RECRUITING UNEMPLOYED PEOPLE
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,
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 Gatewaythe
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.
The Institute's own study of employer attitudes
"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".
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.
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".
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).
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.
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
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".
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.
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.
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".
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').
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.
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.
Some labour market intermediaries are ideally placed to provide
'after care', given their close relationships with both the employer
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.
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".
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.
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
p. 4. Back
J, Giles L and Meager N, Employers, Recruitment and the Unemployed,
IES Report No. 325, Institute for Employment Studies, 1996. Back
p. 4. Back
p. 4. Back
p. 55. Back
p. 6. Back
10, Ev. p. 150-1. Back
p. 77. Back
p. 6. Back
for Education and Employment Annual Report 2000, Cm 4602, p. 130. Back