Select Committee on Education and Employment Fourth Report


NEW EMPLOYMENT OPPORTUNITIES

How can new jobs be created?

  67. David Webster argued that "the main substantive policy requirement is a shift of public resources from supply-side programmes such as New Deal to programmes which would increase the availability of manual jobs in the areas of highest unemployment". He indicated that this would include "spending on derelict land reclamation, industrial property development and associated road and public transport infrastructure".[180] As we mentioned above we were encouraged by the work being undertaken in the Dearne Valley Enterprise Zone. Previous examples of property-led development have not always been successful. These sorts of policies were prevalent in the 1980s and early 1990s through Enterprise Zones, the Urban Programme, the Urban Development Grant and the Urban Regeneration Grant ( which were combined into the City Grant) and Urban Development Corporations. The evidence on the effectiveness of these schemes is inconclusive. New jobs were created, and some of these jobs were taken by people living in the local area. The evaluations noted that many firms relocated short distances to the designated area.[181] A recent study of the impact of Urban Development Corporations in Leeds, Bristol and Central Manchester indicated that "their focus on property-led regeneration was too single-minded. The social dimension of regeneration was largely ignored".[182] It concluded that all future regeneration agencies needed to recognise that the incidence of social benefit was a key component of successful regeneration. In some cases the percentage of new jobs taken by people resident in the designated area was small.[183] Although we recognise that spending on infrastructure is essential as part of the process of regenerating deprived areas, we reject the notion that demand -side policies on their own will be sufficient to provide employment opportunities for the long-term unemployed.

The role of intermediate labour markets

  68. Intermediate labour markets (ILMs) have an important role to play in helping the long-term unemployed back into employment. In conjunction with community enterprises, ILMs can offer employment opportunities in areas displaying jobs gaps. The concept of the intermediate labour market originated with the WISE Group in Glasgow and has been developed by Glasgow Works and other organisations. The purpose of the schemes is to help those furthest from the labour market get back into employment by providing them with paid work at the rate for the job on a temporary contract. Participants also receive training, personal development and active job seeking.[184] The Policy Action Team on Jobs was broadly supportive of the role of intermediate labour markets as "effective bridges into employment".[185] The Government has displayed a degree of ambivalence towards ILMs. It stated that "there is a risk that ILMs might prolong the period without a job in the open labour market by becoming a resting place for people who would be able to move into jobs".[186] This view appears to be based on the notion that "there are jobs coming up all over the country all of the time".[187] Witnesses told us that ILMs have been successful. Glasgow Works indicated that 70 per cent of leavers progressed to employment within six months and that 85 per cent of those who got jobs on leaving were still in employment after 6 months.[188] Nottinghamshire County Council told us that it ran ILMs in the Nottingham conurbation and in the coalfield areas. It indicated that 87 per cent of participants moved into open employment from the ILM based in the conurbation, where there were jobs, and about 20 per cent of participants moved into open employment from the ILMs in the coalfield area.[189] The Sub-committee was repeatedly told during its visit to South Yorkshire that ILMs were beneficial. The provision of a wage and meaningful employment, which made ILMs different from other schemes, was considered to be particularly valuable.[190] The evidence that we have received would indicate that intermediate labour markets have an important role in helping the long-term unemployed back into the labour market. We recommend that the Government should explore ways in which it can support the growth and effectiveness of ILMs.

69. We showed in paragraph 30 that fewer people moved into jobs in high unemployment areas, particularly inner cities, through the New Deal. The TUC has argued that there is a good case for enhancing the New Deal with intermediate labour market provision in the non-traded sector, particularly in areas where the local market economy has partially collapsed.[191] Jamie Peck also argued that "a narrow focus on waged work in the context of localised, demand deficient unemployment is a manifestly inadequate basis for an effective welfare-to-work strategy".[192] There are examples where this is already happening. The Doncaster and Wakefield Employment Zone was using New Deal funding under the Environmental Task Force option of the New Deal, in conjunction with European Social Fund money, to create a waged intermediate labour market option for eligible participants. These jobs were provided within community enterprises.[193] One of the key elements is benefit transfer, which allows a claimant's benefit entitlement to be passed to an employer and subsequently paid as wages. The primary value of the intermediate labour markets is that they provide a "real" job with a proper wage and training for people who have not been employed for some time. In our view there is much greater scope for the use of ILMs in both the New Deal and the enhanced New Deal for 25 plus. We recommend that all participants in the New Deal options, other than the Full-time Education and Training option, should receive a wage.

70. We were told during our visit to South Yorkshire that the length of provision in the New Deal was insufficient for those who were furthest from the labour market.[194] The New Deal Task Force Working Group on Retention also argued for greater flexibility in the length and sequencing of support for the most disadvantaged clients.[195] Some organisations who have brought forward proposals for benefit transfer schemes have argued that there should be the option for people to remain on the programme for up to two years. This would enable those furthest from the labour market to work towards higher in-work qualifications and improve their opportunity of gaining work in the open market.[196] For some New Deal participants it might be appropriate for them to move through a number of options in order to achieve the right mix of skills to enter sustainable unsubsidised employment. The New Deal should be flexible enough to deliver this provision. We recommend that the Government should examine ways of increasing the flexibility in the New Deal, including providing the opportunity, for some clients, to move through more than one option and to remain in work-related New Deal options for more than six months.

New employment opportunities in the public sector

  71. In other European countries, notably the Netherlands and France, the public sector has been given a prominent role in providing employment opportunities for the long-term unemployed. Jamie Peck argued that there was scope to introduce similar provision in the UK.[197] The scheme that operates in the Netherlands includes a commitment to the provision of 40,000 permanent jobs in the public sector to be filled by people unemployed for over one year. The scheme came into effect in 1994 and as of mid-1998 30,000 jobs had been created.[198] The jobs are designed to provide services to local communities and are concentrated in areas of highest unemployment.[199] In its 1993 White Paper, the European Commission identified a number of sources of new jobs in local services such as home help for the elderly and handicapped, health care, childcare, support for the most disadvantaged, and caretakers for blocks of flats.[200] These are exactly the types of jobs that are being made available to unemployed people in the Netherlands. In our view there is scope for similar provision in the UK, provided that it is properly funded. We recommend that the Government should explore ways to engage the public sector in providing jobs in the provision of local services, for those people who have been unemployed for two years, within demand-deficient labour markets.

Job guarantee

  72. The private, public and voluntary sectors have a role to play, in partnership with the Government, in ensuring that people are not abandoned to the debilitating effects of long periods without work. In some areas, the high level of unemployment is partly due to a lack of suitable jobs. People with the lowest skill levels are the most affected group. The New Deal might not be effective in moving people in this position into the open labour market. We have set out a number of routes by which the employment opportunities available to long-term unemployed people can be expanded. In our view it is important that everybody has the opportunity to work. One way that this can be achieved is by guaranteeing paid employment to the very long-term unemployed, in jobs which are generated through job subsidies in the private sector, intermediate labour market and social economy provision and public sector jobs in local services. Job guarantees are a feature of active labour market policies in some other European countries such as the Netherlands and Ireland.[201] We recommend that the Government should pilot a job guarantee scheme, in areas displaying the lowest levels of employment, for those who have been unable to secure employment in the open labour market after leaving the New Deal.

Employment Zones

  73. From early 1998 prototype Employment Zones (EZs) operated in five areas: Glasgow, Liverpool and Sefton, North West Wales, Plymouth and South Teesside. The purpose of prototype EZs was to: examine the role of intermediate labour markets; explore innovative approaches to providing people with skills; and to support individuals in their efforts to become self employed. The Government stated that it would undertake a full-scale evaluation of the prototype Employment Zones and would use this evaluation to "inform the detailed development of the fully-fledged Employment Zones".[202] The fully-fledged Employment Zones will come into effect from April 2000. Representatives of the prototype Employment Zones expressed concern that the lessons learned "would be lost".[203] We recommend that the Government should publish its full-scale evaluation of the prototype Employment Zones and indicate how the lessons learnt have been taken into consideration in the development of the fully-fledged Employment Zones.

74. One of the roles of employment policy should be to improve the employment opportunities of the "hidden unemployed". The Policy Action Team on Jobs suggested that the "hidden and missing" jobless needed better support. It argued that this entailed reaching out to jobless people rather than expecting them to access the support by themselves.[204] The prototype Employment Zones were not targeted at any specific group. We were told that clients included returners to the labour market, lone parents, disabled people, and the very long­term unemployed. In contrast the fully­fledged Employment Zones will concentrate only on JSA claimants. The Policy Action Team on Jobs suggested that pilots should be run in some Employment Zones which would open up provision to an expanded clientele.[205] In June 1999 the Government introduced ONE pilots which are now operating in 12 Benefit Agency areas. On 16 March 2000 the Government announced that the ONE initiative is to be expanded nationwide. A new agency will be established during 2001, which will bring together the responsibilities of the Employment Service and the Benefits Agency for people of working age. ONE provides a work­focused interview and access to a personal adviser for all new claimants, regardless of the benefit claimed. There is no specific active labour market provision in ONE, other than the personal adviser service. The purpose of ONE is to maintain, or in some cases create, a link between the world of work and those who have traditionally been considered furthest from the labour market. It is this group of clients that were targeted successfully by the prototype Employment Zones. A recent study showed that 38 per cent of prototype Employment Zone participants who had been unemployed for between two and five years had found employment. In general, prototype Employment Zone participants were twice as likely to enter employment than non­participants in the same area.[206] In our view there is an opportunity to carry forward the good work undertaken in the prototype Employment Zones while at the same time enhancing the provision available to ONE clients. We recommend that the Government should pilot additional Employment Zones in the original ONE areas, in which ONE clients who have been in receipt of benefit for one year or more, would be eligible for the full range of Employment Zone assistance.

75. The fully­fledged Employment Zones, in contrast to the prototype Zones, will operate on a payment by outcome basis. This has attracted some criticism. The Unemployment Unit suggested that the structure of the incentive scheme encourages operators to move people into employment at the earliest opportunity. This might not always be in the best interests of the clients. The employment has to be sustained before providers receive the larger of two output related payments, but a sustained job is defined as one that lasts for three months. The Unemployment Unit indicates that many low quality temporary jobs fall into this category.[207] We recommend that the Government should re­negotiate the design of the financial incentives in the Employment Zones. Providers should receive a proportion of output-related funding when clients have been in continuous employment (although not necessarily with the same employer) for six months.

76. In some areas private sector companies have been contracted to deliver the full­fledged Employment Zones. In our report on the performance and future role of the Employment Service we recommended that any deepening of the role of the private sector, in ways which moved beyond partnership with the ES, had to be approached with caution, until a proper evaluation of the added value provided by the private sector in delivering the New Deal had taken place.[208] In its reply the Government recognised the importance of evidence­based policy. It said it would pay careful attention to the findings of the full evaluation of the New Deal, including evidence about the value added by the private sector.[209] Michael Richardson, Director of Employment Policy at the DfEE, told us in March 1999 that it was "too early to pass judgement on any private sector partnerships", but indicated that by the end of 1999 there would be "serious evidence" on whether the New Deal was delivering what it was intended to deliver.[210] We strongly recommend that the Government should publish an evaluation of the effectiveness of private sector providers in the delivery of the New Deal.


180  Appendix 16, p. 4. Back

181  Evaluation of Urban Development Grant, Urban Regeneration Grant and City Grant, Department of the Environment, 1993. Back

182  Regeneration Research Summary Nos. 17 & 18, Department of the Environment, Transport and the Regions, 1998. Back

183  Ibid. Back

184  Appendix 31. Back

185  Jobs for All, Policy Action Team on Jobs, DfEE, December 1999, p. 86. Back

186  Ev. p. 6. Back

187  Ev. p. 2, para. 13. Back

188  Appendix 31. Back

189  Q. 51. Back

190  Meeting with Doncaster and Wakefield Enterprise Zone, Annex A, p. xxxvii, paras. 8-12; Meeting with the Centre for Full Employment, Sheffield, Annex A, p. xlvi, para. 57. Back

191  Reinforcing the New Deal, Trade Union Congress, 1999, paras. 2.15-2.20. Back

192  Peck J and Theodore N, Beyond employability, Paper prepared for presentation at the Conference on Social Justice and Economic Efficiency, Cambridge, 12-13 April 1999, p. 27. Back

193  Meeting with the Doncaster and Wakefield Employment Zone, Annex A, p. xxxvii, para. 8. Back

194  Meeting with the Centre for Full Employment, Sheffield, Annex A, p. xlvi, paras. 57-58. Back

195  Lasting Value: Recommendations for Increasing Retention within the New Deal, New Deal Task Force Working Group on Retention, July 1999. Back

196  Appendix 32. Back

197  Peck J and Theodore N, Beyond employability, Paper prepared for presentation at the Conference on Social Justice and Economic Efficiency, Cambridge, 12-13 April 1999, p. 27, 1999. Back

198  Reinforcing the New Deal, ANNEX: New Opportunities for Job Creation Lessons from Europe, Trades Union Congress, 1999. Back

199  Dan Finn, A Comparison of Local Approaches to Welfare­to­Work in the United States, the United Kingdom and the Netherlands, in The Local Dimension of Welfare­to Work, OECD, 1999. Back

200  Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21st Century, Commission of the European Community, 1993, p. 19. Back

201  Dan Finn, A comparison to approaches to Welfare­to­Work in the United States, the United Kingdom and the Netherlands, in The Local Dimension of Welfare­to Work, OECD, 1999, p. 158. Back

202  Employment Zones Consultation Document, DfEE, 2 February 1999, para. 20. Back

203  Q. 124. Back

204  Jobs for All, Policy Action Team on Jobs, DfEE, December 1999, p. 46. Back

205  Ibid, Recommendation 13, p. 138. Back

206  Learning from Experience: The lessons of Employment Zones, Glasgow Development Agency, March 2000. Back

207  Working Brief, Unemployment Unit and Youthaid, August/September 1999, issue 107. Back

208  Seventh Report of the Education and Employment Committee, Session 1998-99, The Performance and Future Role of the Employment Service, HC 197. Back

209  Seventh Special Report of the Education and Employment Committee, Session 1998-99, Government's Response to the Seventh Report from the Committee, Session 1998-99: The Performance and Future Role of the Employment Service, HC 858. Back

210  Ibid; QQ. 407-409. Back


 
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