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

APPENDIX 23

Memorandum from the Rotherham Chamber TEC (JG 30)

THE EXTENT, AND CAUSES, OF ANY GEOGRAPHICAL JOBS GAP

  Unemployment in Rotherham is high yet employers are reporting significant recruitment problems. These tend to "flare up" at particular times in the economic cycle or as a result of local events. For example, currently there is a shortage of quality administrative staff due to heavy recruitment in the call centre sector.

  The labour market in Rotherham can best be described as inflexible, characterised as follows:

—  Significant basic skills deficiencies among labour market entrants, described variously by employers using the following terms: lack of a "work ethos" among young people; lack of flexibility in terms of work taken on, hours etc; poor presentation and communication skills; interpersonal skills and team-working; poor mechanical skills and unrealistic aspirations;

—  Low pay and high staff turnover, with many more qualified workers leaving the area for better pay and conditions elsewhere;

—  Few large indigenous employers, affecting Rotherham's capacity for education-business and other business partnerships;

—  Lower than average levels of business start-up;

—  Over-reliance on manufacturing.

  Although unemployment in the area has been high since the 1980's, the years of investment in education and training through various public sector funding mechanisms, has not created a pool of skilled labour. The Call Centre experience has highlighted some of the deeper seated problems in particular areas: there are a number of estates with high unemployment where it is very difficult to get a commitment to training and create a supply of job-ready applicants for the new jobs. Travel problems are often cited as a barrier to these communities accessing the new hobs in the Dearne Valley, only five miles from Rotherham's town centre. Underneath these practical problems lie problems of low self esteem and lack of confidence in personal potential.

  The picture however, is not all negative and there are positive signs too. The Call Centres have recruited substantially from the unemployed and are very happy with the quality and commitment of their new recruits. They include some who have come out of the coal and steel industries and for whom this is a complete change of direction.

  Whilst unemployment overall has fallen faster than the national average rate in the last 12 months, it still remains 80 per cent higher. However, the pattern is much more striking when analysing specific data for the six Rotherham wards which exhibit multiple disadvantage and illustrated in the following table:

UNEMPLOYMENT IN ROTHERHAM:  JULY 1999

Electoral ward	Unemployment rate July 1999 Per cent	Long-term unemployment rate Per cent	Per cent of unemployed under 24	Per cent annual change 1998-1999	Per cent annual change in unemployment 1994-1999
Herringthorpe	17.3	5.2	22.2	-22.2	-8.2
Central	15.6	4.0	28.5	-6.8	-6.4
Park	14.7	4.3	24.9	-10.6	-4.7
Brampton	10.9	2.4	27.0	-1.7	-8.3
Dalton	9.8	2.8	22.2	-13.8	-9.5
Greasbrough	9.6	2.5	26.7	-2.8	-8.0
Rotherham	7.9	1.9	26.7	-10.0	-8.8
Great Britain	4.3	1.0	25.1	-7.4	-10.5

  Source:  ONS/Nomis/RMBC/RCCTE.

  In terms of unemployed per new job vacancy in Rotherham, during 1998 there were nearly 13 unemployed per vacancy compared to under six nationally, despite the faster fall in unemployment locally. The chart below compares the 1998 ratios with 1996. Although it illustrates the closing of the local/national gap in numeric terms, in proportional terms there has been a deterioration, since the Rotherham ratio has moved from just below to just above twice the national.

Which groups might be most affected?

  Extensive research has been carried out locally to get beneath the figures. Unemployment is concentrated geographically and there are communities with first, second and third generation unemployment dating back to the seventies, particularly in the Herringthorpe, Eastwood/Oakhill, Canklow/Ferham, Brampton and Dalton areas of Rotherham.

  There are higher than average levels of disability which create a barrier to work. Over 6 per cent of the population claim invalidity benefit and severe disablement allowances. The unemployment rate for people with disabilities in Rotherham is estimated at 18 per cent, with over 45 per cent of those of a working age looking for work. Less than 2 per cent of employers actively view this group as a potential source of employees.

  Those in ethnic minority communities are still more likely to be unemployed than their white counterparts. It is estimated that the current rate of unemployment is higher than 18 per cent. It is not surprising that 75 per cent of those in work feel that they would find it difficult to secure alternative employment should they be faced with redundancy.

  More jobs are being taken by women than by men. In Rotherham whilst female employment has grown by 3.5 per cent, male employment has fallen by 2 per cent. This trend is forecast to continue, with a further 3 per cent growth in females in the workforce and a decline for males of over 4 per cent between now and 2007.

  Men with NVQ level 1 or 2 qualifications are more likely to be unemployed long term and their prospects worsen as local economic restructuring continues to reduce demand for unskilled and semi-skilled work. Over 70 per cent of the male unemployed are qualified to NVQ2 or below, with 30 per cent possessing no formal qualifications.

  Older men face particular problems and many do not actively seek work. Of those unemployed aged over 50, over 30 per cent have been out of work for more than five years, compared to a Rotherham average of 11 per cent. Investment in the railways has created a rare example of jobs growth for this group of people, but this will not have a major impact on long-term unemployment levels.

  Unemployment among young people is an underlying problem masked by the numbers on New Deal and Modern Apprenticeship/National Traineeship or other programmes.

  Academic achievement is behind the national average (although typical for a coalfield area) and this makes many young people less attractive prospects for employment. The following Table highlights qualification levels in Rotherham.

Table

DISTRIBUTION OF NVQ EQUIVALENTS FOR THE WORKFORCE

	NVQ0	NVQ1	NVQ2	NVQ3	NVQ4+
	Per cent	Per cent	Per cent	Per cent	Per cent
Yorkshire: Employed	20	12	21	18	29
Yorkshire: Unemployed	34	15	20	16	15
South Yorkshire: Employed	19	14	19	19	29
South Yorkshire: Unemployed	31	19	21	15	14
Rotherham: Employed	20	17	21	17	25
Age 16-24	5	12	39	29	16
25-49	18	19	19	15	30
50+	31	14	14	15	25
Gender Male	16	17	22	16	29
Female	22	18	219	18	23
Rotherham: Unemployed	30	21	22	16	13
Age 16-24	20	32	26	15	7
25-49	26	20	23	18	13
50+	57	7	10	8	18
Gender Male	30	21	21	15	13
Female	28	18	24	17	14

  Source:  Rotherham Household Survey 1999.

How successful the official measures etc are at presenting spatial disparity in UK unemployment

  Official measures of unemployment are not a good indicator of measuring spatial disparity as there are no small area indicators, other than numeric ward based figures. For instance the percentage based figures in this submission are based on estimates of ward populations. However, since unemployment tends to be concentrated in smaller communities and therefore below sub ward level, a reintroduction of detailed postcode data would assist in highlighting these problem areas, often masked within larger ward based areas. In the early nineties such information was available to subscribers via the National On Line Manpower Information System (NOMIS).

  An additional issue for Rotherham has been the recent decision to split the travel to work area between Rotherham and Barnsley, and subsume the majority of Rotherham within the larger Sheffield TTWA. As part of the overall national review of TTWAs. It has meant that Rotherham TTWA's higher levels of unemployment have been hidden by encompassing data from other areas, which is a clear illustration of the problems associated with relying solely on larger area based data.

  We acknowledge, however that measuring unemployment on a regional and sub-regional/county data basis is more meaningful for comparative purposes.

  It is our view that as the TTWA methodology is designed to reflect travel to work patterns (and therefore by definition crosses commonly acknowledged local area boundaries) it is not a very useful measurement of unemployment issues within Local Authority areas. We would therefore suggest that the Travel to Work area based concept should be replaced by measurements (both numeric and percentile) based on sub-regions and local areas. Additionally we would suggest that ward-based data be supplemented by small area statistics, with the additional provision of unemployment rates to at least ward level.

THE IMPACT OF ANY JOBS GAP ON THE EFFECTIVENESS OF SUPPLY-SIDE POLICIES, SUCH AS NEW DEAL

  Our experience is that it is possible with the right local infrastructure to generate vacancies but there is a shortage of suitable people to fill them. The New Deal intervention is successful in many cases, especially among the younger age group, but there are big challenges for those over 25. The 25 plus pilot has many participants who have been unemployed for several years and many of these cannot make the transformation to job-readiness in the time available. Gateway Advisers report that in the 25 plus pilot only around 10 per cent of the client group are job-ready, and at least one third in their judgement will not be job-ready when they exit the programme.

  The impact of one programme on another is easily seen at local level but does not seem well understood nationally. New Deal has led to a dramatic decline in participation on Work Based Learning for Adults, and has had a lesser but measurable impact on Modern Apprenticeship/National Traineeships.

IMPACT OF NEW DEAL ON ROTHERHAM CHAMBER PROGRAMMES:  1996-1999

Programme	1996-1997 Starts	1997-98 Starts	1998-99 Starts
Modern Apprenticeships	664	581	474
Youth Programmes	1,558	1,308	878
Adult Programmes	1,711	1,456	775

  Source: RCCTE.

  This raises fundamental questions about Value For Money and targeting. The cost of introducing New Deal has been enormous but its net effect when the impact on other programmes is considered may have been modest. We question the wisdom of requiring all eligible unemployed people to be forced through the programme. It must be recognised that a very significant proportion of people have no intention of getting a job, or face such personal problems that a job is simply not on the cards for them. Is there a justification for investing in vocational preparation and training for this group? Is there a case for accepting reality and focussing support for this group on life skills not work skills. The two are of course not mutually exclusive.

  However, we feel there is good evidence that for at least half of the clients, New Deal is working positively and improving employability. Particular good practice features are the Skills for Employment Qualification and the employer brokerage service. These are fundamentally about bringing the individual training support into line with the local job opportunity. As the Call Centre experience illustrates, it is much better to focus on generic work skills rather than on job-specific training. But to do this, everyone must be clear as to what we mean by work skills and how we can measure performance in these areas. The Skills For Employment qualification does this and also creates a template for analysing the specific requirements of a job. Vacancies can be analysed in terms of the mix of work skills required.

THE EXTENT OF LOCAL, NATIONAL GOVERNMENT AND EUROPEAN SPONSORED INITIATIVES AIMED AT CREATING A BETTER BALANCE BETWEEN SUPPLY AND DEMAND FOR JOBS AT THE LOCAL LEVEL, AND WHETHER THESE ARE SUFFICIENT

A ROTHERHAM MAPPING EXERCISE YIELDED THE FOLLOWING INVESTMENT LEVELS IN SUPPLY SIDE INITIATIVES:

	£ million
Chamber TEC funding for Youth, Adults and Investors in People	8.9
Employment Service New Deal	3.9
FEFC through colleges of Further Education	21.4
School sixth forms	2.1
Single Regeneration Budget	2.0
Europe	3.5
TOTAL	41.8

  On top of this our research suggests that employers invest around £21 million.

  It is sometimes argued that too much is being spent on training for its own sake and not enough on bringing employers and unemployed people together. With the approach of Objective One the level of supply side investment should be sufficient but to make a real difference will require more flexibility to allow imaginative packages of supported recruitment, training and employment packages for employers and unemployed individuals. Our Direct Recruitment initiative funded through Training For Work was a good example but changes in the rules meant we could not sustain the model. Essentially the package allowed for an individual to follow a customised training programme on placement to an employer, leading to employment with training. This allowed employers and individuals a good lead in time before an employment contract decision was made. Government funds were used flexibly to help pay for the training costs involved in bringing an unemployed individual to the standards required by the employer.

Rotherham Chamber TEC

October 1999

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Prepared 18 May 2000