Steps to Work – New Deal Recontracting Seminar: Limavady, 24 January 2008 The Northern Ireland Labour Market Dave Roge

1. Steps to Work – New Deal Recontracting Seminar:Limavady, 24 January 2008The Northern Ireland Labour MarketDave Rogers, Analytical Services, DEL

2. What I am going to cover Northern Ireland Labour Market in Context What matters – employment, unemployment, inactivity Reconnecting people with the labour market – DEL’s Skills Strategy What Research tells us

3. The NI Labour Market - GOOD NEWS Fifteen Years ago - unemployment 100,000 plus: today less than one third of that Fifteen Years ago - 50,000 long-term unemployed: today less than one third of that Fifteen Years ago - 600,000 jobs in NI: now more than 770,00 - up by well over 150,000 Most net expansion in private sector services GVA (formerly GDP) per head up by more than a third (faster than UK as a whole)

4. NI has a relatively healthy labour market in an international context

5. The NI Labour Market – Unemployment NI unemployment rate – 4.3% UK – 5.2% Austria – 4.3% Italy – 5.9% France – 8.1% Poland – 8.8% Republic of Ireland – 4.4% EU27 – 7.0%; Eurozone – 7.2% Data at Autumn 2007 Source: DETI

6. Claimant Unemployment – Limavady

7. The NI Labour Market - Employment NI employment rate 67% (Eurostat definition) UK – 71% Austria – 72% Italy - 59% Germany – 69% France - 64% Poland – 57% Republic of Ireland – 69% EU27 – 65%; Eurozone – 66% Lisbon Target – 70% (2010) Data at Apr-Jun 2007. Source: DETI

8. The NI Labour Market – NOT SO GOOD NEWS NI still has lowest employment rate in UK (70% vs 75%) This means we have proportionately fewer people in work than the rest of the UK: if we matched the average, we would have 60,000 more people in jobs The employment rate is a key government target – high employment rates are a sign of a healthy economy – and the UK has an aspiration of an 80% employment rate NI Programme for Government has target of 75% by 2020 Unemployment is low – but many of those who are unemployed have either never worked or have not had sustained employment for a long time and have been on programmes such as New Deal two or more times

9. NI Labour Market – Challenges Unemployment is low, and therefore increasing the labour force must look to other sources. Unemployment in other UK regions has begun to rise: could this happen here? High level of economic inactivity Sickness-related benefit claimants up by 14,000 since 1999 Low wages (= benefit trap) Still high dependence on public sector (c 32% of employment cf 20% in UK as a whole) Still relatively weak Private Sector. Median private sector wages only 83% of UK. Risen faster than rest of UK in recent years – but slowdown last year – possibly suggesting weaker demand side? Some evidence of buoyancy (house prices) but many economists beginning to be more pessimistic at global, UK, RoI, and NI level Recession??

10. Issue - Economic Inactivity The economically inactive comprise those who are out of the labour market altogether – not working and not looking for work NI has the highest Economic Inactivity rate in the UK – 27% of our working age population is inactive (cf UK 21%) We have nearly 300,000 people of working age who are inactive Thus we have ten times more inactive people than we have unemployed

11. JSA and IB Claimants; 1971-2007

12. Reasons for Economic Inactivity, Spring 2005

13. The big problem is inactivity, not unemployment

14. Economic Inactivity by District Council, 2006 No data for Moyle DC due to small sample size

15. Persistence of Economic Inactivity (?)

16. Focus on Inactive These figures explain why there is increased focus on the inactive, especially (but not entirely) those on benefit This translates in policy terms largely to those claiming Incapacity Benefit – of whom there are more than 110,000 in Northern Ireland UK target – to reduce IB claimants by 1 million (long term goal) The NI equivalent to this target would be to reduce IB claimant numbers by around 45,000 to about 65,000

17. Other Factors Economic Inactivity is not always “bad” eg students Many people are inactive by choice or decision Around 10-15% of the inactive would like to work Many inactive have been out of the labour market for a long time, have no or poor qualifications and are operating at low levels of literacy and numeracy but not all of them – the inactive also contain a proportion of well qualified people

18. Action is more important than desire: it’s more important to look for work than to want it Percent Flows from inactivity in one quarter into employment in the next quarter

19. DEL’s Skills Strategy:“Success Through Skills” Aim To help people progress up the skills ladder in order to: lift the skills levels of the whole workforce; raise productivity; improve competitiveness; and enhance the employability of those currently excluded from the labour market.

20. DEL’s Skills Strategy Target Groups • New entrants to the labour force; • Those already in the workforce; and • Those who are inactive but could be re-engaged.

21. Future Employment Trends - Summary Sectors: services will continue to increase – manufacturing to decrease Occupations: managerial/supervisory occupations will increase – elementary occupations to decrease There will be increasing demand for workers with high levels of skills and qualifications On the other hand, the demand for workers with few or no skills and low levels of qualifications will fall This understanding is one of the drivers of the new NI Skills Strategy: hence importance of re-engaging those who are disconnected from labour market

22. Future Employment Trends:Projected Employment Change by Qualification, 2002-2012

23. Issue – Literacy and Numeracy One key issue for many of those out of the labour market is lack of essential skills of literacy and numeracy We know from the Adult Literacy Survey (dated – 1996 – but still likely to be indicatively correct) 18% of those employed are operating at lowest literacy level 30% of those unemployed 41% of those economically inactive 21% of those with some sort of qualifications are at the lowest literacy level compared to 46% of those with no qualifications

24. Research DEL has carried out a considerable programme of research into JSA and IB claimants and the effectiveness of interventions in this area There also exists a considerable body of evidence from elsewhere This has been used in order to shape the design of Steps and also other, related programmes Research projects in NI include a study of New Deal Returners; a New Deal Leavers Survey; and research into IB claimants Summaries will be published shortly in DEL’s Labour Market Bulletin

25. Some Findings Reality check – research confirms that many clients in this group will be very difficult to help… … but not all. Significant minority really want to work and also think that they will work at some time in the future Many differences between clients (especially in older age group) suggesting a more tailored approach needed (“Anna Karenina” syndrome - "All happy families are alike; each unhappy family is unhappy in its own way.“) Fairly high levels of satisfaction with New Deal (eg in 25+, 63% either very or fairly satisfied ) – so need to build on this “goodwill” Perceptions of the labour market are very important – and tend to be negative (arguably, too negative). This is an important area for clients – and for those trying to help them

26. Overview • Background • Customer Base • Approach • Provision

27. Background • NEW DEAL - Introduced 1998 • Mainstream New Deals - 18 to 24 - 25+ • Voluntary New Deals - Lone Parents - Partners - Disabled Persons - 50+

28. New Approach • Building on New Deal (BoND) Local solutions meeting individual needs • Delayed until 2009

29. Steps to Work (Pilot) Aim To test a Flexible Menu-based approach with existing and extended customer base

30. Steps to Work (Pilot) • Pilot commenced 2 April 2007 • Introduced Menu-based approach • Extended Customer Base • Economically Inactive -(Incapacity Benefit, Income Support clients and those on other benefits or none) • Open to customers aged 25 or over

31. Trends • Increase in Voluntary participation • Increase in Economically Inactive participation • Increase in numbers entering Employment

32. Steps to Work (Roll out) ReplacesNew Deals - 18 to 24 - 25+ - Lone Parents - Partners - Musicians - Self-Employed

33. Steps to Work (Roll-out) • Fresh approach to delivery of Provision • Available to all age groups (18+) • Flexibility central to success with both Advisers and Providers key players in assessing and identifying client’s barriers to employment

34. Steps to Work – Key Features • Modular based provision • Tailored to individual needs using a “pick ‘n mix” and variable length approach • Voluntary participation (non-sanctionable)

35. Steps to Work – Key Features (cont’d) • Mandatory clients must participate or risk benefit sanctions • IB/IS participants remain on benefit • Training Premium for all participants • Focus on Employment Outcome

36. Structure Step 1 Short duration intervention aimed at those closest to the labour market Step 2 Relevant to those who are further from the labour market who require additional help in finding work Step 3 Follow-up support and advice for those who have not found work after participating in Step Two provision

37. Eligibility • Step 1 - day one of unemployment/economic inactivity • Step 2 - unemployed in receipt of benefit for 13 weeks - in receipt of benefit (IB/IS) - economically inactive and out of work for 6 months

38. Step 1 Provision Gateway • Short Accredited Courses • Basic Self Employment Awareness • Start a Business Programme • Music Industry Adviser

39. Step 1 (cont’d) Core Gateway Course • Essential Skills Assessment • CV Building • Employability Skills • Interview Skills • Jobsearch Skills • Intensive Jobsearch for Returners (mandatory 3 days) • Confidence/Motivation Building

40. Step 2 Provision • Back to Work (inc Work Exp., VRQs) • Essential Skills • Qualifications • NVQs (26 wks to complete) • NVQs (52 wks Full) • Self-employment Test Trading • Subsidised Employment (up to £100 p.w.) • Enhanced Support

41. Enhanced Support • Mentoring • one-to-one support • improve prospects of gaining and sustaining employment • Pre employment (12 weeks) • In-Work settings (12 weeks) • Only available in conjunction with provision

42. Step 3 Follow-up • Adviser review Interview/s • 6 weeks duration • Avail of Step 1 provision not accessed during the Gateway process (e.g.Short Accredited Courses, Core Gateway modules)

43. Summary • Builds on New Deal (Delivered under New Deal legislation) • Accessible to a wider customer group • Introduces greater flexibility • Single menu approach

44. Steps to Work Delivery Arrangements Brian McVey Programme Management and Development Branch

45. Overview • Model of Delivery • How will provision be delivered? • Contractual Areas • Number and scale of contract areas • Tendering Arrangements • Planning and Timescales

46. Background to the Re-contracting process • Expiry of existing contracts • Stakeholder feedback • Approval and extensions • Mitigating Factors

47. Review Process • Composition of Working group • Wider considerations • Ministerial Clearances

48. DELIVERY MODEL • Existing model • Consortium based • Issues • Historical influence • Management of consortia • Membership • Referrals • Clarity of roles • Legal dimension

49. Developing a Delivery Model • Options considered • Consortia Model • Single Contractor Model • Prime Contractor Model • Hybrid Model

50. Option Chosen • Prime Contractor • Single Contract Provider or • Partnership with a nominated Prime Contractor