APPENDIX 25
Memorandum from the Business Services
Association (JG 34)
BACKGROUND
The Business Services Association is a policy group
of major companies providing outsourced services to companies,
public bodies, local authorities and government departments and
agencies. The combined turnover in the United Kingdom of its 15
member companies is around £8 billion. Member companies employ
directly and indirectly in excess of 350,000 people, many of them
at blue-collar level.
BSA members are committed to delivering high-quality
services to their customers. They are also firmly committed to
training and advancing their employees, and have sought to work
with Government since the beginning of the New Deal initiative
to promote these ideals.
BSA was the first association to sign up publicly
to the New Deal, in August 1997, and submitted a paper to the
Select Committee in October 1997 expressing its initial thoughts
on how the scheme might be given the best chance of success. Further
evidence was submitted to the Committee in March 1999, outlining
some thoughts on ways in which employers might be more effectively
involved in the early stages of the New Deal process alongside
the ES.
EXPERIENCE
In previous evidence, BSA highlighted the geographical
factor as one of the key problems in filling New Deal vacancies.
A number of member companies have worked hard at local and national
level to recruit New Deal candidates to fill their vacancies,
but have found that there are simply not enough people available
within the local area for the Employment Service to make the necessary
referrals to cover the posts available. The problem seems particularly
acute in the South of England, where unemployment levels continue
to fall, whilst job vacancy numbers rise.
Even in areas of high unemployment, where it
could be anticipated that suitable candidates would be readily
available, it has proved almost impossible to find them. Problems
have been experienced in a number of areas including Leicestershire,
Hampshire and Wales, where member companies seeking to employ
large numbers of staff have found that sufficient candidates are
simply not available in the local area to fill the vacancies.
Not surprisingly, levels of frustration are rising, and employers
are showing an understandable reluctance to even attempt to take
on New Deal candidates when perceived levels of success are so
low.
Even within the London area, where unemployment
is high, experience of working with local New Deal officials reveals
in a significant number of potential candidates a marked reluctance
to travel to work outside a small defined local area. Reasons
for this will vary from individual to individual, and in a number
of cases will centre around issues of cultural identity and a
reluctance to move outside a known and familiar environment. For
example, one young New Deal candidate turned down the opportunity
of a training course offered to him, because it would require
a 30 minute bus journey, even though his fares would have been
paid.
There is a real need for this issue to be addressed
within the Gateway period of preparation for "job-readiness",
and we have been encouraged by the willingness of some local ES
officials to tackle this problem in conjunction with major employers
by arranging pre-employment site visits and encouraging greater
involvement by employers at an early stage in the training process.
Domestic pressures, such as childcare arrangements,
may also play a part in the reluctance of some of the unemployed,
particularly part-time and women workers, to travel far from their
local area to find work. Again, these are matters which can be
resolved in conjunction with employers and Jobcentre advisors.
However, while there is a clear cultural element
to be addressed, the most compelling reasons for the perceived
jobs gap are economic.
ECONOMIC FACTORS
BSA believes that it is too simplistic to see
unemployment solely as the product of a skills gap and insufficient
training. Supply side policies such as New Deal address only one
element of the unemployment equation, namely the perceived lack
of job readiness amongst the unemployed.
However, both supply and demand aspects will
need to be addressed if the New Deal and other employment initiatives
are to succeed. Purely supply side policies make no attempt to
address the key issue of labour market mobility in the UK.
The UK's inadequate and high-cost public transport
infrastructure is a major impediment to labour market mobility,
even within relatively small geographic areas. One member company
has provided the following case study to illustrate this point:
Shortage of airport workers within the Gatwick
and Heathrow areas
Gatwick is an area of zero unemployment, so
workers must be attracted from such areas as Croydon and Brighton,
some 20 miles distant with unemployment rates of 6 per cent. However,
at present the cost of a weekly season ticket from Croydon or
Brighton to Gatwick is the equivalent of 20 per cent of the entry
level worker's wage after tax. A similar picture emerges for Heathrow,
where unemployed workers in North London are unable to travel
to Heathrow owing to the excessively high cost of the Heathrow
Express. The six-month New Deal subsidy does not address the problem:
the example above shows that the subsidy would reduce transport
costs to 10 per cent of take-home pay for the first six months
but thereafter the employee would experience the equivalent of
a 10 per cent cut in take-home pay, as transport costs rise to
take up 20 per cent of the total. From a sustainable employment
perspective, this position is completely untenable.
CONCLUSION
The experience of BSA member companies in a
number of areas indicates clearly that there is a genuine problem
in matching supply and demand at local level, and that geographic
considerations play a significant part in this. Unless ways can
be found to alleviate the economic and social pressures which
restrict the mobility of the labour force, this is unlikely to
improve.
However, as an association and as individual
employers, BSA members remain committed to the principle of the
New Deal, and welcome its expansion to include those over the
age of 25. Many problems remain to be addressed, but progress
is being made in building better relationships between employers
and the employment service at local level. Our experience shows
clearly that this is the key to success.
Val Hiscock
Assistant Director-General
Business Services Association
November 1999
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