Active Labour Market Policies in the UK - What Lessons Can Be Learned from the British Experience?

Michelle De CortEconomy and Labour Market Policy

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This presentation will cover...

The UK labour market today

How have we got there?

What next?

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0%

10%

20%

30%

40%

50%

60%

70%

80%

Canada UK US Japan Germany France Italy

The UK has one of the highest employmentrates in the world

Percentage of the working age population in work

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….and is a key success story for the UK

Employment is high by historical standards

68

69

70

71

72

73

74

75

76

Per c

ent

Employment rate

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…with high employment across most groups

Source: OECD Employment Outlook 2007

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10%

20%

30%

40%

50%

60%

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80%

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100%

Total Men Women Young PrimeAge

Older Lowskilled

Mediumskilled

Highskilled

Em

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ym

en

t R

ate

s

UK OECD

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…at low cost

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Nethe

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Denm

ark

Sweden

Belgium

Franc

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German

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Irelan

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Finlan

d

Norway

Spain

Portug

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Austri

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Switzer

land

Hunga

ry

New Z

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Greec

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Slovak

Rep

ublic

Austra

lia

Canad

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Japa

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Korea

Czech

Rep

ublic US

Mex

ico

Source: OECD

Expenditure on labour market programmes as a % of GDP

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HOW HAVE WE GOT THERE?

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Key elements that have contributed to the success so far…

• Macroeconomic stability

• Flexibility and Diversity

• Making work pay

• Active labour market policies

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Labour market policies 1997 to 2001: focus on claimant unemployment

• Built on Jobseeker’s Allowance (JSA) – one benefit for all unemployed – and Employment Service – one stop shop for all unemployed.

• JSA system:-

rights & responsibilities

focus on individual with regular contact throughout claim.

‘Work first’

Increased help as duration increases culminating in the New Deal

• Introduced New Deal for Young People and later New Deal 25+.

• Achievements: youth long-term claimant unemployment down 90%. Overall claimant and long-term unemployment lowest for 30 years.

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Labour market policies 2001-2008: focus on all benefits, particularly ‘inactive’ benefits

• Established and rolled out Jobcentre Plus – one stop shop for all benefits not just unemployment benefits.

• Introduced work-focused interviews and New Deals for lone parents and people on incapacity benefits.

• Achievements: world leader in this area. Benefits now falling after decades when only way was up.

Jobcentre Plus purpose:

“Work for those who can, support for those who cannot”

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Labour market developments since 1997

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500

1,000

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3,000

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1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Tho

usan

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Unemployment benefits Incapacity benefits Lone parents

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WHAT NEXT?

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But still have high aspirations - full employment is our goal

• Tackling poverty

• Responding to the challenges of demographic change and globalisation

• Work is good for you

An employment rate of 80%, with employment opportunity for all

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…and stubborn barriers exist in getting to that ambition

• 3 million people of working age have been on benefit for over a year, many on incapacity benefits

• there are nearly 3 million households in which no-one works, and 1.7 million children are growing up in these households

• 5 million adults are not functionally literate and 17 million have difficulty with numbers

• Of the 5.1m Jobcentre Plus customers – 38% lack functional literacy, and 45% lack functional numeracy

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…so embarking on next stage of welfare reform

“We are clear that in future, good training to develop the skills that employers want has to be a central part of helping people into jobs, and helping people stay in jobs. Our goal is sustainable employment, not cycling between short term work and repeated spells on benefit. We want to support progression in work as well as entry to work.”

Peter Hain, Secretary of State for Work and Pensions, November 2007

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…with 5 key principles

• a stronger framework of rights and responsibilities

• a personalised, responsive and more effective approach

• not just jobs, but jobs that pay and offer retention and progression

• partnership – the public, private and third sectors working together

• devolving and empowering communities

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A stronger framework of rights and responsibilities

Sick and Disabled People

• Employment and Support Allowance will replace incapacity benefits for new customers from October 2008.

Lone Parents

• Lone parents currently on Income Support will be expected to look for work when their child reaches 12 from autumn 2008, 10 from October 2009 and 7 from October 2010.

• Alongside increased expectations there will be access to skills advice, childcare and employment support to find work, for example New Deal for Lone Parents

 

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A personalised, responsive and more effective approach

flexible New Deal• Modernising and rationalising existing New Deal, focusing support on the needs of individual

jobseekers.• Expectations and support for Jobseekers increases as the duration of the claim increases -

recognising that majority of people leave Jobseekers Allowance within the first year. • Jobcentre Plus provision for first 12 months, then private sector provision - with a focus on sustained

employment.

Pathways to Work• Programme of support for those with a health condition or disability to overcome barriers to work• Six mandatory work focused interviews have been effective, increasing the chances of a new

customer being in work• From April 2008 will be available to everyone in the UK and will be rolled out to existing customers

aged under 25 from 2009

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Not just jobs, but jobs that pay and offer retention and progression

Increased emphasis on skills as well as employment support

• Early screening of all benefit customers to identify literacy, numeracy and English language needs

• Partnership between Jobcentre Plus and the new adult advancement and careers service to provide detailed skills advice and support

• Piloting mandatory training for jobseekers after six months, subject to adviser discretion• Enabling jobseekers to take up short, full-time, employment focused training to support a return

to work • Supporting lone parents to stay in and progress in work

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Partnership – the public, private and third sectors working together

• Employers commit to make more of their jobs available to people disadvantaged in the jobs market: we reduce the cost and risk

• Jobcentre Plus arrange work trials, pre-recruitment preparation, sifting, reviews of recruitment practices etc

• The target is 250,000 people into jobs by December 2010

• Joining up the employment and skills agendas

Local Employment Partnerships - a partnership between Jobcentre Plus, employers and jobseekers

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Commissioning - a new partnership

• Longer, larger contracts and greater flexibility in provision delivery

• Our relationships with providers will be more strategic and based on shared understanding of government objectives

• A focus on place with providers taking a more strategic role

• We’ll increasingly link with local delivery mechanisms

• Smaller, specialist providers will be encouraged to flourish and develop

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Devolving and empowering communities

- focus effort on the most deprived neighbourhoods

- support local authorities and communities to tackle worklessness and low levels of skills and enterprise

- add value by complementing mainstream services

- give local authorities flexibility to achieve the objectives which matter to local people

- include a significant reward element to incentivise success

CLG and DWP have together created a new Working Neighbourhoods Fund, worth £1.5bn to 2010-11. The fund will:

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Testing localisation through the City Strategy

Jobcentre Plus

Regional Development Agency

Local authority

Learning andSkills Council

Primary CareTrust

Employers

Consortium

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Conclusion• The UK has a strong labour market by historical and

international standards

• But we have aspirations to aim even higher, moving to an 80% employment rate

• Will be very challenging and so reform is essential to getting there:

In return for greater obligations on people, much stronger emphasis on providing tailored employment and skills support; and

Recognition that everyone has a part to play in helping individuals - employers, the public, private and third sectors and local areas

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Any questions…or answers?

Department for Work & Pensionswww.dwp.gov.uk

Jobcentre Pluswww.jobcentreplus.gov.uk

New Deal employment programmeswww.newdeal.gov.uk

Learning & Skills Councilwww.lsc.gov.uk