30 years of intermediate labour market (ILM) schemes: What works?

1. 30 years of intermediate labour market (ILM) schemes: What works? Tony Wilson, Inclusion Laura Gardiner, Inclusion

2. What is an ILM? “Waged temporary work of community benefit for the long-term unemployed, with support to move into the mainstream labour market” (Marshall and Macfarlane, 2000) • Also looking at ‘transitional employment programmes’ (less emphasis on local implementation and community benefit) and wage subsidies within this session

3. A need for ILMs in London? • Stagnant growth and demographic patterns mean that demand for jobs in London outstrips supply • While other labour market indicators begin to improve, long-term claimant unemployment is rising faster than ever

4. ILMs / transitional employment programmes Lots of evidence to draw on... Various local ILMs (often connected to New Deals) Community Programme Community Action StepUp pilot Future Jobs Fund 1980 1985 1990 1995 2000 2005 2010 Adult Employment Subsidy Young Workers Scheme Workstart pilot National Insurance Contributions holiday Six Month Offer Youth Contract Wage subsidies New Deal employer options + a wealth of international evidence

5. Community Programme • 1982–1988, supported up to 250,000 12-month jobs • Voluntary participation for young people unemployed for more than 6 months and adults unemployed for more than a year • Paid ‘the rate of the job’, most jobs part-time • Heavily criticised: • High levels of job substitution • No job search or link into regular jobs – length and wages of CP jobs made them too ‘safe’, and locked people out of the open labour market • No provision for skills • Insufficiently targeted at the very long-term unemployed • However, job outcomes weren’t too bad – 56% had had a job at some point within 10 months of leaving

6. Local ILMs in the UK • A 2002/03 DWP report estimated that 14,000 people were in ILM jobs • A diverse range of jobs and placements • Most were locally driven, joining up funding streams: • Two thirds based on New Deal employer options • 80% made use of EU funding • Average job outcome rate of 43%. Job outcomes maximised when: • ILMs were ‘medium sized’ • Jobs lasted 6 months or longer

7. StepUp pilot • 2002–2004 programme for New Deal returners • 50-week waged job and job search support • Step up job outcome rate (53%) not significantly higher than comparison group, but significant impact on job outcomes for: • Those aged over 30 • Long-term unemployed people and those with low objective employability • Widespread failure to encourage effective jobsearch, 50-week jobs led to ‘lock in’ • Delivery infrastructure critical: • Initial jobmatch by Jobcentre Plus had a large impact on success • Independent support worker crucial to maximising retention

8. Future Jobs Fund • 6-month minimum wage job for unemployed 18-24 year olds (older adults as well in agreed areas) • 100,000 jobs created in fewer than two years • Employment outcomes: • People usually left early 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

9. Future Jobs Fund • What worked well: • Focus on training and qualifications • Equally good outcomes for disadvantaged groups • Engagement of the voluntary and community sector, which delivered better outcomes than other sectors • Areas for improvement: • Not enough focus on jobsearch and progression • Not enough targeting at those most in need of support (lots of highly-educated and short-term unemployed people included in latter stages) • More engagement with private and growth sectors needed • More streamlined interaction with other mainstream provision needed

10. Evidence from the USA • Growth in local transitional employment programmes since 1996 welfare reform. Elements of effective schemes include: • Robust targeting, e.g. one scheme in Philadelphia had an effect on job outcomes 4x larger for highly disadvantaged people • Job placement diversity • Pre-work placement preparation, especially for lone parents and those with no workplace experience • An emphasis on jobsearch throughout • Skilled case managers • Collaboration between a range of organisations

11. Wage subsidies • Tend to have very low take-up, e.g. NIC holiday was expected to benefit 130,000 per year, but in first year there were only 2,300 successful applications. Likely to be due to: • Lack of publicity / employer awareness • Subsidies too low to influence employer behaviour • Very high deadweight • However, recruitment subsidies were more effective than training or volunteering within the New Deal options – due to lesser risk of ‘lock in’

12. What works – ILM must haves An emphasis on progression into unsubsidised employment: ILMs need to be focused on jobsearch and progression throughout + Targeting: ILMs are costly – placements should be robustly targeted at the most disadvantaged groups and those who are unlikely to be helped by lower-cost interventions

13. What works – ILM nice to haves • Provision for training and/or qualifications – tying in with mainstream skills provision where possible • A diversity of jobs on offer • A dedicated support infrastructure • Pre-placement preparation: managing transitions • Support from a range of partners and strong local collaboration • Links with other local provision

14. e.g. Creative Industry programme • Six-month paid jobs for young unemployed people in London-based organisations involved in the Cultural Olympiad, led by the Royal Opera House • Cohort of 40 young people started work yesterday • Strengths: • Wide range of jobs on offer • Focus on progression from day one • Training: including master classes and an accredited qualification • Linked to Work Programme and Youth Contract wage subsidies • Cohort approach provides strong support infrastructure

15. tony.wilson@cesi.org.uk laura.gardiner@cesi.org.uk