Fixing the 25+ New Deal

What should be done about the New Deal for those aged over 25? The poor relation of the flagship New Deal for 18 to 24 year olds, the latest results show this programme significantly under-performing - so far only about 8% of leavers have found jobs compared with 26% for younger New Dealers.

To be fair, the New Deal for 25+ is aimed at the harder to help. They are older and very long term unemployed and things are really stacked against them: only 4% of claimants end up being unemployed beyond a 2 year threshold.

But there are some big qualitative differences between the programmes too. Five out of six 25+ participants are simply going through an advisory interview process. Just 14% are engaged in education, training, work experience or a subsidised job compared with nearly one in three aged 18-24. This is not surprising. On a like-for-like basis, the programme for under 25s is spending about 6 times more of the windfall tax cash.

But things are not that simple. When trying to help the very long term unemployed, New Labour's credo - that tough problems are not solved by simply spending more money - can ring fairly true. Firstly, no amount of training or work experience is going to help in an area that is chronically short of jobs or badly served by affordable transport. Meanwhile, in a buoyant labour market, companies are simply not going to recruit people who have been out of work for a long time. Not without some intensive job preparation and plenty of soft-soaping the employer.

But the economy is growing and labour markets are tightening in many regions - even where there are large numbers of people without work who want to work. In the past, companies have responded to recruitment blockages by bidding-up wages and this has led to inflationary pressure.

So employers are increasingly realising that long term labour market exclusion is not just bad for individuals. When it translates into acute shortages of staff, it is bad for firms too. The Government has coined a slogan about "people without jobs" and "jobs without people" to describe this paradox. Incidentally, the provenance of this phrase lies in the 1988 advertising campaign for Employment Training - the scheme that became Training for Work and subsequently Work Based Learning for Adults (and still called TfW in Scotland).

So, the main thrust of Government policy is to improve employability not just amongst mainstream JSA claimants but also those on "inactivity" benefits like Income Support for Lone Parents or Incapacity Benefit who have been away from work a long time. But what sort of help should they receive?

Lastly, waiting 12 or 24 months is too long before making an intervention. There is a crude logic, which says that duration of unemployment sorts sheep from goats. Because 50% of job losers get back into work within 6 months, Government officials say that helping everyone from "day 1" would be a waste of money. But extending the "trigger" to 12 months (at which point 85% have left the register) is not the best way of identifying who needs the help. Rather like deciding who requires medical attention by leaving a GP's waiting room of patients a few weeks to see whose illness gets worse. Instead, doctors use sophisticated diagnosis to identify serious potential health disorders. So too, the Employment Service should be profiling its "day 1" clients to spot those who might still be on the jobless rolls after 12 months and then act early.

What else needs to be done?

Firstly, there are parts of Britain where the shortage of jobs needs fixing - not just the poor employability of its workless population. That's why some regional Development Agencies must boost sectors that are employment intensive and make their competitiveness and GDP growth plans co-incide with the Government's welfare to work strategy.

Secondly, employer attitudes need changing - especially where unemployment is worsened by discrimination. When employers call for better "soft skills" they are treading dangerous ground. These skills are undoubtedly needed. But they are notoriously difficult to measure and that leads to recruiters making subjective judgements about a candidate's capability. This is only a short distance from making discriminatory judgements. So, we need to find ways of quantifying a jobseeker's potential ability to "fit" a company or a team of staff and their work organisation.