The Case for Intermediate Labour Markets (ILMs)

1. The Case for Intermediate Labour Markets (ILMs) Tracy Fishwick, InclusionNW Laura Gardiner, Inclusion

2. Outline of session • The need for action • The evidence around ILMs • Options for ILMs in the current policy and delivery landscape

3. 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

4. The need for action 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

5. 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

6. The need for action – summary 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

7. 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

8. 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

9. 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

10. 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

11. 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%)

12. FJF – Lessons Wage 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

13. Options for ILMs today – local government FJF Evaluation recommendation: introduce temporary waged job initiatives to stimulate depressed labour markets and create growth in developing industries 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

14. Options for ILMs today – national government 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 • Also, the CBI has recently called for a one-year National Insurance contribution holiday after a business employs a young person

15. Options for ILMs today – Work Programme providers FJF Evaluation recommendation: work with local partners and employers to fund temporary jobs in order to achieve sustained employment outcomes for customers • 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...

16. 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

17. 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

18. Contact us • Tracy Fishwick tracy.fishwick@cesi.org.uk @InclusionNW 07769 670 753 • Laura Gardiner laura.gardiner@cesi.org.uk @lauracgardiner 020 7840 8343