Flexibility in the UK: Activation Policies Analysis by Professor Ronald McQuaid

1. Flexibility in the UK – the Case of Activation Policies Professor Ronald McQuaidEmployment Research Institute, Napier University, Edinburgh, Scotland, UK

2. Structure of the presentation • Background • Flexibility in different parts of the labour force – the case of those not working • Flexibility in policy implementation

3. 1. Background • Current high UK labour demand, but productivity still too low (GDP/capita & quasi-fixed exchange rates) • Flexibility of those in work – hire/fire; unions (55% in 1979 – 29% in 2005); wages (collective bargaining and local variation); health provision (does not inhibit labour mobility) • But also some flexibility by employers – e.g. work life balance and wider debates

4. ‘Tight’ Labour Market • High employment and labour market Activity rates • Relatively low unemployment (although high ‘sickness’ rates) • Relatively high level of in-migration from A8 (Eastern Europe) • Demographic ageing of the working population

5. 15 yr Olds % Change 1960 - 2010

6. Number 15-29 year olds in Scotland • 1927 – 1,369,915 (28% of pop) • 1952 – 1,258,378 (25% of pop) • 1977 – 1,186,595 (23% of pop) • 2002 – 938,223 (18% of pop) • 2027 – 770,661 (15% of pop) • 1977-2002 -21%; 2002-27 -18%; 1977-2027 -35% • So we have been through high decline in past– BUT that was during working population growth period • TOTAL 15-64 YEAR OLDS 1977-2002 +2%; 2002-2027 –12.5%

7. How to increase the labour supply (quantity and quality) & flexibility? • Limited possibilities to change population numbers - increase birth rates, retirement ages, migration (too small), ‘Guest Workers’ …. so… • Increased flexibility of those in ‘working age’, especially those not in work

8. Activity rates % 1960 & 2010

9. 2. Flexibility in policies • UK uses models that are ‘flexible’ in different ways – • ‘Work First’ model - the best way to improve a person’s labour market outcomes is for them to move quickly into work (any work): policy programmes focus mainly on compulsory job search and short-term interventions to facilitate a quick return to work • Human Capital Development model – for long term improvements, and sustainability, in work you need better skills etc.: policy programmes tailor services to promote longer-term skills and personal development

10. ‘Work First’ and Human Capital Development approaches

11. ‘Work First’ and Human Capital Development approaches cont.

12. UK – background and policy • Long history of ‘conditionality’ of benefits • 1986-97 – ‘stricter benefits regime’; JSA 1996 • 1987-97 – retreat from investment in training; strong compulsion on job seeking; poor quality (private) services (Contradiction with increased productivity?) • Key policies: central government/PES lead as funder and provider of advisory services • ‘Work First’ emphasis: job search and short training, retreat from Human Capital Development

13. UK policy since 1997 • 1997: New government: concern over young and long-term unemployment • 1998 Government policy called the ‘New Deal’: ‘Gateway’/Personal Adviser - client-centred approach; choice of training options; employment option/subsidy - more flexibility in support and in choice for unemployed (within limits!) • With both ‘Work First’ and Human Capital Development, but mostly ‘Work First’

14. Pathways to Work – Flexibility & HCD • Targeting 2.5M people (2003) on ‘incapacity’ benefits • Piloted 22 areas 2003-6; 30 further areas from 2007 • Combines Personal Adviser services, training and health services • ‘Condition Management Programme’ (Cognitive Behavioural Therapy elements) developed with National Health Service • Credibility, expertise and capacity of health service • Flexible funding rather than payment for ‘quick wins’ • Shared governance/ownership not rigid contracts • However, main streaming different?

15. 3. Flexibility in policy delivery • Governments increasingly deploying inter-agency approaches to activation • Problem of persistent unemployment/inactivity in certain areas and among particular groups (the ‘easy to employ’ people are increasing in work, so those left often have multiple issues) • Multi-dimensional problems = multi-agency response Wider agenda – • Policy makers seeking efficiency/dynamism of private sector • European Employment Strategy focus on local partnerships and Public Employment Service reform

16. European Employment Strategy and flexibility in the implementation of policies • Guidelines since 2000: modernisation of Public Employment Services (PES); inclusion of a range of actors, social partners • EES 2001: Strengthening the local dimension • EES 2003: strengthening of PES institutions and partnerships to combat Long Term Unemployed and promote activation • EU/EEA PES Network statement 2006: greater efficiency in systems, partnership with providers

17. Summary of European Employment Strategy themes – flexibility? • ‘Progressive de-monopolisation’ and liberalisation of service market: add to service quality and range • Contracting out of services and Public Employment Services (PES) functions • ‘Closer links between the management of (welfare) benefits and the delivery of employability services’ • Co-ordinating service delivery and policy – drive to an ‘integrated jobcentre’ model in many countries • ‘Flexibility’ in PES staff

18. UK – models of co-operation • Amalgamation of jobs and benefits in one agency –personal advisers and work-focused interviews • Contracting out of training services to local authorities and private, public and voluntary sector • Rigid contractual model; focus on job entries • Unions marginalised; employer voluntarism • 2003: Pathways to Work: partnership with National Health Service/others to assist inactive groups • Pathways: more flexible funding and governance

19. Conclusions • UK shows some • Flexibility – in work • Flexibility – those out of work • Flexibility – policy development and delivery But there are pros and cons with each ….