MEMORANDUM FROM THE DEPARTMENT FOR EDUCATION
AND EMPLOYMENT (RU34)
INTRODUCTION
We believe it is important to see the recruitment
of unemployed people in the context of the current buoyant economy
which is experiencing higher levels of employment and economic
activity than has been seen since the mid 1970s. For example,
the number of new Jobcentre vacancies has continued to be at record
high levels; in February this year there were 230,000 vacancies
notified to Jobcentres nationally. Each month around 200,000 vacancies
are notified to Jobcentres and this is estimated to represent
only a third of all the vacancies in the economy. [ONS: Labour
Market Trends: Note to Table G1].
Over the past year the number of people in employment
has increased by 258 thousand and by 888 thousand since the spring
(February to April) of 1997. Employment is down in some sectors,
particularly manufacturing, but the rise in services has more
than made up for this. Over the past year the number of service
sector jobs has increased by 354 thousand jobs. There are now
27.78 million people in employment, the highest ever level. The
employment rate is now 74.3 per cent.
The economic context for unemployed people is
therefore one of an increasing number of people competing in the
employment market but at the same time the best prospects for
a job in over a quarter of a century. Unemployment has fallen
on both the claimant count and ILO measures and are at their lowest
levels since the early 1980s. Currently, ILO unemployment is at
1.715 million (5.8 per cent), down 122 thousand on the year and
356 thousand since the spring of 1997. Claimant unemployment (March
2000) is at 1.149 million (4.0 per cent) down 157,000 over the
year and 486,500 since May 1997.
THE GOVERNMENT'S
STRATEGY TO
HELP PEOPLE
WHO ARE
UNEMPLOYED
The Government's strategy has been to extend
the opportunity to work and to look to reduce the proportion of
working age people living in workless households, not just those
who are included in the claimant count as unemployed. The Welfare
to Work strategy aims to help all workless people who can work
move from welfare into work including those who are outside or
excluded from the labour market. Policies and resources are aimed
at helping those who are most disadvantaged in the labour market,
putting in place measures that will help them compete for the
jobs available.
Education and training policies are aimed at
equipping people with the skills to take up the jobs, benefit
policies and the minimum wage are aimed at making work pay. In
addition, the agenda for equal opportunities is helping people
overcome the barriers to employment and gets employers to consider
people they may have previously disregarded. For example, the
Government is increasing the numbers of women returning to the
labour market after having children through initiatives such as
the New Deal for Lone Parents. The comprehensive national strategy
for child care is part of the strategy to remove obstacles to
work. The agenda for civil rights for disabled people is aimed
at helping employers recognise the benefits of employing disabled
people.
RECRUITMENT PRACTICES—TO
WHAT EXTENT
DO EMPLOYERS'
RECRUITMENT PRACTICES
PRESENT A
BARRIER TO
RECRUITMENT FOR
UNEMPLOYED PEOPLE?
There is, of course, a legal framework which
underpins recruitment practices in this country. The Race Relations
Act, the Sex Discrimination Act and the Disability Discrimination
Act set out the way employers and others are expected to act.
In addition, this Department for Education and Employment is taking
forward a number of initiatives to advise and help employers implement
fair recruitment policies. The Race Relations Employment Advisory
Service (RREAS) provide free and confidential advice to help employers
develop and implement comprehensive equal opportunities policies
and practices to eliminate racial discrimination at work. The
service is delivered by a team of advisers based throughout the
country to ensure local expertise. The Disability Rights Commission
became operational in April 2000 and is working towards the elimination
of discrimination against disabled people.
The Department also publishes a range of guidance
to promote the message to employers that workforce diversity helps
businesses to prosper. This includes: the Code of Practice on
Age Diversity in Employment; "Equal opportunities—the
10 point plan for employers", which also takes an employer
through appropriate recruitment, selection, promotion and training
procedures; and booklets on "Equality Pays", "Employer
equality networks" and "Positive Action".
Jobcentres have very detailed guidance on tackling
discrimination by employers. First through trying to get the employer
to stop discriminating; secondly (if this isn't immediately successful),
by suspending all handling of all their vacancies; and thirdly
by reporting the case to the Commission for Racial Equality, Equal
Opportunities Commission or Disability Rights Commission. If the
discrimination was raised by a job seeker, ES staff advise them
of their legal rights and give them guidance in how to make a
claim, if they wish to do so. If the discrimination was on grounds
such as upper age limits, which are not actually illegal, ES would
not handle the employer's vacancies.
We believe that many employers have worked hard
to develop recruitment practices they believe to be fair. But
the Policy Action team on Jobs, for which this Department provided
the secretariat, found during the course of its visits that many
businesses, especially small and medium sized enterprises, rely
on informal networks and word of mouth recruitment without considering
or monitoring potential for discrimination in this approach. Although
some employers had jobs but could not find people to fill them,
the PAT found that many of these employers lacked the confidence
that people from particular areas would meet their needs and decided
not to take the risk of recruiting from those areas.
A report by the Institute for Employment Research
at Warwick University "Employers, Young People and the Unemployed:
a Review of Research" found evidence that "employers
seek two things when they recruit: People with the right skill
and people who represent minimum risk. The report goes on to say
"Employers who tend to associate longer-term unemployment
with poor work performance, poor motivation and self discipline
and unacceptable attitudes, regard people who have been unemployed
for a lengthy period as risky". Many employers automatically
reject applications from the long-term unemployed for this reason.
We have looked for ways to reduce the perceived
risk to employers in recruiting unemployed people. We believe
there are a number of ways of so doing.
(a) Encouraging employers to give the unemployed
a chance
Work trials and tasters have a useful part to
play here. They work by reducing risk by giving employers and
jobless people the chance to test out a working relationship over
a short period of two or three weeks without obligation on either
side. The employer has no obligation to take on the potential
recruit at the end of the trial and during the trial only has
responsibility for health and safety matters. The jobless person
can try out a job he or she is uncertain is the right one without
risk, and can leave the job without damage to benefit or work
records. We know employers value the work trial and taster. For
example, one of the recommendations of the Sheffield Employers
Coalition in a recent report was that New Deal participants should
be encouraged to go on work tasters, and that a number of Sheffield
employers stood ready to provide this experience. We believe work
trials and tasters allow unemployed people the chance to show
what they can do, which allows them to demonstrate to an employer
that although unemployed they are not risky prospects.
The New Deal for young people has also looked
for ways to engage employers in the design of the programme locally.
Birmingham is just one of many examples (mostly locally tailored
and therefore small scale) of work with the hospitality industry
and other sectors.
ES is now working with British Hospitality Association
to agree a generic framework which incorporates best practice
from around the country. The framework will include:
— selling and matching careers in hospitality
to unemployed people;
— assessing aptitude and attitude for
the industry, leading to an individual plan to address development
areas, eg health and safety, customer service qualifications;
— specific skills training, eg housekeeping,
linked to work tasters;
— post placement support (buddy system
with someone already established within the industry);
— alongside ongoing careers advice
and specialist support (eg basic skills).
(b) Offering training and support
The research mentioned earlier by the Institute
for Employment Research at Warwick University found that many
employers tended to set more store by soft skills than by vocational
ones alone. That does not mean vocational skills do not have a
part to play in helping someone find and keep a job. But many
employers offer on the job training schemes to help people deal
effectively with the demands of new jobs. We believe there is
scope to offer unemployed people intensive help to boost self-confidence
and inter-personal skills. The Government has announced that the
Intensive Gateway in the New Deal for young people which was piloted
last summer will now be available nationally from this summer.
It offers intensive help in personal skill development by increasing
self-esteem, self-confidence and employment search skills. Basic
Employability Training (within Work Based Learning for Adults)
also offers unemployed adults with a combination of labour market
disadvantages (low self esteem, lack of confidence, poor basic
skills) help to overcome their underlying soft and basic skills
needs and compete more effectively in the labour market.
(c) Encouraging lifelong learning
Lifelong learning improves competitiveness,
increases employability, gives confidence and purpose and raises
self-esteem. The Government's vision of a learning society is
one in which people from all walks of life have the chance to
learn and upgrade their skills throughout life.
Our lifelong learning strategy has twin objectives:
(a) to create the skills we need for a productive
workforce and a globally competitive economy;
(b) to increase access, participation and
levels of attainment by disadvantaged (and sometimes excluded)
groups so as to help reduce inequality, improve employability
and contribute to community development and social inclusion.
The Learning and Skills Council is the centrepiece
of new arrangements set out last summer in the White Paper Learning
to Succeed. It will modernise and simplify the planning, funding,
delivery and quality assurance of post-16 education and training.
The key policies include:
— Working with employers and trade
unions and others to promote workforce development;
— learning accounts to encourage individuals
to take control of their learning;
— learndirect, due to be launched in
autumn 2000, to make learning more relevant and accessible to
a new audience of businesses and individuals, with a free telephone
helpline already available for impartial information on learning
opportunities;
— provision for an additional 800,000
places in further and higher education by 2002;
— family and community learning initiatives
to encourage adults back into learning;
— around 700 Information and Communication
Technology (ICT) learning centres in England to improve access
to ICT for all;
— help with literacy and numeracy for
500,000 people a year by 2002—New Deal provides the first
systematic screening for basic skills ever and the most comprehensive
choice of learning environments;
— £54 million investment over
three years in local information, advice and guidance for adults;
— joint work with broadcasters and
other partners to promote lifelong learning; and
— Access Funds, childcare and residential
support.
(d) Offering employers financial support
to take on unemployed people
We know that subsidies can make a difference,
particularly for small and medium sized employers. A report prepared
for the Employment Service by Social and Community Planning Research
found that one of the factors which influences employers towards
the recruitment of young and employed people was subsidies. Employers
said they increased "the attractiveness and lower[ed] the
risks to employers of recruiting" and "enhancing the
attractiveness of New Deal clients compared to others". We
believe subsidies can have a role to play in fair recruitment
by causing employers to use the services of Employment Service
or of job broking agencies in the private and voluntary sectors
where before they might have recruited through informal networks.
(e) Using intermediates
The New Deal Task Force project on the role
of intermediaries suggested that the main role of intermediaries
is to "intervene in the labour market at the point of labour
market failure, both to improve labour supply and to activate
or stimulate demand for labour. In this respect intermediaries
undertake a number of functions at the interface between the unemployed
person and the employer." We believe that intermediaries
have an important role to play in bridging the divide between
the unemployed and employers, and return to this subject later
in this memorandum.
(f) Taking a sectoral approach
The New Deal Task Force, Employer Coalitions
and employers have all endorsed the value of developing initiatives
along sectoral lines. ES has focused on sectors with known growth
potential: core sector documents have been produced with the British
Rail Consortium (BRC) and British Hospitality Association (BHA)
and are being used to enhance support arrangements in pilot sites.
This approach provides a framework, for use
as it is or for tailoring following discussion with employers
in local labour markets. Key elements to the framework are:
— producing a clear specification of
the needs of the sector;
— improving client and Employment Service
knowledge of the sector;
— designing a Gateway that meets the
needs of the sector;
— identifying and engaging key customers
who can help us to place our client groups at national, regional
and local level, and;
— establishing a national steering
group of respected business leaders from the sector.
Early feedback from employers indicates they
strongly welcome the support and development of bespoke arrangements,
such as job preparation and employer input to the development
of these arrangements. ES has targeted its approach, with hospitality,
retail and construction already underway and is now focusing attention
on financial, IT and Public sectors.
DOES ENCOURAGING
EMPLOYERS TO
RECRUIT UNEMPLOYED
PEOPLE HELP
REDUCE UNEMPLOYMENT?
We have set out a range of measures to encourage
employers to recruit unemployed people. The nature of the UK labour
market is such that there are a wide variety of types and ranges
of jobs available—so that the UK labour market offers jobs
with a greater diversity of hours worked and patterns of hours
worked than our EU partners. Because there are jobs that suit
different people has meant that the employment rate in the UK
is now amongst the highest in the world. The employment rate is
well above the EU average in every region of the country. We are
second only to Denmark in the EU. If the UK employment rate was
as low as the EU average then there would be around 4 million
fewer people in employment in this country. However, although
a range of employment opportunities arise all the time, joblessness
is concentrated amongst certain groups. Our polices are designed
to play a central part in trying to address this inequality and
achieve employment opportunities more widely. Getting employers
to consider people with disabilities, from ethnic minorities,
from disadvantaged backgrounds, and people who have been long-term
unemployed or unattached to the labour market when judging who
to employ, will help deliver employment opportunities for all.
If our polices are effective at helping more
people into the world of work more vacancies can be turned into
jobs rather than remaining unfilled. Getting the right people
in the right jobs means vacancies can be turned into jobs rather
than leaving them unfilled, and means that the economy runs with
higher levels of employment and lower levels of inflation as the
potential for growth and employment will have increased. Focusing
extra help on the most disadvantaged in the labour market also
means the spread of employment will be more equal.
The New Deal was introduced to end long term
unemployment amongst young people. We have already had considerable
success, but there is still more to do. The client group for the
New Deal for Young People aged 18-24 for six months or more is
now at levels not seen since the mid 1970s. The current levels
of around 50 thousand are around a tenth of the peak in the mid
1980s. And, since its introduction the fall in the client group
has been much greater. Unemployment amongst those aged 18-24 unemployed
for six months or more over the past two years has fallen by more
than half compared to nearly a fifth for the rest.
We believe that if these policies are effective
in bringing more people into the world of work then more vacancies
can be turned into jobs rather than remaining unfilled. Getting
the right people into the right jobs eases bottlenecks, skill
shortages and reduces the risk of inflationary wage increases.
Thus, with better matching of people and jobs it will be possible
to run the economy with a higher level of employment and lower
levels of inflation. Not only that, but in the evaluation of the
New Deal so far there are no signs that displacement is a problem.
ES RELATIONSHIP WITH
EMPLOYERS
The Employment Service handles over 2 million
vacancies a year. Most of the job vacancies that are offered to
unemployed people come by persuading employers to use the ES to
handle their vacancies. This means establishing good working relationships
with employers, and gaining their confidence by regularly submitting
credible candidates. If Jobcentres cannot offer the right people,
employers will not place their vacancies with them—a free
service only works if it is of use. In the year 99-00 ES met all
its placing targets.
ES accordingly sees employers as critically
important customers. It is seeking a more strategic approach to
build relationships with employers locally, regionally and nationally.
For example:
— the ES Large Organisations Unit provides
a full account management service to large national and multi-site
employers who prefer to deal with ES nationally or regionally;
— this Unit is working closely with
employers and their representative bodies in sectors such as retail,
hospitality, construction and engineering, to develop a "package"
of ES vacancy filling help, tailored to the needs of the sector;
— ES regularly works in partnership
with particular employers to plan and carry out large scale recruitment
exercises, such as that for the Bluewater Centre in Kent;
— ES is preparing to take over responsibility
for the Work Based Learning for Adults programme from TECs in
April 2001; as part of this process, ES will be working very closely
with the Learning and Skills Council and its local equivalents,
to map the skills needs of areas and regions, and decide how they
can best be met;
— ES has introduced a programme to
improve staff understanding of business and the labour market,
with targets for local managers for numbers of employers to visit
each month;
— for the year 2000-01, employer satisfaction
will count as one of the new targets in the Annual Performance
Agreement.
ES regularly works in partnership with particular
employers to carry out large scale recruitment exercises. Examples
of specific services which ES can provide to employers include
advice on recruitment methods and procedures; an initial sifting
service to assess applicants' suitability; interview facilities
with Jobcentres, and for very large projects, even Jobcentres
stationed on site. Research in the past has shown that employers
are generally satisfied with the overall service they receive
from the ES; those who have used Jobcentres have a much better
opinion of them than those who have not.
In all these relationships the ES seeks to persuade
employers to consider people who are unemployed and looking for
work, using the incentives of programmes and services (New Deal
and Work Trials) and demonstrating the business benefits of doing
so. Evidence shows that ES' approach to employers needs is proving
successful.
— over 68,600 employers have signed
up to participate in New Deal;
— almost 200,000 young people have
been helped from benefits into work through New Deal.
Employer marketing activities are underpinned
by ES's first national marketing strategy and a set of explicit
service standards, the Employer Service Commitments.
ES has also embarked on a major programme to
use new technology to improve further customer service, which
will start to come on stream from the autumn of 2000. It includes:
— introduction of a single telephone
number for employers, which can be dialled from anywhere in the
country and will go through to one of ES's planned new regional
call centres (building on the success of ES's first dedicated
call centre for employers at Peterlee, and on ES Direct, the existing
single telephone number for jobseekers);
— putting all ES's vacancies onto the
internet, and working with agencies and internet recruitment companies
to ensure that a comprehensive range of private agency vacancies
can also be readily downloaded onto the ES website.
These two initiatives mean that both employers
and jobseekers should be able to place vacancies with ES, and
apply for them, either via the internet or via the telephone,
as well as face to face in a Jobcentre. It will greatly increase
ES's accessibility outside normal working hours, and should prove
more convenient for many employers and jobseekers.
In order to ensure that all jobseekers have
access to the on-line vacancies, ES plans to put touchscreen kiosks,
linked to its jobs database, into all Jobcentres and a number
of non-Jobcentre locations, such as libraries and supermarkets.
This will mean that those without internet access at home can
nevertheless get access to all ES's jobs.
In addition, the New Deal Task Force is currently
engaged in a study commissioned by the Chancellor and Secretary
of State. The objective of this project, Business on Board, is
to identify how the Employment Service and its partners develop
and maintain employer links. The final report, which will be completed
in September, will recommend practical actions which can be implemented
to increase business involvement and specifically the take-up
of the subsidised employment Option in the New Deal for Young
People.
PRIVATE AGENCIES
The ES offers a service which any jobseeker,
whether employed or not, can use. That said, it has a particular
responsibility for those who are most disadvantaged. Those who
are already employed and seeking to change jobs are less of a
priority for ES, and have traditionally been the particular concern
of private employment agencies. The UK has more than 11,000 private
employment agencies, who have a substantial market share—far
larger than in most other European countries, where governments
have until recently not generally encouraged private sector involvement
in the employment sphere.
The ES often works with private employment agencies—it
has a formal agreement with the Federation of Recruitment and
Employment Services (FRES)—and often displays their vacancies
in Jobcentres. The arrangement has worked well. Although no clear
data is available on how many agency vacancies are notified to
Jobcentres experience suggests that between 8 and 10 per cent
of the stock of opportunities come from the FRES sector. At a
formal level, a forum exists between ES and the Recruitment Employment
Consortium to maintain a dialogue between the public and private
recruitment sectors. Co-operation between the ES and private agencies
has become even closer—to their mutual benefit—with
the advent of programmes like the New Deal and Employment Zones.
ES has a responsibility to help every jobseeker who asks for help.
But it does not believe that it has all the expertise that any
jobseeker could ever need. The ES needs to work in partnership
with other organisations to help meet its objectives, while helping
them to meet theirs. We believe that private sector agencies have
a part to play in helping move people into work, and are testing
this out in a number of programmes, such as ONE, New Deal and
Employment Zones.
The ES is increasingly working in partnership
with other organisations in the public, private and voluntary
sectors to deliver the Government's Welfare to Work agenda, especially
as ES increasingly provides services to wider client groups. Partnership
working offers opportunities for the ES and recognises the diverse
skills and experience that other organisations have to offer,
which can be harnessed to provide a more comprehensive service
to clients. The way in which the ES works in partnership with
other organisations varies according to each particular set of
circumstances. They include:
— formal contractual partnerships to
deliver services, such as ES's partnership with EDS to deliver
computer services, or with Rebus to deliver pay and human resource
services;
— a joint venture partnership between
ES, Manpower and Ernst & Young to form a private company,
Working Links, which has successfully bid to run nine of the 15
Employment Zones;
— local strategic partnerships in each
of the 130 ES Districts to oversee the delivery of the New Deals
and ensure their success locally;
— working relationships with the voluntary
organisations, locally and nationally, especially to deliver and
develop the voluntary sector option for New Deal for Young People.
Organisations working nationally with ES include the National
Council for Voluntary Organisations, the Scottish Council for
Voluntary Organisations, and the National Association of Councils
for Voluntary Services.
INTERMEDIARIES
In addition to the Employment Service we know
there are many other organisations also providing significant
support to other people. They can offer value in a more independent,
more flexible approach than statutory agencies and can act as
an intermediary between client and employers. We believe that
using intermediaries can offer a valuable way of building on the
support already available from the ES, and in many cases can add
a local dimension to these arrangements. The Policy Action Team
on Jobs found a number of different ways of involving people were
already in operation, such as taking information about jobs and
training into local communities through local interest groups
and church and faith groups. It did not find one way of doing
it that was better than another, but argued instead that different
approaches worked with different communities.
Jobs for the Future, an American research and
development organisation, documented the most important elements
of successful employer-led programmes. One of the most significant
findings of their report was that all of the leading American
companies studied had developed close relationships with an "intermediary"
organisation (or several organisations) which provided specialised
pre-employment and post-placement services.
These organisations can help unemployed and
disadvantaged people to get, keep and advance in jobs and careers.
They help to define business requirements and then conduct assessment,
education and training which is specially customised for employers.
Many provide support services and skill development after job
placement along with training for front-line supervisors.
We have wanted to test the concept of using
intermediary organisations in helping unemployed people move into
and keep good jobs in the context of the New Deal and other workforce
development initiatives. To achieve this, the pre-budget report
allocated funding to be spent over the next three years for intermediaries,
particularly in inner cities and working with specific industry
sectors.
HOW WILL
THE INNOVATION
FUND BE
USED?
The Innovation Fund provides venture capital
for the New Deal. Its aim is to test ideas and activities which
will increase performance outcomes and extend our knowledge of
what works in helping people to move from welfare to the workplace.
Specifically, we are seeking high quality proposals which will
result in measurable increases in the number of disadvantaged
and unemployed people who get and advance in jobs that provide
economic self-sufficiency. We are particularly interested in proposals
which engage employers in the design of New Deal; which increase
the relevance of all provision to the local labour market; and
which improve the process by which people are matched to the right
jobs.
In total £9.5 million is available over
three years, with £5 million ring fenced to support proposals
in inner city areas from private and voluntary sector intermediaries
using a demand led approach to help people gain and retain employment.
This money will be targeted on the 11 inner city areas with Employer
Coalitions. The remaining £4.5 million would support projects
with the same objectives, plus projects supporting particular
industrial sectors and other ideas which aimed to improve performance
and support the continuous improvement of the New Deal. However
eligible bidders could be from any part of the country and from
organisations in the public, private and voluntary sectors.
We will want to find organisations who are able
to provide a bridge between employers and the unemployed—so
they must have credibility with both sides. We will be asking
them to focus in a flexible and dynamic way on specific work focused
solutions in ways which have proved very effective in the United
States. We expect that the innovation Fund will allow employers
to engage in the design and delivery of programmes; enable capacity
building in key organisations to support the further development
of the links with employers required by intermediaries delivering
such a demand led strategy; and get people into good quality and
sustained jobs, with equal access for ethnic minority and other
disadvantaged groups. The payments system for each part of the
Innovation Fund will reflect the objectives for retention and
wage gain and will be made primarily against achieved outcomes.
However, for some proposals, these outcome payments will be inappropriate
for the purpose of the project. In these cases, bidders may propose
an alternative payment schedule matched to specific outputs which
will be negotiated as part of the final contract terms.
We will be looking for evidence of new and radical
approaches which can be spread more widely if they deliver strong
results so there will be a rigorous evaluation of successful projects.
We will be able to see how best intermediaries can add value to
the New Deal, if there are measures we can take to improve provision
in the inner cities and if variations in the New Deal model can
add to our success in getting people into sustained employment.
Department for Education and Employment
April 2000
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