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


APPENDIX 7

Memorandum from Peter Urwin and Professor J R Shackleton, Education, Training and the Labour Market Research Group, University of Westminster

A NOTE ON THE ROLE OF PRIVATE EMPLOYMENT AGENCIES IN PLACING THE UNEMPLOYED

  1.  The following analysis uses Labour Force Survey data from Spring 1998 to provide information on the use of Private Employment Agencies (PEAs) by the unemployed. We realise that the analysis constitutes a brief note and will be glad to expand on any of the points discussed if you wish to invite us to give oral evidence. The Labour Force Survey is a rich data set of approximately 60,000 households (150,000 individuals)—with information on a variety of socio-economic characteristics. The first LFS in the UK was conducted in 1973; it was carried out biennially until 1983; annually between 1984 and 1991 and quarterly from the Spring of 1992. The statistics quoted in this document are weighted to reflect the characteristics of the population of Great Britain.

  2.  The accompanying tables concentrate on the use of Private Employment Agencies (PEAs) by the ILO unemployed for various groups of the population, when compared to other forms of job search. However, to begin, it is useful to identify the importance of PEAs in the labour market as a whole. Table 1 shows that, of all those employees and people on government schemes who have been with their current employer for three months or less, 10 per cent used a private employment agency to obtain their job. The most important single route to employment for this group was through a reply to an advertisement.

  3.  Further analysis of these individuals who gained their job within the last three months shows that, of those who were unemployed prior to this, 10 per cent used PEAs to obtain their current position. Whilst these figures must be treated with caution[1] it is interesting to note that the use of PEAs is highest amongst ex-pupils and students (those who have just finished full-time education), with 22 per cent of those who were students three months ago having gained their present employment through this avenue. Of those who were employed in another job three months ago, 17 per cent obtained their new job through registration with a PEA.

  4.  Table 2 looks at the proportion of employed, unemployed and inactive individuals who are using PEAs as their main method of employment search. As we can see, of the 1.6 million employed individuals who were searching for work in the last four weeks only 6 per cent rely upon registration with an employment agency as their main method of search—for the unemployed the figure is even smaller, at 3 per cent.

  5.  However, simply analysing the main method of search seriously underestimates the use of PEAs. The use of PEAs often serves as one amongst several methods of search, alongside such avenues as studying situations vacant, contacting friends etc. Thus, if we analyse Table 3, we can see that 23 per cent of ILO unemployed individuals who are looking for a job as an employee are registered with a Private Employment Agency. This proportion is the same for those in employment who are looking for a job. The proportion for the inactive may seem relatively high (for a group that is not supposed to be actively seeking employment) but the numbers involved are small and probably represent those who are unavailable for work at the moment, but have sought work over the last four weeks. It would be interesting to identify the source and definition of the 12 per cent figure quoted in the call for evidence—even if we consider all unemployed individuals (not just those seeking a job as an employee) we still arrive at a figure of 19 per cent.

  6.  Table 4 analyses the main methods of job search used by unemployed individuals who are registered with PEAs. It is interesting to note that those individuals whose main method of search is to visit a Careers Office or a Job Centre are some of the least likely to be registered with a PEA (though, once again, care must be taken with cells that have <10,000 observations). In contrast, those who visit a Jobclub or answer advertisements in newspapers and journals as their main method of search are the most likely to be registered with a PEA.

  7.  It is clear that any expansion of the role of PEAs in placing the unemployed will have implications for access to employment opportunities. Therefore, it is useful to analyse the characteristics of those who use them, as it is possible that PEAs may favour certain sub-groups of the population or, vice-versa, certain sub-groups of the population may favour their use. Therefore, the tables numbered 5 to 10 analyse the use of PEAs by ethnicity, gender, age etc. It is also useful to note that we are only dealing with those who are looking for work as an employee—any expansion of PEA involvement in job placement programmes will not help those wishing to become self-employed.

  8.  The following points provide a brief comment on the accompanying tables (All Tables from 5 to 14 analyse the situation of the unemployed, except for Table 12 which crosstabulates whether present job is temporary or permanent with method of obtaining present job for all those who obtained their present post within the last three months).

    —  Table 5 shows that 27 per cent of unemployed men, compared to only 17 per cent of unemployed women, are registered with PEAs.

    —  From Table 6 there seems to be very little difference between the proportions of each age group using PEAs amongst the ILO unemployed.

    —  Table 7 shows some variation in the use of PEAs by ethnicity. Unemployed Black Caribbeans and Black Africans are most likely to be registered with a PEA. Indians and Pakistanis have similar proportions to Whites and unemployed Bangladeshis have too low a sample size to provide comment.

    —  We can see from Table 8 that, the higher the occupational category of individuals in their previous job, the more likely they are to register with a PEA when unemployed.

    —  Table 9 analyses the use of PEAs amongst the unemployed according to their previous industry group. From this we can see that the most likely to be registered with a PEA are those who previously worked in the Financial, Real Estate, Renting and Business Services sector.

    —  Table 10 highlights the fact that the longer the time period since your last job, the less likely you are to be registered with a PEA.

    —  Table 11 indicates that PEAs seem to be used by individuals mainly to find full-time employment.

    —  The Labour Force Survey does not allow us to analyse whether being registered with a PEA is correlated with whether individuals are looking for a temporary or permanent position (the unemployed are not asked whether they are looking for a permanent or temporary post). However, Table 12 does show that, if you obtained your present post through a PEA then it is much more likely that the post is temporary.

    —  Analysis of the data by region of residence (Table 13) shows that, generally, as you move South the unemployed are more likely to be registered with a PEA.

    —  Finally, Table 14 shows that, the higher individuals' level of educational attainment, the more likely they are to be registered with an employment agency.

  9.  As mentioned in the first paragraph, the preceding analysis cannot be considered to be in any way comprehensive. There is likely to be a high level of correlation between many of the variables analysed. For instance, we find that in Table 8 a high proportion of unemployed Managers and Administrators are registered with PEAs. The fact that in Table 14 we subsequently find a large proportion of those with Higher Educational Qualifications are registered with PEAs is less surprising, as Managers and Administrators are likely to possess Higher Educational Qualifications. Therefore, in order to isolate the relative strengths of the factors affecting whether an individual is registered with a PEA, some form of multivariate analysis is required. An analysis such as this would also enable us to identify whether unemployed individuals using Private employment agencies have a higher or lower probability of gaining employment.

  10.  Additional to this, adding a time series element to the analysis would also answer questions such as—Do PEAs place workers for very short periods of time, or do they provide access to tenured, "secure" jobs? Do those using Private Employment Agencies simply spend their careers moving between unemployment and employment? (See Shackleton and Urwin (1999) for a possible methodology[2]).

  11.  Finally, some form of further investigation would be needed in order to identify the conditions under which Employment Agency workers are employed. Many Private Employment Agencies now provide training for those registered with them and treat their workers as employees. Do these individuals receive holiday entitlement, sick pay etc.?

  Material from the Labour Force Survey made available through the Office of National Statistics and the ESRC Data Archive has been used by permission of the Controller of HM Stationery Office.

Education, Training and the Labour Market Research Group, University of Westminster.

Table 1:

HOW CURRENT JOB WAS OBTAINED*

Method of gaining present job
  
Frequency
Reply to advertisement
Count
%
483,203
29
Job Centre
Count
%
169,225
10
Careers Office
Count
%
10,691
1
Jobclub
Count
%
3,417
0
Private employment agency, business
Count
%
178,580
11
Hearing from someone who worked there
Count
%
463,100
27
Direct application
Count
%
225,677
13
Some other way
Count
%
155,707
9
Total
Count
%
1,689,600
100


  Source:  Labour Force Survey Spring 1998.

  *All employees and people on government schemes who have been with their current employer for three months or less.

Table 2:

MAIN METHOD OF LOOKING FOR A JOB AS AN EMPLOYEE—FOR EMPLOYED, UNEMPLOYED AND INACTIVE WHO HAVE SEARCHED WITHIN THE LAST 4 WEEKS

Main Job Search Method
 
Employed
Unemployed
Inactive
Total
Visit a Jobcentre
Count
%
113,089
7
429,905
30
24,228
10
567,222
17
Visit a Careers Office
Count
%
7,840
0
13,154
1
13,131
6
34,125
1
Visit a Jobclub
Count
%
2,090
0
13,644
1
1,108
0
16,842
1
On books of private employment agency
Count
%
103,316
6
39,946
3
5,292
2
148,554
4
Advertise in newspapers or journals
Count
%
2,020
0
863
0
  
2,883
0
Answer ads in newspapers and journals
Count
%
198,960
12
140,373
10
20,058
8
359,391
11
Study sits vac in newspapers or jornals
Count
%
818,600
51
468,995
32
77,855
33
1,365,450
41
Apply directly to employers
Count
%
150,623
9
164,989
11
52,116
22
367,728
11
Ask friends, relatives, colleagues, TUs
Count
%
138,116
9
141,788
10
22,883
10
302,787
9
Wait for results of application for job
Count
%
37,277
2
15,087
1
5,600
2
57,964
2
Do anything else to find work
Count
%
48,043
3
22,098
2
13,946
6
84,087
3
Total
Count
%
1,619,974
100
1,450,842
100
236,217
100
3,307,033
100


  Source:  Labour Force Survey Spring 1998.

Table 3:

INDIVIDUALS REGISTERED WITH PRIVATE EMPLOYMENT AGENCIES*

  
  
Employed
Unemployed
Inactive
Total
Use variety of methods other than registration with PEA
Count
%
1,244,209
77
1,122,478
77
209,903
89
2,576,590
78
Use variety of methods, including registration with PEA
Count
%
375,764
23
328,364
23
26,316
11
730,444
22
Total
Count
%
1,619,973
100
1,450,842
100
236,219
100
3,307,034
100


  Source: Labour Force Survey Spring 1998.

  *  These figures apply to all those who have looked for a job as an employee within the last four weeks.

Table 4:

MAIN SEARCH METHOD OF UNEMPLOYED INDIVIDUALS WHO ARE ALSO REGISTERED WITH PRIVATE EMPLOYMENT AGENCIES*

  
  
Visit a Jobcentre
Visit a Careers Office
Visit a Jobclub
Answer ads in newspapers and journals
Study sits vac in newspapers or journals
Apply directly to employers
Ask friends, relatives, colleagues, TUs
Wait for results of application for job
Do anything else to find work
Not registered
with PEA
Count
354,785
10,719
9,599
97,380
366,505
131,523
119,467
12,382
19,171
  
%
83
82
70
69
78
80
84
82
87
Registered with
PEA
Count
75,120
2,435
4,045
42,993
102,490
33,466
22,321
2,705
2,927
  
%
17
18
30
31
22
20
16
18
13
Total
Count
429,905
13,154
13,644
140,373
468,995
164,989
141,788
15,087
22,098
  
%
100
100
100
100
100
100
100
100
100


  Source: Labour Force Survey Spring 1998.
  *  These figures apply to all those who have looked for a job as an employee within the last four weeks.

Table 5:

THE USE OF PEAs BY UNEMPLOYED MEN AND WOMEN

  
  
Not registered
with a PEA
Registered
with a PEA
Total
Male
Count
629,161
230,076
859,237
  
% within Sex
73
27
100
  
% within PEA
56
70
59
Female
Count
493,317
98,287
591,604
  
% within Sex
83
17
100
  
% within PEA
44
30
41
Total
Count
1,122,478
328,363
1,450,841
  
% within Sex
77
23
100
  
% within PEA
100
100
100


  Source:  Labour Force Survey Spring 1998.

Table 6:

THE USE OF PEAs ACCORDING TO THE AGE OF THE ILO UNEMPLOYED

Age
  
Not registered
with a PEA
Registered
with a PEA
Total
16-24 years old
Count
377,031
109,618
486,649
 
% within years
77
23
100
 
% within PEA
34
33
34
25-39 years old
Count
403,951
122,522
526,473
 
% within years
77
23
100
 
% within PEA
36
37
36
40-49 years old
Count
172,073
48,226
220,299
 
% within years
78
22
100
 
% within PEA
15
15
15
50-59/64 years old
Count
169,423
47,998
217,421
 
% within years
78
22
100
 
% within PEA
15
15
15
Total
Count
1,122,478
328,364
1,450,842
 
% within years
77
23
100
 
% within PEA
100
100
100


  Source:  Labour Force Survey Spring 1998.

Table 7:

THE USE OF PEAS ACCORDING TO ETHNIC ORIGIN OF THE ILO UNEMPLOYED

Ethnic origin
  
Not registered
with a PEA
Registered
with a PEA
Total
White
Count
987,775
279,934
1,267,709
  
% within Ethnic origin
78
22
100
  
% within PEA
88
85
87
Black—Caribbean
Count
18,992
8,483
27,475
  
% within Ethnic origin
69
31
100
  
% within PEA
2
3
2
Black—African
Count
17,671
8,980
26,651
  
% within Ethnic origin
66
34
100
  
% within PEA
2
3
2
Black—Other Black groups
Count
8,423
1,369
9,792
  
% within Ethnic origin
86
14
100
  
% within PEA
1
0
1
Indian
Count
23,329
8,534
31,863
  
% within Ethnic origin
73
27
100
  
% within PEA
2
3
2
Pakistani
Count
24,069
7,110
31,179
  
% within Ethnic origin
77
23
100
  
% within PEA
2
2
2
Bangladeshi
Count
8,654
974
9,628
  
% within Ethnic origin
90
10
100
  
% within PEA
1
0
1
Chinese
Count
6,488
1,215
7,703
  
% within Ethnic origin
84
16
100
  
% within PEA
1
0
1
Other
Count
27,076
11,366
38,442
  
% within Ethnic origin
70
30
100
  
% within PEA
2
3
3
Total
Count
1,122,477
327,965
1,450,442
  
% within Ethnic Origin
77
23
100
  
% within PEA
100
100
100


  Source:  Labour Force Survey Spring 1998.

Table 8:

THE USE OF PEAs AMONGST THE UNEMPLOYED ACCORDING TO PREVIOUS OCCUPATIONAL GROUP

Major occupation group
(last job)
  
Not registered
with a PEA
Registered
with a PEA
Total
1.  Managers and administrators
Count
46,559
35,003
81,562
  
% within Major occupation group (last job)
57
43
100
  
% within PEA
6
13
8
2.  Professional occupations
Count
20,397
14,109
34,506
  
% within Major occupation group (last job)
59
41
100
  
% within PEA
3
5
3
3.  Associate prof and tech
Count
30,266
14,259
44,525
  occupations
% within Major occupation group (last job)
68
32
100
  
% within PEA
4
5
4
4.  Clerical, secretarial
Count
99,906
48,100
148,006
  occupations
% within Major occupation group (last job)
68
32
100
  
% within PEA
12
17
14
5.  Craft and related
Count
117,168
30,223
147,391
  occupations
% within Major occupation group (last job)
79
12
100
  
% within PEA
15
11
14
6.  Personal, protective
Count
115,822
21,734
137,556
  occupations
% within Major occupation group (last job)
84
16
100
  
% within PEA
14
8
13
7.  Sales occupations
Count
85,875
27,434
113,309
  
% within Major occupation group (last job)
76
24
100
  
% within PEA
11
10
10
8.  Plant and machine operatives
Count
144,564
53,778
198,342
  
% within Major occupation group (last job)
73
27
100
  
% within PEA
18
19
18
9.  Other occupations
Count
145,004
32,799
177,803
  
% within Major occupation group (last job)
82
18
100
  
% within PEA
18
12
16
Total
Count
805,561
277,439
1,083,000
  
% within Major occupation group (last job)
74
26
100
  
% within PEA
100
100
100


  Source:  Labour Force Survey Spring 1998.

Table 9:

THE USE OF PEAs AMONGST THE UNEMPLOYED ACCORDING TO PREVIOUS INDUSTRY GROUP

Standard Industrial Classification 1992
  
Not registered with a PEA
Registered with a PEA
Total
No ans, outside UK, does not apply, inad
Count
325,344
52,270
377,614
 
% within SIC92
86
14
100
 
% within PEA
29
16
26
Primary and utilities
Count
17,877
3,893
21,770
 
% within SIC92
82
18
100
 
% within PEA
2
1
2
Manufacturing and construction
Count
266,071
90,704
356,775
 
% within SIC92
75
25
100
 
% within PEA
24
28
25
Hotel, wholesale and retail
Count
222,811
64,063
286,874
 
% within SIC92
78
22
100
 
% within PEA
20
20
20
Transport
Count
51,846
21,165
73,011
 
% within SIC92
71
29
100
 
% within PEA
5
6
5
Financial, real estate, renting and bus
Count
62,518
47,632
110,150
 
% within SIC92
57
43
100
 
% within PEA
6
15
8
Public
Count
173,495
46,946
220,441
 
% within SIC92
79
21
100
 
% within PEA
15
14
15
Other
Count
2,517
1,692
4,209
 
% within SIC92
60
40
100
 
% within PEA
0
1
0
Total
Count
1,122,479
328,365
1,450,844
 
% within SIC92
77
23
100
 
% within PEA
100
100
100


  Source: Labour Force Survey Spring 1998.

Table 10:

THE USE OF PEAs AMONGST THE UNEMPLOYED BY LENGTH OF UNEMPLOYMENT

When left last job
  
Not registered with a PEA
Registered with a PEA
Total
Less than 3 months
Count
131,648
69,941
201,589
 
% within When left last job
65
35
100
 
% within PEA
12
21
14
3 months but less than 6 months
Count
137,620
54,448
192,068
 
% within When left last job
72
28
100
 
% within PEA
12
17
13
6 months but less than 12 months
Count
132,426
52,475
184,901
 
% within When left last job
72
28
100
 
% within PEA
12
16
13
1 year but less than 2 years
Count
136,312
42,086
178,398
 
% within When left last job
76
24
100
 
% within PEA
12
13
12
2 years but less than 3 years
Count
69,772
15,801
85,573
 
% within When left last job
82
18
100
 
% within PEA
6
5
6
3 years but less than 4 years
Count
55,889
12,180
68,069
 
% within When left last job
82
18
100
 
% within PEA
5
4
5
4 years but less than 5 years
Count
36,418
7,834
44,252
 
% within When left last job
82
18
100
  
% within PEA
3
2
3
5 years or more
Count
227,969
35,331
263,300
 
% within When left last job
87
13
100
 
% within PEA
20
11
18
Never had paid job
Count
187,711
37,366
225,077
 
% within When left last job
83
17
100
 
% within PEA
17
11
16
Total
Count
1,115,765
327,462
1,443,227
 
% within When left last job
77
23
100
 
% within PEA
100
100
100


  Source: Labour Force Survey Spring 1998.

Table 11:

THE USE OF PEAS AMONGST THE UNEMPLOYED BY THE TYPE OF EMPLOYMENT SOUGHT

Type of employment sought
  
Not registered
with a PEA
Registered
with a PEA
Total
Full-time employee
Count
613,391
240,829
854,220
  
% within Type of employment sought
72
28
100
  
% within PEA
55
73
59
Part-time employee
Count
313,537
36,442
349,979
  
% within Type of employment sought
90
10
100
  
% within PEA
28
11
24
Employee—no preference
Count
182,169
50,652
232,821
  
% within Type of employment sought
78
22
100
  
% within PEA
16
15
16
Looking for place on government scheme
Count
13,382
441
13,823
  
% within Type of employment sought
97
3
100
  
% within PEA
1
0
1
Total
Count
1,122,479
328,364
1,450,843
  
% within Type of employment sought
77
23
100
  
% within PEA
100
100
100


  Source: Labour Force Survey Spring 1998.

Table 12:

WHETHER PRESENT JOB IS TEMPORARY OR PERMANENT BY THE METHOD OF OBTAINING A PRESENT POST*

Permanent or temporary job
Reply to advert- isement
Job Centre
Careers Office
Jobclub
Private employ- ment agency, business
Hearing from someone who worked there
Direct appli- cation
Some other way
Total
Permanent
Count
391,622
109,118
7,051
2,647
79,524
346,208
182,379
111,948
1,230,497
% within permanent or temporary job
32
9
1
0
6
28
15
9
100
% within current job was obtained (if within last 3 months)
82
70
95
86
45
75
82
73
74
Not permanent in some way
Count
88,082
47,007
396
416
97,770
114,086
39,814
40,419
427,990
% within permanent or temporary job
21
11
0
0
23
27
9
9
100
% within current job was obtained (if within last 3 months)
18
30
5
14
55
25
18
27
26
Total
Count
479,704
156,125
7,447
3,063
177,294
460,294
222,193
152,367
1,658,487
% within permanent or temporary job
29
9
0
0
11
28
13
9
100
% within current job was obtained (if within last 3 months)
100
100
100
100
100
100
100
100
100


  Source: Labour Force Survey Spring 1998.

  *  All employees and people on government schemes who have been with their current employer for three months or less.

Table 13:

THE REGIONAL USE OF PEAs AMONGST THE UNEMPLOYED

Residence
  
Not registered
with a PEA
Registered
with a PEA
Total
The North-East
Count
197,787
51,317
249,104
 
% within Residence
79
21
100
 
% within PEA
18
16
17
The Midlands
Count
214,048
63,519
277,567
 
% within Residence
77
23
100
 
% within PEA
19
19
19
The South-East
Count
318,711
120,133
438,844
 
% within Residence
73
27
100
 
% within PEA
28
37
30
The South-West
Count
65,913
22,856
88,769
 
% within Residence
74
26
100
 
% within PEA
6
7
6
The North-West
Count
135,412
29,515
164,927
 
% within Residence
82
18
100
 
% within PEA
12
9
11
Wales
Count
60,315
12,904
73,219
 
% within Residence
82
18
100
 
% within PEA
5
4
5
Scotland
Count
130,292
28,118
158,410
 
% within Residence
82
18
100
 
% within PEA
12
9
11
Total
Count
1,122,478
328,362
1,450,840
 
% within Residence
77
23
100
 
% within PEA
100
100
100

Source: Labour Force Survey Spring 1998


Table 14:

THE USE OF PEAs AMONGST THE UNEMPLOYED BY THEIR HIGHEST EDUCATIONAL QUALIFICATION

Highest Educational Qualification
Not registered
with a PEA
Registered
with a PEA
Total
Don't know
Count
% within Highest Ed
% within PEA
7,394
75
1
2,500
25
1
9,894
100
1
Higher Education
Count
% within Highest Ed
% within PEA
84,772
55
8
68,226
45
21
152,998
100
11
"A" level of equivalent
Count
% within Highest Ed
% within PEA
110,772
70
10
47,756
30
15
158,528
100
11
Craft and related
Count
% within Highest Ed
% within PEA
141,026
76
13
43,897
24
13
184,923
100
13
"O" level or equivalent
Count
% within Highest Ed
% within PEA
224,716
77
20
66,121
23
20
290,837
100
20
Other
Count
% within Highest Ed
% within PEA
216,099
81
19
51,477
19
16
267,576
100
18
No qualification
Count
% within Highest Ed
% within PEA
337,699
87
30
48,388
13
15
386,087
100
27
Total
Count
% within Highest Ed
% within PEA
1,122,478
77
100
328,365
23
100
1,450,843
100
100


  Source:  Labour Force Survey Spring 1998.


1   The figures are unreliable, as cell size is less than 10,000. Back

2   Shackleton, JR and Unwin, P (1999), "Search methods and transitions into employment and inactivity, an analysis of linked records from the Labour Force Survey", International Journal of Manpower, Vol 20, Nos 3/4. Back


 
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