Select Committee on Education and Employment Appendices to the Minutes of Evidence


APPENDIX 14

Memorandum from the Gorbals Initiative (JG 20)

GORBALS INITIATIVE

  This submission is based on the experience of Gorbals Initiative of working with a caseload of almost 500 individual job seekers and 200 local businesses.

  1.  Gorbals Initiative is a Local Development Company (LDC) based in the Gorbals area of Glasgow. It was established in 1991 to maximise the opportunity for economic regeneration arising from the major investment in the physical redevelopment of the Gorbals. The Gorbals historically has been characterised by high levels of deprivation, low levels of attainment, high levels of unemployment (currently 18.6 per cent), and a history of unsuccessful physical redevelopment.

  2.  Gorbals Initiative seeks to do away with long term unemployment in the area through,

    —  Increasing the number of available jobs.

    —  Increasing access to jobs.

    —  Reducing the number of people seeking work.

    —  Increasing investment in the area.

    —  Raising expectation of clients and agencies in the area.

  3.  In short our aim is to create, find, fill and sustain jobs.

  4.  Gorbals Initiative is a partnership organisation between the Glasgow Development Agency, the Glasgow City Council, Scottish Homes and the Employment Service. It is a company limited by guarantee and a registered charity and one of a network of seven Local Development Companies across the city.

  5.  As an intermediary organisation Gorbals Initiative serves two customers, local businesses and job seekers. Activity is aimed at stimulating both labour market demand and labour market supply.

  6.  Services to individual job seekers to enable them to access sustainable employment include,

    —  vocational counselling and support;

    —  personal development;

    —  vocational training and interview preparation;

    —  intermediate labour market jobs;

    —  matching to job vacancies;

    —  aftercare to ensure job retention and progression;

    —  New Deal Gateway and Employment Zone.

  7.  Services to businesses include,

    —  business start up support;

    —  support to facilitate business development and company growth;

    —  specialised support in areas such as HRD development, environmental improvements, property and IT;

    —  training and employment grants;

    —  customised recruitment and training services supported by aftercare.

  8.  Gorbals Initiative headline achievements since 1991

    —  2,111 jobs filled by Gorbals Initiative clients;

    —  1,111 college and university places accessed;

    —  205 business start ups (since 1993);

    —  730 additional jobs created in new and growing companies (since 1993).

IS THERE A JOB GAP—THE ISSUES

The Widening Gap between Job Seekers and Employer Requirements

  9.  Despite falling levels of unemployment we are working with a client group which requires more intensive support in order to access sustainable employment. In particular our experience of providing support to clients on the Employment Zone (Glasgow is a prototype Employment Zone) has underlined this.

  10.  Clients who fall into this category face a range of barriers, which prevent them from entering employment. These barriers may be personal such as alcohol or drug dependency, mental or physical health problems, low levels of confidence or educational achievement or the barriers may be more structural such as lack of suitable childcare or transport issues.

  11.  In our experience, employers state that their main recruitment requirements for entry level jobs are basic core skills ie time keeping, communication, handling conflict flexibility etc. These are areas where long term unemployed clients have particular difficulty and require support before and after recruitment.

  12.  One positive aspect is that Gorbals Initiative has demonstrated that, given the appropriate level of support and encouragement, these clients can be motivated to achieve remarkable outcomes. We need to reach down into the ranks of the long-term unemployed and tackle the barriers to them re-engaging with the labour market.

  13.  The emergence of the knowledge economy has certainly had the impact of widening the job gap. The increasing use of information and communication technology has resulted in companies requiring people with higher level skills, so we are experiencing a trend where the requirements required for what were once "entry level" jobs are increasing.

  14.  In addition, within the three growth sectors in Glasgow, retail, hospitality and call centres, there is evidence that many of the new jobs are going to students seeking part time work or people already in work. So, although the number of available jobs has increased, the prospects for low-income jobseekers has not substantially improved.

  15.  For those individuals who are very far removed from being job ready we need to provide a range of provision, which can be tailored to individual needs, to progress them to that stage. It is also important to maintain a "work first" approach where individuals understand that employment is the primary objective.

  16.  The quality of the first job is clearly critical, and impacts significantly on the prospects for longer-term job retention and progression. We need to encourage job seekers and employers to take a longer-term view of career development and invest in effective induction and staff development programmes. Ongoing support should be available to enable job seekers to progress not just into that first job but also to develop their skills and qualifications with a view to longer-term career progression, thus creating the ladder of progression where entry level jobs are made available as people move on.

  17.  This would serve to prevent the "revolving door syndrome" where individuals join a training programme, enter employment and then fall out of employment very quickly to start the cycle off again. This syndrome also serves to alienate employers, discouraging them from employing from the ranks of the unemployed.

Labour Market Intelligence

  18.  Experience has demonstrated that long term unemployed clients have a limited and somewhat traditional understanding of the labour market. In areas such as Glasgow where the manufacturing industry has significantly declined many of the jobs that our older (40 years plus) clients trained for in their youth no longer exist. These clients need assistance in recognising the opportunities that emerging growth sectors, and in particular the service sector, might offer.

  19.  Issues to be addressed include:

    —  What are the growth sectors, for example in Glasgow Call Centres are a major growth sector. We need to run introductory programmes to introduce clients to new ways of working and challenge the "sweatshop" image that call centres have.

    —  We need to break down gender barriers and the perception of what are "acceptable" jobs for men and women.

    —  Many employers have negative preconceptions of the long-term unemployed, and their suitability to fill and sustain their jobs, which must be challenged.

    —  Employers should be encouraged to take a longer term view on the recruitment and development of staff.

Working with Companies

  20.  In the UK we have in excess of 35,000 employers signed up to New Deal, this is a significant number, but we must ask the questions.

    —  How many of them have actually recruited through New Deal?

    —  Of the employers who have not recruited, why not, what are the barriers, how can we encourage them to consider taking on new recruits who have been previously long term unemployed? What supports are required to fill the gap?

  21.  Clearly there is a gap between employers signing up to the New Deal and actually becoming involved in recruiting through the programme.

  22.  New Deal and the other initiatives aimed at improving job seekers employability have had success, however little consideration has been given to stimulating labour market demand, ie how employers could use the support of offer to develop their business.

  23.  The message that was given to employers with regard to New Deal was very much take a young person through New Deal because there was a wage subsidy and it was a positive thing to do. A more effective approach would be to offer employers practical support and advice to help them grow their business, including the benefits to be derived from investing in staff development. This in conjunction with the financial support on offer would increase the potential for longer-term job creation.

  24.  There is however a question of investment, if we are to work with employers in a more integrated manner then this will need to be funded in some way.

  25.  Clearly the quality of the first job is critical to retention and progression through employment. We must remember that most businesses are driven by their profitability (the bottom line). We need to work with employers at a strategic level to help them understand the dynamics of the labour market and the costs to their business of high staff turnover.

  26.  Support should be offered to help companies develop effective recruitment, personnel and staff development policies, which would include:

    —  Investors in People,

    —  Job design (job share, flexitime etc),

    —  Equal Opportunities policies.

  Plus any other measures, which would facilitate the recruitment of previously unemployed employees and simultaneously improve, job retention and productivity. This would have a positive impact on their bottom line, reducing down time, advertising costs, interview time etc.

  27.  We should look to the experience in the USA of Welfare to Work. The Welfare to Work Partnership has had considerable success working with companies to improve job retention and reduce staff turnover. Through working with companies who are seeking to recruit ex welfare recipients the Partnership has helped companies introduce more intensive induction and mentoring programmes for new recruits which has significantly improved retention rates. An interesting point is that most companies that have been successful in this have been supported by an intermediary organisation.

  28.  One example from the States is UPS, who achieved an 80 per cent retention rate for their first intake of ex welfare recipients. This was a vast improvement on their 60 per cent retention rate for employees recruited through more traditional methods.

The Role of Intermediaries in the Jobs Gap

  29.  The UK New Deal Task Force, with support from the Rockefeller Foundation, has recently produced a report on "Improving the Employment Prospects of Low Income Job Seekers: The Role of Labour Market Intermediaries" Gorbals Initiative was used as a case study in the report.

  30.  What is evident from this work is that intermediary organisations are effective in closing the job gap. In particular those intermediaries that serve both job seekers and employers have a number of characteristics, which make them effective.

  31.  Intermediary organisations,

    —  Understand the labour market well;

    —  Know particular employers and their needs;

    —  Know job seekers and their needs;

    —  Are entrepreneurial and customer driven;

    —  Keep employment as the primary focus;

    —  Develop tie to non-employment service provider's eg local childcare providers;

    —  Use data to improve performance;

    —  Focus not just on employment but on retention and career advancement.

  32.  These organisations are best placed to broker the needs of the local labour market and close the jobs gap.

SUMMARY

  33.  Gorbals Initiative is a local Development Company based in an area of Glasgow characterised by high levels of deprivation and long term unemployment. The company aims to create, find, fill and sustain jobs through the provision of services to local job seekers and local businesses.

  34.  There is evidence of a widening gap between the skills and aspirations of job seekers and the demands of employers, and although emerging growth sectors are creating significant job growth these jobs do not necessarily go to job seekers who have been long term unemployed.

  35.  Individuals who have been long term unemployed increasingly require a range of customised interventions to enable them to secure and retain employment.

  36.  The Government's Welfare to Work strategy has concentrated on labour market supply measures, with little consideration given to the issue of labour market demand. This has been a missed opportunity, and one that must be addressed, especially as there is an increased emphasis on a "work centred" approach to social policy.

  37.  We need to understand that businesses are driven by their bottom line and we need to invest in working with businesses to help them:

    —  grow and create jobs;

    —  recruit, retain and progress individuals who have been previously long term unemployed.

  38.  The wage subsidies offered through New Deal, linked up with the range of other supports currently available, could be a major business development tool. The key here is developing customised packages of support for companies based on their specific requirements. This would entail working with individuals and companies both pre and post recruitment, leading individuals effectively into quality jobs, which will be sustainable in the long term.

  39.  The role of labour market intermediaries, such as the Local Development Company Network in Glasgow, is critical in the process of closing the job gap at a local level.

  40.  The New Deal Task Force report identifies the key characteristics of effective labour market intermediaries, which differentiate them from "service providers". These organisations understand the labour market well and know particular employers and job seekers and their needs.

  41.  In conclusion it is clear that there is a jobs gap, which in some areas is widening. We need to work with employers and balance labour market supply and labour market demand activity. Research has shown that intermediary organisations are effective in brokering the needs of employers and job seekers while providing a range of customised services.

Gorbals Initiative

September 1999


 
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