned
around in the next round of innovation funding and it should be
concentrated where it can have the most effect.
219. How would you do that? The ones that already
have a good track record need to be invested in?
(Ms Munro) Yes.
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