Local flexibility in tackling youth unemployment
National policies have long focused on supporting young people back into work. There was a significant increase in initiatives targeted at youth unemployment in the 1980s and 1990s. The Young Workers Scheme (YWS) that ran between 1982 and 1986, and the New Workers Scheme that followed provided wage subsidies to employers recruiting young people. The Youth Training Scheme (YTS), an on-the-job training course for school leavers aged 16 and 17, was also brought into operation in 1983. Evaluations suggest that the additional employment impact of the YWS programme was low, at around 16 per cent.15
Recently the national approach to tackling youth unemployment has broadened, with increased awareness that programmes need to target youth before school leaving age and promote education as well as employment. Broadly, polices now aim to prevent early school-leaving and reintegrate early school-leavers. Preventative measures are coupled with the more traditional measures to support school-to-work transitions and offer employer incentives to employ young people. Examples of more recent initiatives include raising the compulsory education age and bursary funding, which offers young people financial incentives to stay in or return to school (see Box 2).
Box 2: National youth employment policies
Raising participation age: Since 2013 all young people in England must continue in education or training until the end of the academic year in which they turn 17.15 This will be raised to 18 in 2015. The post-16 options open to young people are: 1) full-time study in a school, college or with a training provider; 2) full-time work or volunteering combined with part-time education or training; or 3) an apprenticeship.
Basic skills (Maths and English): From September 2013 pupils must continue to study English and Maths until they receive a GCSE at grade C or above. Some Government employment programmes also provide basic training in English and Maths for those aged 16-24 (e.g. traineeships).17
Work Programme: Introduced in 2011 this consolidated support for the long-term unemployed into a single programme. It is ccompulsory for 18-24 year olds who have been claiming JSA for nine months, or three months for those deemed to have significant barriers to work such as long-term NEETs. It is delivered by a range of private, public and voluntary sector organisations through a ‘black box’ approach, giving providers more freedom to shape services locally and to personalise support for claimants, including offering continuing support once participants are in work.
Increasing number of apprenticeships/ traineeships: Apprenticeships are open to those aged 16 or over who are not in full-time education. In 2009 the National Apprenticeship Service (NAS) was launched to bring about a significant growth in the number of employers offering Apprenticeships through promoting the value of apprenticeships. In 2009 Apprenticeship Training Agencies (ATAs) were launched to simplify the process of taking on an apprentice through taking responsibility for recruiting, employing and arranging training on behalf of employers. There were 504,200 Apprenticeship starts in the 2012/13 academic year in England, compared to 172,600 in 2005/06.18 The Government is also increasing the budget for the Apprenticeship Grants for Employers (AGE) scheme for 2014-15 and 2015/16.19 In 2013 Traineeships were introduced for 16- to 24-year-olds (16-25 for those with learning difficulties) who need additional help to gain an apprenticeship or job. Traineeships provide high quality work placement and training in English and maths.
Youth Contract: Announced in 2011 this comprises three main elements: 1) Additional support for unemployed 18-24 year olds including Work Experience places, wage incentives and additional support from Jobcentre Plus advisers; 2) subsidies for small businesses taking on an apprentice aged 16-24; and 3) additional support for disengaged 16-17 year olds across 12 regional areas in England, designed to support disengaged young people to move into education, training or employment with training. Local delivery is being trialled in three areas (Liverpool, Newcastle-Gateshead and Leeds-Bradford-Wakefield) as part of City Deals.
Sector-based work academies (local delivery in some parts of England): Run by employers, colleges and training providers in different parts of the UK, sector-based work academies aim to move anyone aged 18 or over and claiming Jobseeker’s Allowance or Employment and Support Allowance into work. The exact support provided varies but can include pre-employment training, a work experience placement and the possibility of achieving units towards a qualification.
Education Maintenance Allowance (EMA) / Bursary Fund: 16-18 year olds living in Northern Ireland, Wales and Scotland whose household income is below a set threshold and who are studying for a minimum amount of time are provided with £30 a week under the EMA, to help with the costs of education. In England EMA ended in 2011. 16-19 year olds living in England and in education (excluding university) or training can apply for a bursary of up to £1,200 a year to pay for course equipment, lunch and transport to and from school or college.
Yet a large number of young people fall outside the remit of existing mainstream provision. The majority of UK employment and education programmes are delivered via Government agencies or schools and colleges, with JSA support focused on those aged 18 or over. This means that there may be limited employment support available for 16 to17 year olds. In response, as part of the Youth Contract policy, the government introduced an initiative to offer targeted support to disengaged 16-17 year olds to participate in education, an apprenticeship or a job with training. The Government has also recently announced a pilot scheme to offer 16 to 17 year olds support through JobCentre Plus.20
But programmes still often miss the most disengaged – those not in education or employment and not in contact with the Job Centre. DWP estimates that around 100,000 young people a year will qualify for the Work Programme, which is only open to those who have been claiming JSA for nine months or more (or three months for those judged to have significant barriers to work, such as ex-offenders). This is less than 10 per cent of the estimated number of 1.07 million 16 to 24 year old NEETs in the UK. Many programmes (both community and national) require a certain skill level before enrolment on the scheme or a certain amount of time claiming benefits before young people have access to the training necessary to get a job is offered. Not all NEETs will meet these requirements and waiting is likely to increase the scar from unemployment. While national basic skills provision programmes are offered (for example, traineeships that aim to prepare young people with the skills needed to get on an apprenticeship scheme), this support is more limited.
The third sector plays a significant role in plugging these gaps, although the sheer number of initiatives focused on youth unemployment coupled with lack of coordination has resulted in duplication and fragmentation.21 In response, the Big Lottery Fund launched the Talent Match project. The initiative aims to help long-term unemployed young people find work by bringing together the public, private and voluntary and community sectors to create effective local partnerships and find local solutions.22
The UK has low levels of local flexibility in labour market policy compared to other OECD countries. The OECD countries estimated the degree of local flexibility available in different countries based on various management aspects of labour market programmes and services, including their design, budget, legal framework and performance management. Demark and Switzerland have the highest degree of flexibility, while Greece and Australia have the lowest. The UK is in the bottom five OECD with the lowest levels of flexibility (see Figure 4).
Case study 1: Flexibility in the Danish employment system
Source: Froy, F. et al (2011) ‘Building Flexibility and Accountability in to Local Employment Services: Synthesis of OECD Studies in Belgium, Canada, Denmark and the Netherlands’, OECD Local Economic and Employment Development (LEED) Working Papers, 2011/10, OECD Publishing; Mploy (2011) ‘Managing Accountability and Flexibility’ in the Danish employment system, Mploy
Denmark spends the highest proportion of GDP on active labour market policies among the OECD countries. It also has one of the most flexible employment systems. The 98 municipalities have responsibility for active labour market policy and cash social benefits. They can determine the content of employability enhancement schemes and develop their own measures. Less than a quarter of municipal job managers identified local labour market priorities which they could not address.
Intervention at the municipal levels sits within a strong national legal framework that ensures performance targets are met, citizens are guaranteed minimum rights and duties, and they receive similar services across the country. Three to four national goals and targets are set, with scope for municipalities to set supplementary targets if deemed necessary. The four Employment Regions sitting above the municipalities provide support and advice, and have responsibility for following up with municipalities if they are underperforming.
The system of financial management ensures a high degree of accountability and flexibility in labour market policy. Expenditure for labour market measures – passive and active – are guaranteed to municipalities by national government with no ring-fencing around specific policies. Incentives are also built in so that municipalities can retain savings if they get people into work. In 2011, the Danish government reformed the financial system to focus incentives on the outcomes of employment interventions rather than just volume.
The challenge for the Danish government has been to retain levels of accountability while reducing bureaucracy and maintaining flexibility. Municipalities are expected to undertake an annual performance audit and prepare an income statement. Municipalities’ performance is benchmarked on a widely accessible internet portal allowing for full transparency of outcomes. But levels of paperwork and poor IT systems mean that a relatively high percentage of job centres (93 per cent) stated the level of bureaucracy was too high. The government has since been working with job centres to identify ways to reduce the administrative burden and improve the IT systems.
Youth employment programmes in the UK have historically been characterised by limited flexibility at the local level. The New Deal for Young People which ran between 1998 and 2011 was associated with decentralisation but in reality there was limited local flexibility. The programme placed greater focus on skills and participation, with local delivery regarded as an important feature, together with the provision of variety in delivery methods. The intention was to enable the scheme to be tailored to match local labour market conditions. While the programme allowed a certain degree of local discretion and cooperation in delivery, bureaucratic guidance and financial structures constrained the real extent of local flexibility.23
Local authorities continue to have limited flexibility in more recent government initiatives. During the recession emphasis was put on keeping young people close to the labour market through the provision of job opportunities and work-focused training as part of the Young Persons Guarantee and the Future Jobs Fund (2009-2011). Local authorities were consulted during the development of the policy and criteria stated that jobs and training should be relevant and of value to local communities. Local authority led partnerships also played an important role in creating jobs – partners in Manchester created 8,000 jobs.24 Yet, again, there was limited scope for partners to tailor the programmes at the local level due to national guidance.25
As a result, bids for funding for local youth unemployment initiatives were a feature of many City Deal proposals. For example, Leeds City Region’s City Deal featured a ‘Guarantee to the Young’, including 14-24 Academy and Apprenticeship Hubs and a focus on developing integrated pathways into work and further education.26 More recently Plymouth agreed a ‘Deal for Young People’ which includes improving information, advice and guidance, and providing personal caseworkers for 1,500 people in ‘hotspot’ locations.27 In 2013, the government also invited cities to bid for a share of up to £50 million to invest in local youth unemployment initiatives.28
Greater local flexibility in the design and implementation of policies to address youth unemployment can be more efficient and effective. Different cities will require different polices to effectively address the core issues their young people and their local economies face and are more likely not only to have a good grasp of these underlying issues, along with the true scale of youth disengagement and unemployment within their city, but also to know which organisations are best placed to respond. Local organisations should also be better placed to build relationships with young people, employers and education facilities and so provide a joined up approach to tackling disengagement and unemployment, as is increasingly recognised by government policy.
Evidence from the devolved Youth Contract offers support to the idea that local partners can deliver better outcomes. While the centralised programme moved 27.5 per cent of participants into a job or learning,29 the pilot schemes being run by local providers in Leeds, Bradford and Wakefield have seen almost 57 per cent of those who have taken part get into education, training or employment.30 The local approach in Newcastle and Gateshead has resulted in 47 per cent of participants who were previously categorised as NEET successfully moving into a job or training course.31 These higher success rates have been attributed to the fact that local authorities and their partners are better placed to bring together services that help young people into work and learning.
Box 4: Why is local flexibility important?
Improved policy learning and adaptation: Training programmes have been found to work best when they are carefully tailored to local or regional labour market needs. Coupled with robust evaluation, greater differentiation and personalisation in approaches can lead to greater understanding of what works.
Stronger partnership building: local partners can engage with employers and other stakeholders and work in close collaboration due to their proximity and shared challenges. Collaboration can lead to the more effective and efficient allocation of resources, and to better outcomes.
More innovation: greater local flexibility would enable the design of new initiatives or adaptation of existing ones. The University of Bristol found that some of the most innovative and engaging interventions in their review of youth unemployment initiatives were those run by community organisations.32
Greater resource targeting: local partners can bring new and better quality information into decision-making processes due to their proximity to participants, target groups and employers and their understanding of the local labour market. A review of apprenticeship programmes found that locally designed programmes improved participation rates among young disadvantaged people.33
The next section examines some of the measures employed in cities in the UK and international cities to young people’s employment prospects.