employment research institute 1 flexibility in the uk – the case of activation policies professor...

Employment Research Employment Research InstituteInstitute

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Flexibility in the UK – the Case of

Activation Policies

Professor Ronald McQuaid

Employment Research Institute,

Napier University, Edinburgh,

Scotland, UK


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Structure of the presentation

• Background

• Flexibility in different parts of the labour force – the case of those not working

• Flexibility in policy implementation


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1. Background

• Current high UK labour demand, but productivity still too low (GDP/capita & quasi-fixed exchange rates)

• Flexibility of those in work – hire/fire; unions (55% in 1979 – 29% in 2005); wages (collective bargaining and local variation); health provision (does not inhibit labour mobility)

• But also some flexibility by employers – e.g. work life balance and wider debates


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‘Tight’ Labour Market

• High employment and labour market Activity rates

• Relatively low unemployment (although high ‘sickness’ rates)

• Relatively high level of in-migration from A8 (Eastern Europe)

• Demographic ageing of the working population


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15 yr Olds % Change 1960 - 2010

<15s Total pop

USA +4 +66

Japan -36 +36

Canada -15 +11

UK -20 +15

Germany -31 +12

France -7 +34

Italy -42 +12


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Number 15-29 year olds in Scotland

• 1927 – 1,369,915 (28% of pop)• 1952 – 1,258,378 (25% of pop)• 1977 – 1,186,595 (23% of pop)• 2002 – 938,223 (18% of pop)• 2027 – 770,661 (15% of pop)

• 1977-2002 -21%; 2002-27 -18%; 1977-2027 -35%• So we have been through high decline in past– BUT

that was during working population growth period • TOTAL 15-64 YEAR OLDS 1977-2002 +2%; 2002-

2027 –12.5%


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How to increase the labour supply (quantity and quality) &

flexibility?

• Limited possibilities to change population numbers - increase birth rates, retirement ages, migration (too small), ‘Guest Workers’ ….

so…

• Increased flexibility of those in ‘working age’, especially those not in work


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Activity rates % 1960 & 2010

Age 15-49 Age 50-64

Age 65+

USA 64% to 79% 65 to 65 21 to 9

Japan 71 to 78 70 to 70 36 to 19

Canada 61 to 82 59 to 61 18 to 5

UK 72 to 80 61 to 59 14 to 4

Germany 74 to 80 59 to 57 14 to 2

France 68 to 76 60 to 50 16 to 1

Italy 63 to 75 48 to 41 15 to 3


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2. Flexibility in policies

• UK uses models that are ‘flexible’ in different ways –

• ‘Work First’ model - the best way to improve a person’s labour market outcomes is for them to move quickly into work (any work): policy programmes focus mainly on compulsory job search and short-term interventions to facilitate a quick return to work

• Human Capital Development model – for long term improvements, and sustainability, in work you need better skills etc.: policy programmes tailor services to promote longer-term skills and personal development


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‘Work First’ and Human Capital Development approachesWork First approaches HCD approaches

Rationale Facilitating quick return to labour market by job search and work-focused training

Improving long-term employability through improved education, skills, health, and personal development

Programme targets

Immediate emphasis on job entry; focus on getting people into work quickly

Sustainable transitions; improvements in level & range of skill; progression routes once in work

Intervention model

Job search central and constant; short-term training; focus on immediate activity

Long-term training; integrated with social care, education and health; high quality Personal Adviser support


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‘Work First’ and Human Capital Development approaches cont.

Work First approaches HCD approaches

Relationship to labour market

Demand-responsive – seeks to insert job seekers into available opportunities

Up-skills job seeker to expand range of opportunities; encourages and supports progression in workplace

Relationship with individuals

Use of sanctions and/or financial top-ups to encourage job entry

Encourages participation by demonstrating benefits of high quality opportunities

Flexibility Increases flexibility for employers (low end of labour market); unemployed people (training in work!)

Should improve longer term flexibility of labour market


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UK – background and policy

• Long history of ‘conditionality’ of benefits

• 1986-97 – ‘stricter benefits regime’; JSA 1996

• 1987-97 – retreat from investment in training; strong compulsion on job seeking; poor quality (private) services (Contradiction with increased productivity?)

• Key policies: central government/PES lead as funder and provider of advisory services

• ‘Work First’ emphasis: job search and short training, retreat from Human Capital Development


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UK policy since 1997

• 1997: New government: concern over young and long-term unemployment

• 1998 Government policy called the ‘New Deal’: ‘Gateway’/Personal Adviser - client-centred approach; choice of training options; employment option/subsidy - more flexibility in support and in choice for unemployed (within limits!)

• With both ‘Work First’ and Human Capital Development, but mostly ‘Work First’


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Pathways to Work – Flexibility & HCD

• Targeting 2.5M people (2003) on ‘incapacity’ benefits

• Piloted 22 areas 2003-6; 30 further areas from 2007

• Combines Personal Adviser services, training and health services

• ‘Condition Management Programme’ (Cognitive Behavioural Therapy elements) developed with National Health Service

• Credibility, expertise and capacity of health service

• Flexible funding rather than payment for ‘quick wins’

• Shared governance/ownership not rigid contracts

• However, main streaming different?


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3. Flexibility in policy delivery

• Governments increasingly deploying inter-agency approaches to activation

• Problem of persistent unemployment/inactivity in certain areas and among particular groups (the ‘easy to employ’ people are increasing in work, so those left often have multiple issues)

• Multi-dimensional problems = multi-agency response

Wider agenda –

• Policy makers seeking efficiency/dynamism of private sector

• European Employment Strategy focus on local partnerships and Public Employment Service reform


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European Employment Strategy and flexibility in the implementation of policies

• Guidelines since 2000: modernisation of Public Employment Services (PES); inclusion of a range of actors, social partners

• EES 2001: Strengthening the local dimension

• EES 2003: strengthening of PES institutions and partnerships to combat Long Term Unemployed and promote activation

• EU/EEA PES Network statement 2006: greater efficiency in systems, partnership with providers


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Summary of European Employment Strategy themes – flexibility?

• ‘Progressive de-monopolisation’ and liberalisation of service market: add to service quality and range

• Contracting out of services and Public Employment Services (PES) functions

• ‘Closer links between the management of (welfare) benefits and the delivery of employability services’

• Co-ordinating service delivery and policy – drive to an ‘integrated jobcentre’ model in many countries

• ‘Flexibility’ in PES staff


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UK – models of co-operation

• Amalgamation of jobs and benefits in one agency –personal advisers and work-focused interviews

• Contracting out of training services to local authorities and private, public and voluntary sector

• Rigid contractual model; focus on job entries

• Unions marginalised; employer voluntarism

• 2003: Pathways to Work: partnership with National Health Service/others to assist inactive groups

• Pathways: more flexible funding and governance


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Conclusions

• UK shows some

• Flexibility – in work

• Flexibility – those out of work

• Flexibility – policy development and delivery

But there are pros and cons with each ….

employment research institute 1 flexibility in the uk – the case of activation policies professor...

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