Select Committee on Education and Employment Third Report


Overcoming Barriers

27. The Government, through the New Deal for Young People (NDYP), has sought to develop the soft skills, such as punctuality and presentation, of participants. As we noted in our recent Report on New Deal for Young People: Two Years On,[49] one of the characteristics of the programme has been the commitment to continuous improvement, which has resulted in a number of significant changes to the design of the programme, particularly to the Gateway—the initial entry stage of the programme. In July 1999 the fourth month of the Gateway was intensified for those who reached that stage of NDYP. An Intensive Gateway, piloted from August 1999, has now been expanded from the initial 12 pilots areas to apply nationally. It provides more intensive assistance with job search and programmes to help with soft skills, such as punctuality, team working and communication skills. Those joining NDYP now will be required to attend a two-week course, which begins in the fifth week of the programme, and which aims to ensure that all job seekers can present themselves properly to employers. The Sub-committee's inquiry into New Deal: An Evaluation will be examining the NDYP's impact in this area.

28. Several witnesses also emphasised the importance of increasing the opportunities for employers to discover what long-term unemployed people can achieve. The Institute for Employment Studies drew attention to "ample evidence" that successful experiences of recruiting unemployed people in general, and long-term unemployed people in particular can be effective in moderating employers' attitudes and lessening their concerns about unemployed people's abilities and motivation.[50] The Institute's own study of employer attitudes[51] "showed clearly that employers who had participated in Government programmes in the past were more likely to recruit unemployed people to vacancies. This ... does not simply reflect the possibility that firms of certain types are more likely both to participate in programmes and to recruit unemployed people. The finding persists when firms participating in schemes are compared to otherwise similar firms which have not participated".[52] By implication then, the more the Employment Service can widen the pool of employers prepared to employ or provide work experience for unemployed people, perhaps with the help of Government programmes, the greater would be the number of employers prepared to recruit from the ranks of the unemployed in the future.[53]

29. Employers often prefer to recruit those already in employment rather than a suitably qualified unemployed person, because it is seen as a less risky option. Job seekers, particularly those experiencing a sustained period of unemployment, may also be cautious about their ability to meet the demands of a job. The Institute of Employment Studies argues that in these circumstances, both would benefit from a "no-risk trial run".[54] It says that the experience with work placements under the NDYP and with Work Trials shows that it is much easier to bring employers and job seekers together on a low or no commitment basis for a finite period than it is to place job seekers directly into permanent positions. Work Trials and placements therefore can serve to reduce employers' nervousness about recruiting a long-term unemployed person by exposing them to the achievements that can be made. This in turn, as Mr Meager suggested, can lead to employers re-evaluating their own recruitment practices which would have screened out unemployed people or in some cases lead to a permanent job offer (a phenomenon which Jeff Jablow, Vice President of the Wildcat Corporation, described as temp-to-perm).[55] Work Trials also provide unemployed people with work experience, which many recruiters see an important selection criterion. They may also increase the clients' confidence in their own abilities.[56] We recommend that the Government and the Employment Service should seek to expand the opportunities for work placements and trials for unemployed people.

30. In contrast, however, both the current evaluations of New Deal[57] and the evidence submitted to this inquiry suggests that the job subsidies provided under New Deal (three of the New Deal variations, NDYP, New Deal for 25 plus and New Deal for the Over Fifties, include a facility for employee subsidies) are not a strong inducement to recruiting long-term unemployed people. The take-up of New Deal subsidies by employers has not been huge, accounting for only about 25 per cent of placements under NDYP; furthermore, this proportion has been falling since the scheme was launched. Job subsidies are usually seen as having a positive substitution effect: that is, they will increase the recruitment of those job seekers who attract a subsidy at the expense of those who do not. We are not aware of any evidence that the subsidies provided under New Deal have yet had a significant substitution effect; in part this may be because the take-up has been so low and in part because of the tight labour conditions.

31. The Minister said that, despite the fact that the employee subsidies in NDYP did not appear to be a major incentive to employers to recruit unemployed people, they were "a welcome extra, to focus on the lower level effectiveness that we would expect a young unemployed person to operate at in the early weeks and months of their involvement with a new employer".[58] Ms Spence, Policy Manager for the North East Chambers of Commerce, recounted her experience with the New Deal Survey which indicated that the majority of employers were far more attracted by the associated provision of training and the provision of funding for training than they were by employee subsidies.[59] The Institute for Employment Studies pointed to other research which suggests that subsidies may be attractive to small firms where the subsidy presents a significant proportion of the costs of supporting the job.[60]

32. The Minister said that in the coming months, the Government would be concentrating "much more heavily on subsidised work experience as a first step linked to in-work training for people who already have the essential basic skills which are a pre-requisite of long-term employment".[61] We welcome this emphasis on the use of subsidies as a means of risk reduction for employers and as a job-broking tool. We agree that employee subsidies, as they operate under New Deal, are not, nor should they be seen as, a means of increasing employment.

Post placement support

33. One of the aims of NDYP is to place clients in jobs that will lead to sustainable employment and career progression. Experience suggests that post placement support can enable entry-level job holders to progress to higher level jobs in the same or another company, thus vacating an entry-level position for new labour force entrants without themselves returning to the ranks of the unemployment (a phenomenon known as 'churn').[62] Several witnesses, including Manpower plc, agreed that post placement support was an essential tool in placing the unemployed in into jobs, and careers, which were sustainable.[63] Mr Chris Evans of the Centre for Social Inclusion stated that one of the characteristics of an effective labour market intermediary was the provision of post placement support, where greater focus was placed on clients retaining jobs and achieving promotion.[64] Some labour market intermediaries are ideally placed to provide 'after care', given their close relationships with both the employer and employee.

34. For the Employment Service, which places some 25,000 unemployed people each week, the burden of keeping in contact with each one of them after placement could not be justified. For some clients, particularly those with the greatest disadvantages, the Employment Service does provide post placement support so that it can assist in resolving any difficulties which if unresolved could undermine the placement There is little robust evidence which sheds light on the impact on post placement support job retention or progression. We welcome the two experimental projects, one in Yorkshire and the Humber and one in Scotland, which will test whether the provision of more intensive after care has a positive impact on retention or progression.[65]

35. Measures to help unemployed people to overcome the barriers to employment discussed so far are most relevant to those in the job market who are closest to being job ready. Some unemployed people have profound personal difficulties or skills deficiencies which render them almost unemployable. Those eligible for NDYP enter the programme after they have been claiming job seekers' allowance for six months. For New Deal for Unemployed People Aged over 25, the threshold period is two years. A significant proportion of those entering the programme are assessed as not job ready "after two years in which they have been forced to present themselves to employers as precisely that".[66] For some the problem will be the result of a deterioration in skills and relevant experience during their unemployment. But for those who have a persistent and long-term condition which could have been identified when they entered the register, the intervening period is at best a waste of time. It is more likely that compelling unemployed people who are a long way from being job ready is counter-productive. Their job hunting is unlikely to be successful yet their applications could reinforce employers' negative impressions of unemployed people. Repeated unsuccessful applications could also undermine job seekers' own self confidence and weaken their motivation to get a job or to equip themselves with the necessary skills. We welcome the reduction of the threshold period from two years to eighteen months which is due to take place in April 2001.[67] It is a step in the right direction. We recommend that the Government should reduce further the period for which unemployed people over the age of 25 are required to claim job seekers' allowance before entering New Deal.

49  Eighth Report from the Education and Employment Committee, Session 1999-2000 New Deal for Young People: Two Years On, HC 510. Back

50  Ev. p. 4. Back

51  Atkinson J, Giles L and Meager N, Employers, Recruitment and the Unemployed, IES Report No. 325, Institute for Employment Studies, 1996. Back

52  Ev. p. 4. Back

53  Q. 12. Back

54  Ev. p. 4. Back

55  Ev. p. 55. Back

56  Q. 12. Back

57  Q. 306. Back

58  Q. 306. Back

59  Q. 127. Back

60  Ev. p. 6. Back

61  Q. 306. Back

62  Q. 64. Back

63  Appendix 10, Ev. p. 150-1. Back

64  Q. 64. Back

65  Ev. p. 77. Back

66  Ev. p. 6. Back

67  Department for Education and Employment Annual Report 2000, Cm 4602, p. 130. Back

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