The strategy for labour market inclusion

Paul Convery

Joint Director

Unemployment Unit & Youthaid, London

SCVO, Edinburgh, June 24th 1999

Unemployment Unit & Youthaid

• an independent research, policy, advice and advocacy organisation - UK scope
• exists to combat disadvantage in the labour market
• choices for individuals to realise their potential through education, training and work at appropriate points in their lives
• support the goal of full employment
• promote "active" measures to engage with the labour market

Unemployment Unit & Youthaid

• supplying research and analysis to 200 unemployed peoples' centres
• national body representing 400 training & work experience providers (mainly E&W)
• information resource used by almost 3,000 frontline advice and guidance agencies
• independent evaluation for non-statutory sector
• supplying advice to Government and employers
• alternative dissemination network
• independence - multiple funding

Why welfare to work?

Widespread dislocation from the labour market

• 1 in 5 of working age households have no employed earner
• a total of 4.7 million want to work (1 in 6)
• of 4.3 million disabled people only 5% work; but 1.2 million want employment
• of 1.8 million lone parents, 44% are employed; 30% want to work («m+)
• 11+ million experienced unemployment over 5 years after last recession (benefit claimants)

Unemployed have complex needs and face multiple barriers to work

• 60% lack basic qualifications (SVQ2)
• 40% are long term unemployed
• High levels of ethnic minority unemployment (non-white unemployment rate: 16%)
• A fifth of young unemployed have had contact with the criminal justice system
• Significant numbers who are of homeless or insecure housing tenure
• Overwhelmingly an urban population
• Significant regional disparities

Welfare to work: significance

• pledge card commitment: "get 250,000 young people off welfare and into work"
• work is the primary mechanism for combatting poverty
• not just another set of unemployment schemes but a coherent political and economic strategy
• a defining aspect of the New Labour "third way" project
• an integrated Government approach

A strong political vision

• achieving more social justice by recreating individual economic self-sufficiency
• poverty and unemployment are not the costs of achieving competitiveness but causes of comparative economic underperformance
• the growth of a "workless minority class ... detaches people, not just from work, but from citizenship itself"
• increased employability heads of inflationary pressure by reducing labour force bottlenecks

Labour market conditions

source: LFS Dec98 to Feb99 quarter

Labour market conditions

source: LFS Dec98 to Feb99 quarter

Labour market conditions

source: LFS Dec98 to Feb99 quarter

London & South East account for 62% of all UK employment growth despite having just 25% of UK working age population

New Deal in Scotland: bucking the trend

source: DfEE, ONS, New Deal performance database

New Deal in Scotland: bucking the trend

source: DfEE, ONS, New Deal performance database

Growth is not enough

labour market strategy has 6 strands

• Reforms to taxation and benefits
• Investment in skills
• Security in the workforce
• Employer & community commitment
• Regional economic development
• Programmes and services for the disadvantaged

Labour market strategy

(1a) Reforms to taxation

"Making work pay", keep jobs and improve earnings

• Increased entry thresholds for income tax and national insurance
• Children's Tax Credit, Working Families Tax Credit, increased Child Benefit
• Minimum income guarantee for families with full-time earner of £200 per week
• No family with children will pay income tax until earnings exceed £235 a week

Labour market strategy

(1b) Reform to the benefit system

Removing traps caused by the benefit system itself

• Avoiding pointless jobsearch & activity testing
• Less means-testing
• Relax weekly earnings 'clawback': £5 or £10

Might extend housing benefits so mortgage payers get a "breathing space" when they start a job (already 4 week run-on for rental payers)

• 12-month "linking" rule protects disability benefit
• Lone parents get 2 week Income Support run-on

Labour market strategy

(2a) Investing in learning for young people

Encouraging 16-17 years in education or training

• Drive to improve numeracy & literacy
• Reduce school truancy and exclusions - pre 16
• Improved occupational and educational guidance
• Financial help: EMAs and Bursaries
• Opportunities and Choice consultation (DfEE post-16 review and June '99 Learning & Skills White Paper)
• Statutory "entitlement to train or study"
• Higher Still - aiming to increase participation
• Learning Gateway / New Start for disadvantaged (Beattie Report)

Labour market strategy

(2b) Investing in all-ages learning

Lifelong learning for those in-work

• Training & education no longer a privilege of those with a secure position in the labour market
• Improve employability throughout working life

• 52% of those without qualifications are in work

• 78% of those with SVQ3+ are in work

• SVQ3+ earn 25% more on average

• Overcome skill shortages
• University for Industry (Scotland) and "individual learning accounts"

Labour market strategy

(3) Security in the workforce

Minimum standards & safeguards

• Statutory union recognition
• Unfair dismissal laws strengthened
• National minimum wage
• Maternity leave extended; new parental leave
• 48 hour maximum working week; holiday entitlement; stronger protection for under 18s
• Equal employment rights for part-time workers
• Result: shift in the balance of workplace power

Labour market strategy

(4) Employer & community commitment

Partnership with employers

• Strong political leadership & consensual ideology
• New mood of corporate responsibility
• Business leadership & participation "pay back"
• Skills: 'gaps' and 'shortages'

Partnership with community organisations

• Consultation
• Delivery: e.g. regeneration; community learning; New Deal

Labour market strategy

(5) Regional economic development

Extending the WDA, Scottish Enterprise and HIE model (new RDAs in England):

• inward investment
• local labour recruitment agreements
• social economy projects
• new financial instruments and tax incentives
• business development initiatives - technology transfer, HE/business collaboration, industry clustering
• rural information technology infrastructure

Labour market strategy

(6a) Programmes for the disadvantaged

New Deals for key target groups:

• 18-24 year olds 6 months+ and 25+ LTUE

• economically inactive claimants

• Gateway: personal advisers, diagnosis, specialist agencies helping tackle exceptional problems
• Intensive "pre-Gateway" - like New Futures Fund
• Direct job entry: matching and screening
• Jobsearch and work relevant training
• Job subsidies, work experience, education
• "Follow through" case management

Labour market strategy

(6b) Programmes for the disadvantaged

New agencies and culture

• The ONE service: a one-stop approach to benefits, work and employability
• increased employability must lead to sustainable work

ES must:

• fully engage with the mainstream labour market
• a supportive and not punitive environment
• client focused, needs based services
• not exclusively delivered by public agencies

Conclusions

• highest political priority for Government at all levels
• multiple barriers faced by the disadvantaged
• multi strand approach
• local and regional diversity
• new agencies and working culture
• partnership approaches work best
• integration, integration, integration