The Case for Intermediate Labour Markets (ILMs)

Tracy Fishwick, InclusionNWLaura Gardiner, Inclusion

Outline of session

The need for action The evidence around ILMs Options for ILMs in the current policy

and delivery landscape

The need for action

Young people have been hit hardest by economic downturn:

– Youth unemployment increasing faster than unemployment for all other age groups

– Long-term youth unemployment highest in 16 years = lifelong ‘scarring’ effects

– Young people particularly hard-hit by the way employers have responded to this recession

There aren’t enough jobs to meet demand:– Growth forecasts are bleak and worsening– Situation in North West particularly concerning:

Unemployed 16-24 year olds per 16-24 year old recruited, 2010

The need for action

Current programmes are not doing enough:

– Apprenticeships:– Only 12% go to young unemployed people– They are growing 234% for those aged 25+,

compared to only 10% for 19-24 year olds and 21% for 16-18 year olds

– Inclusion analysis of the JCP work experience scheme shows that it appears to be having no additional impact on young people leaving benefits

The need for action

Young people in particular are suffering in the current labour market

+The economy looks unlikely to ‘naturally’ fix this

problem in the short and medium term

+These short and medium term effects have

lifetime impacts

=A strong case for ‘demand-side’ interventions like

waged employment programmes/ILMs

The need for action – summary

Evidence around ILMs

A body of evidence around waged employment programmes:

– ‘Transitional jobs’ in USA: substantial benefits for individuals in the long-term, reduced unemployment in the short-term

– StepUP: large positive impacts, but only for those furthest from work

– Future Jobs Fund

FJF – Background

6-month waged job for unemployed 18-24 year olds in the main (25+ in agreed areas)

An unprecedented programme – speed, scale and budget

Soon after the election...a decision to close it down

100,000 jobs were created and filled in fewer than 2 years

Inclusion commissioned to produce an independent evaluation by seven local areas

FJF – Key benefits A real job and a wage Engaged employers – change in attitudes

and practices towards the young unemployed Voluntary and community sector made a

big contribution Community benefit output Boosted qualifications and career

aspirations Good results for the typically hard-to-reach

FJF – Areas for improvement

More focus on progression More targeting at those most in need of

support (lots of highly-educated and short-term unemployed people included in latter stages)

Better engagement of private sector and growth sectors

More streamlined interaction with other mainstream provision

FJF – Outcomes and value for money

Employment outcomes:– When people left early it was usually to start

another job immediately– Overall job outcome rate: 43%– Impressive sustainment: modelling suggests

86% of jobs will be sustained to 3 months and 56% to one year

Impact:– Participants spent 70 days fewer on benefits,

above and beyond time spent in FJF jobs Value for money:

– Net cost per participant: £3,900– Net cost per job outcome: £9,200 (at job

outcome rate of 43%)

FJF – LessonsWage employment programmes can:

Engage young people with the offer of a job and a wage

Engage employers and encourage them to recruit the young unemployed in future

Produce job outcomes and boost job sustainment

Produce outcomes for hard to help groups Be costly, but less so with effective targeting Provide a boost to stagnant local labour

markets

Options for ILMs today – local government

Schemes are underway or in development:– In Scotland: Community Jobs Scotland is

creating six month jobs for young people in the voluntary and community sector

– In Greater Manchester: exploring shorter, demand led jobs in VCS and SMEs

FJF Evaluation recommendation: introduce temporary waged job initiatives to stimulate

depressed labour markets and create growth in developing industries

Options for ILMs today – national government

Also, the CBI has recently called for a one-year National Insurance contribution holiday after a business employs a young person

FJF Evaluation recommendation: allow out-of-work benefits to be used as a wage subsidy in low-vacancy areas, in growth and target sectors, for the hardest to support, and in jobs with clear community

benefit

Options for ILMs today – Work Programme providers

In partnership with the ‘Give Us A Chance’ consortium of social housing providers, Inclusion has developed a workable model for subsidising new jobs through the Work Programme...

FJF Evaluation recommendation: work with local partners and employers to fund temporary jobs in

order to achieve sustained employment outcomes for customers

Options for ILMs today – Work Programme providers If young WP customers were offered six-month

temporary jobs, providers would be paid an average of £2,200, over £1,000 more than DWP expects to pay

This additional income could partly fund wage costs, with the difference made up by employers or other investment:

– The ‘Give Us A Chance’ consortium will launch a pilot initiative funded jointly by a Prime provider and the housing association that will employ the young people

– Inclusion recently recommended that national government make up the difference in wage costs, creating up to 75,000 jobs with an investment of £150 million

In summary

Current interventions are not enough Temporary waged jobs work Targeting some young people and certain

places is necessary There are mechanisms and programmes in

place to build on

Contact us Tracy Fishwick

tracy.fishwick@cesi.org.uk@InclusionNW07769 670 753

Laura Gardinerlaura.gardiner@cesi.org.uk@lauracgardiner020 7840 8343